In recent years, the importance of sales funnel management in brick and mortar, online business and hybrid business models is increasingly driven by the advances in CRM capabilities of the firms. Newer models to manage the funnel, newer analytics to power its efficiency and stronger emphasis especially on web-based business models have added multiple layers of complexities and many of these layers, in my opinion, are unwanted. In the next few paragraphs, I am making an attempt to delineate the fundamentals of sales funnel management (SFM, hereafter) and offer a perspective from Sales Manager-Salesperson dyadic relationship; the start and end point of action!
Let’s begin with this question: Why do customers buy our products? The answer to this question is largely dependent on our understanding of the buying funnel that starts with customer awareness, moves to brand awareness, brand consideration, brand preference, purchase intention, purchase, customer loyalty and finally, customer advocacy.(Source: Ending the War Between Sales and Marketing, HBR)
The buying funnel suggests that once the brand preference is built and the customer expresses his/her interest (in varying degrees, of course), the sales lead flows into the sales funnel. From this point on, the lead must be qualified, approached, and converted to a sale thereby sales lead turning into a customer. The sales lead that flow into the selling system could come from the marketing efforts and from the salesperson’s on ground activities including social selling efforts.
The sales force needs to perform different actions at each of the five stages of the sales funnel.
1. Lead generation: Expand the leads basket through activities, social selling
2. Lead qualification: Deep dive and develop intimacy with leads as follow-ups are pursued
3. Selling: Deploy the appropriate selling method to ensure the right value for the customer
4. Close: Conclude the sale and close the order
5. Service: Provide post-sale service to the customer
Clearly, the sales funnel throws up multiple sets of challenging tasks and responsibilities that must be managed and desired efficiency levels are achieved from stage 1, the starting point of the funnel. The leads that flow into the funnel must be treated with utmost care and the sales manager must ensure the following:
• The leads are adequate in numbers
• These are scanned for accuracy
• A great deal of intimacy is developed with the leads – what are the sources of leads? Inbound marketing? Referrals?
• Leads are approached with a sense of immediacy
The issue of immediacy requires complete attention and monitoring of the sales manager. Recent research has suggested that the biggest leakage in the funnel takes place due to a delayed response to a lead. Consider this: 1.25 million online leads were tracked and it was discovered that leads followed up within an hour had seven times better chances of qualifying as compared to leads followed after an hour. The chances were 60 times better as compared with leads followed up post 24 hours. Therefore, it is critical that sales leads are acted upon immediately and this is possible only if the sales manager-salesperson dyad is functional and efficiently managed.
Leads to Conversion: The Essentials for Sales Managers
The conversion rate in a sales funnel is a function of salesperson’s effort and attention and the supervision support that the sales manager must provide to his/her team. Responding to sales leads immediately is great but often persistence is missing which leads to early losses. Consider these facts:
• 48% of salespeople quit after the first contact
• 90% quit after the fourth attempt
• The remaining 10% are persistent with their sales leads and they find this rewarding; because 80% of the sales are closed after the fifth contact! These salespeople, therefore, are super productive.
Sales Managers must have a collaborative approach towards sales funnel management and should back it up with solid data analysis. They should monitor the leaks and delays at each stage of the funnel and understand the causes of success and failures. Few useful strategies are as under:
1. Don’t keep your prospects waiting: Get close to them immediately
2. All leads are not the same and they require the different intensity of approach and follow-ups: For example, the source of lead could be an indicator of the position of prospect in the buying process. A lead coming in the form of inquiry from a website (in case of cars, if it is coming from Cardekho.com) could suggest that the prospect is close to firm up his purchase intention. On the other hand, a lead coming from a paid advertisement, referrals could be from prospects at an early stage of the buying process.
3. Allocate leads wisely: Sales managers must use different filters while distributing leads amongst the team members. Some of these could be; skills, demography, salesperson’s expertise.
4. Patiently aggressive: Be aggressive with leads but do not give up easily. Persistence is the key and therefore timely feedback in the dyadic relationship with your salesperson will help a great deal. Make your salesperson realize that even the so-called “bad leads” are hidden opportunities waiting to be harvested, provided meaningful connections are maintained.
5. Learn like a Machine: Measure the success and failure at each stage of the funnel. Learn from the events leading to such developments. Develop strategies to avoid failures and ramp up success rates.
6. Salesperson as a unit of analysis: Aggregate analysis is good; the better strategy is to examine individual salesperson’s funnel performance. This could throw insights that can be useful in improving sales funnel performance on an aggregate basis.
Sales Managers would benefit a lot from understanding the linkages of salesperson’s motivation, opportunity, and ability that drives the efficiency of the sales funnel. Clearly, managers who excel in sales planning and manage sales force motivation are the winners in the crucial sales warfare; sales funnel management.