Understanding your sales funnel
Founder of The Sales Method, Consultant, Growth Expert
Who are you short term sales?
80% of the sales cycle happens in the qualification process.
Pull apart each piece of your sales cycle and audit each to optimize your process.
Lesson: Sales Market Fit with Whitney Sales
Step #7 Sales Process: Understanding your sales funnel
The startup market has changed quite a bit. If we look at selling overall, it's actually changed quite a bit. It used to be direct selling only, but as freemium and premium products have come into play and free trials have come into play, it's really evolved how businesses run and grow and actually go to market.
If we look at the various types of selling, there's this freemium model which is a free product and there's this mid-market product and price point, and then there's this enterprise price point. When you think about each of these markets that actually are going to be using this product, there are various pricing structures that you can apply that actually make the customer more receptive to your product overall.
One of the really interesting things I've actually learned around selling to enterprise is price point; they pay attention to it. They don't want to think what they're buying is cheap. So you need to price it accordingly.
Mid-market, it's more of they want a structured pricing, and they want to see it, and they want to see what they get for it, and there are going to be boxes checked. That's a really interesting thing when you think about pricing that product, when you think about how you market that product, when you think about how you sell that product. It's very structured and you're establishing yourself as an expert in that specific market.
When you look at a lower SMB space and how you're pricing that product, you're really looking at a low cost. You're typically going to be doing a free trial, which is very important, a free trial, or a freemium model of the business, or even where they're upselling within it, or you might have a lower cost and then a premium.
These will actually be all within the same business, which is really, really interesting when you structure and build your product because when you're developing a product overall, you want to think about your short-term sale. So who is your product ready for first? So is going to buy my product first? You need to get money in fast. That's a really important thing in the B2B space is making sure you have money coming in the door.
You may have developed your first 100 customers and have them on the product testing it out, but it doesn't mean they're going to pay for it. You need to start looking at who's most likely to buy my product first. It may be the small transactional sale. It may actually be enterprise or it may be this mid-market. That's going to tell you the priority around product development for that market.
The second piece to look at is within your target market, how complex of a product are you going to need based on the price point in which you're going to charge? So for an enterprise solution, you may actually have the exact same product for an enterprise company as you do for a mid-market company, but enterprise is going to get additional customer support and handholding in that process of onboarding. And then maybe as you build out new features, they'll get added to the enterprise suite than what a mid-market is getting. It can be very different.
SiriusDecisions developed something called the Demand Gen Waterfall. We can talk about SiriusDecisions. There are some pieces that I've removed because I think they're a little fluffy and they're a much larger sales cycle. But across every business, you can look at various categories on this entire funnel. So there are your monthly unique visitors who hit your website. So your Google Analytics, "How many people do I have coming to my website? How many people do I have inquiring about who I am as a company?"
Then you have your marketing qualified leads. So you get your lead. You have someone fill out your form and what it looks like. Marketing goes, "Yeah, these fit what we define as a target market." So that's an MQL. Then from there, you have an SAL. So marketing goes, "Okay, we're now passing this lead to sales because we've deemed it appropriate for a sales person."
The sales person will then go, "Actually, you know what? I talked to this customer two months ago and they're not ready to buy," or, "You know what? The title of this person, it may be in the right department but they're way too junior," or it may be that this specific title is not in the right department. It says analyst but they're actually in the finance department versus in a marketing or sales department or IT department, for example. That's a sales accepted lead, so an SAL.
Then from there you have a sales qualified lead. So if we actually look at the overall sales process, about 80% of a sales cycle actually comes within the qualification process. It doesn't necessarily mean that it's going to be the first conversation, but it's a sales person actually going and qualifying the lead and understanding the value that that customer is looking for from that product and that they're actually ready to buy that product within a realistic time frame and the person you're talking to can help influence the decision making of that product, not necessarily the decision maker, but they can influence the decision making.
Then from there, in the qualification process there's an element of getting the buyers in the room. This is going to be more of an enterprise sale than it is going to be a transactional sale because transactional sales are much faster, even though they'll go through the same process.
There's qualifying the team. As you get into larger sales cycles, you're going to have more people involved in the buying process. So you're getting to the point where you can actually have a demo with this customer where they're evaluating that product and whether it's going to have the capabilities that they need within it. It's something where the price point fits the value that it's offering.
And then from there, there's the closing process. Each company defines the closing process very differently. They may have technical requirements that are built in there. There may be some nurturing as part of that process. There may be a negotiation that happens, legal or procurement depending on that product or service. And then there's the actual close, so getting the contract signed. So as a company defines what they're building into their sales force, they're going to be looking at each of these and how complex it needs to be in their overall sales funnel.
The waterfall is more of looking at how effective each of the steps along the sales process are. So it's looking at of your monthly uniques, how many are converting to leads? That's going to tell you a bit about your content marketing on your website because once they hit your website, you have all these marketing pieces to drive people to your website, but once they hit your website, how many of them are actually converting?
Then there's once they convert and it's a sales accepted lead, that's going to tell you from a sales accepted lead standpoint how well is marketing defining the market. Is it clear? Does it actually fit with what sales wants? If that's the case, if it's low, there probably needs to be a redefinition of what the target market looks like.
Then you have a sales qualified lead. It's from the accepted standpoint to qualification. It's how often are you converting those leads from, "Yes, they're a good fit," and then the sales person actually reaches out and qualifies them that they know what their target market looks like and they're good at identifying what that is.
And then if we look at sales qualification and demo, how good are they at actually establishing value in the first conversation and getting that person to start sharing information about their organization and the value they're going to find in the product and why they reached out and all those pieces.
And then we look at the demo to close piece and all the steps that come in between. That's going to tell you how good is that sales person at generating value and setting expectations for their customer in the qualification process and then showing the value. And then closing is going to be how good are they at actually taking the steps needed to continue pushing that deal along and helping the decision maker navigate their internal processes to actually close the deal.
So all of those, it's the way in which you look at and measure your sales and marketing flow.