Marketing and sales funnels are complex systems with many moving parts. As we prepare for the start of a new year, there are seven funnel mismanagement mistakes to discuss and plan for how to avoid in your organization.
1. Not having a view of the entire holistic system
The marketing and sales funnel is a holistic system, but in today’s business environment, it is common for businesses to try to split the funnel into multiple pieces. Marketers tend to live in a world of inquiries, Marketing Qualified Leads and other top of funnel metrics, and they build their own measurements of success. Meanwhile, sales lives in a world of pipeline, opportunities and other bottom of funnel metrics, and they are measured differently than marketing. By defining measures of success that don’t always align with each other, businesses leave gaps that ultimately undermine their ability to maximize overall funnel performance.
Learn more about how to view the funnel as a holistic system: One Funnel, Indivisible, with Visibility and Metrics for All.
2. Not having proper marketing and sales alignment
Marketing and sales alignment is one of the most important issues facing leaders in both professions today. While nearly everyone who has worked in one of those roles has felt or seen the pain of misalignment at some point in his or her career, the origins are complicated and the solutions are not always clear.
However, a great starting place for improvement is to make sure marketing and sales teams have an aligned view of the world, aligned goals and aligned people.
Read more about these best practices for alignment: Three Keys for Marketing & Sales Alignment.
3. Not having accurate funnel forecasts
Sales forecasting is both an art and a science. Most companies use a forecasting process that includes the following steps:
- Assign a probability (a percent) to each open opportunity
- Many times, the probability is based on the opportunity’s stage or forecast category
- Multiply the probability by the total opportunity value (dollar amount)
- Add up the results to arrive at total forecasted sales
The problem with this approach is that it is highly dependent on assigning the correct probability to each opportunity. Even if the probabilities are based on stage or forecast category, a sales person is still making a judgment about which stage or category to place their opportunities in. Many times those decisions are based on what their heart or gut tells them about an opportunity instead of fact and logic.
The result is sales’ forecasts that are frequently misleading.
Revenue Funnel Science is a scientific approach to measuring, forecasting and optimizing the entire marketing and sales funnel. When using the Revenue Funnel Science framework, organizations can build a forecast based on facts and data.
Learn more about how to build a better funnel forecast: 99% of Sales Organizations Make This Mistake With Their Forecasts.
4. Not having a clearly defined funnel blueprint
A funnel blueprint is a written definition of the stages or steps that an individual or organization goes through to become a customer of a company. In many businesses, it is common to have discussed these stages verbally, but to not put them in a written format or to have different opinions from marketing vs. sales about what they should be. Documenting funnel stages in a written blueprint that is agreed upon by both marketing and sales is a critical step that needs to be taken before companies can accurately measure, forecast or optimize funnel results.
Read best practices for defining or improving your funnel blueprint: Mastering Your Marketing & Sales Funnel Blueprint.
5. Not having the right number of leads at the right time
Most B2B marketers are under significant pressure to generate more leads, according to a recent survey. Research by B2B Marketing and The Telemarketing Company found that 59 percent of marketers are receiving “significant pressure” from upper management to generate more leads for their businesses. For anyone who works in B2B marketing or sales, this finding is likely not a huge surprise, as lead generation is the fuel that drives growth for many successful businesses.
But how do you know how many leads are needed and how does upper management set appropriate goals for their marketing and demand generation teams? As a CEO and business leader, I have struggled with this issue myself. The answer is you can set the right lead goals by reverse engineering your marketing and sales funnel.
Learn how to reverse engineer your funnel goals: How to Reverse Engineer Your Funnel.
6. Not having 80 percent or more of your sales reps achieving quota
Imagine if when you sent a package with UPS or FedEx, it only successfully arrived at its destination 50 percent of the time. Or if when you ordered at your favorite restaurant, they only brought you the correct dish 50 percent of the time. Either of these scenarios would be considered unacceptable, but if you are in sales, it is considered “normal” when only 50 percent of sales reps achieve their quotas. According to research by CSO Insights and others, only 50-60 percent of sales reps hit their quotas. In software and technology sales the number is even lower.
If 20 percent or more of your company’s sales reps are missing quota, it is a sign that your marketing and sales funnel is crying for help. Or a more correct way to say it would be, your marketing and sales funnels (plural) are crying for help. If you have 20 sales reps, then you really have 20 funnels. If 10 of the reps have missed or are missing quota, then 10 of your funnels are broken. My experience and the research have both shown that if a salesperson is missing quota, it is usually due to one or more of four common causes.
Read about those four causes and how to resolve them: Sales Reps Missing Quota Are a Sign That Your Funnel is Crying for Help.
7. Not having laser focus on the biggest areas of improvement for sales
When talking about a revenue funnel, it is easy to talk about a single overall funnel for a business. But the reality is that any business can and should have multiple dimensions by which their funnel is broken down by or sliced-and-diced. These dimensions create individual “sub funnels,” or a unique and specific view of your larger funnel.
The overall main funnel for a business tells only a small fraction of the story. The act of slicing-and-dicing data into sub funnels is where companies really learn the details. When comparing key variables across different sub funnels, you are able to identify where the biggest areas of needed improvement are or changes that when made can lead to more effective revenue growth.
Learn how to slice your funnel to identify the biggest areas for improvement: Slice-and-Dice with Sub Funnels.
Need More Funnel Management Tips?
Download the eBook, Revenue Funnel Science: EXPOSED.