Organizations use the sales funnel to track prospects as they move through sales stages, adjusting strategies and marketing methods in response to their behaviors. [Juno / Stocksy]
A sales funnel, stretching from early-stage brand discovery to final purchase, represents the customer journey. Most companies use the funnel to track prospects as they move through sales stages, adjusting strategies and marketing methods in response to their behaviors.
Using a “funnel” as a metaphor is somewhat misleading, however – especially in a rapidly changing digital sales environment. In real life, the buying process is never so linear. Digital marketing, artificial intelligence (AI), and multi-faceted CRMs have drastically changed the process of converting new leads into customers.
Business-to-business (B2B) sales and marketing teams need to understand how the modern sales funnel works, and what strategies most efficiently move prospects through the buying journey.
This article addresses these and other fundamental sales funnel topics:
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What are the stages of a traditional sales funnel?
The top of the funnel is where new leads, or prospects, enter the buying journey, while the narrow bottom reflects how many of those leads are converted to customers by the end of the sales process.
The stages of a sales funnel can vary, but a traditional model follows these phases from top to bottom:
- Awareness – prospect become aware of a brand or product/service
- Interest – prospect shows genuine interest in a product or service
- Desire – prospects shows desire to purchase when it becomes clear the product/service meets a specific need
- Action – prospect decides to purchase product/service
Why is the sales funnel important?
A well-defined sales funnel helps you understand your prospects’ knowledge of and interest in your products or services at various points of the buying journey. Tracking this carefully can help you determine how each lead should be approached, which products/services are best for a sales pitch, and what messaging you should use to close the deal.
Getting the communication (and timing) right prevents losing prospects by bombarding them with too much information or giving them the hard sell too early. This is why moving prospects through the funnel is often called “nurturing.” In fact, 78% of business buyers seek salespeople who act as trusted advisors with knowledge of their needs and industry. This can only be achieved if you know what needs a prospect has in the moment.
How is the sales funnel changing?
The changing nature of marketing and selling – recently marked by the move to digital environments and a push for customer-first selling – means sales funnels must adapt.
As Michael Bosworth, author of “Solution Selling,” points out in the “Story of Sales” documentary, sales used to be about convincing, persuading, overcoming resistance, handling objections, and closing the sale. “Today, my definition of selling is helping [people],” Bosworth said. “It’s helping your customer achieve a goal, solve a problem, or satisfy a need.”
The ways prospects and customers interact with businesses are also changing. Email, social media, and other digital channels are preferred by many in a digital-first world.
High performers are 1.6X more likely to prioritize leads based on data analysis than underperformers – and half as likely to use intuition.
There’s good reason for the pivot: Videoconferencing and other apps offer an opportunity to engage at a time and place that suits the prospect. In fact, 60% of sales reps said they spend more time selling virtually than they did in previous years, according to Salesforce’s global State of Sales study.
To keep track of fast-paced digital buying cycles, data and analytics are becoming increasingly important. In our State of Sales research, analytics and deal management tools were ranked as the top technologies used by sales teams, with 68% receiving data insights on sales, customers, and prospects.
Data insights change how sales and marketing teams make decisions. Sales reps now rely less on intuition in pursuing opportunities. As noted in State of Sales, “propensity to buy” is the most popular method of prioritizing leads – in fact, it’s twice as popular as intuition.
As you take on a bigger book of business with more opportunities, quarter after quarter, relying on your own memory means mistakes and wasted time.
Tony Rodoni, EVP of emerging business, SALESFORCE
“Time is money for a rep,” said Tony Rodoni, Salesforce EVP of emerging business. “You need to know the most important thing to do right now, and what to do next. If you’re not clear on which opportunities are accurate, you’re relying on your memory to know which ones need work. As you take on a bigger book of business with more opportunities, quarter after quarter, relying on your own memory means mistakes and wasted time.”
State of Sales also compared the habits of high performers (sales teams that have significantly increased year-over-year revenue) with underperformers (those with comparatively lower revenue). It revealed that high performers are 1.6X more likely to prioritize leads based on data analysis than underperformers – and half as likely to use intuition.
How do you successfully manage your sales funnel?
Managing your sales funnel boils down to one key task: Review and adjust your sales strategy based on lead changes in the funnel. Do this using the best data available and, where appropriate, human intuition.
Let’s say, for example, that a lead is lingering in the “Desire” stage but is hesitating to make the leap to purchase. Ordinarily, your process may be to present a dynamite sales pitch and follow up with a contract. But if the lead waffles, asks a lot of questions, backpedals – what then? You need to revise your strategy to keep them moving through the funnel, either by offering more incentive to buy or by effectively addressing their concerns.
Review and adjust your sales strategy based on lead changes in the funnel. Do this using the best data available and, where appropriate, human intuition.
The second piece of this is optimization. Even if a lead responds well to the nurture process, you may discover you keep them too long in a particular stage. This cuts the momentum they need to make a purchase. Adjust your strategy accordingly. Move them to “Action” more quickly by creating urgency using clear deadlines. Organizations can also improve the efficiency of sales teams by re-allocating resources, offering additional incentive options or team support for complicated deals.
Data insights are the heart of this funnel optimization. Three data-driven technologies follow analytics and sales reporting as the most popular sales tools:
- Account and contact management (65%)
- Sales forecasting tools (56%)
- Customer relationship management (CRM) systems (58%)
The last of these is a particularly crucial tool for optimization, allowing you to organize all customer-related data in a central location.
Salespeople also use data to better understand a prospect’s relationship with their company. Three-quarters of salespeople said data on prospects’ propensity to buy again helps them prioritize leads and opportunities. This suggests a shift from the traditional sales and marketing dynamic. Now the focus is on the value of leads, rather than the volume.
It should be noted, however, that while data is key to sales success, the sales funnel is ultimately about people.
As State of Sales found, salespeople believe a combination of human skills and data-driven insights is needed to convert prospects into customers. The ability to listen is considered a critical attribute for landing deals by 78% of those surveyed. Sales reps also have to demonstrate industry knowledge (74%), trustworthiness (74%), and knowledge of prospects’ business needs (73%).
These qualities, paired with data-driven insights, will ensure prospects flow easily down the sales funnel.
Read more sales trends in our free State of Sales report
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