Revenue Funnel Science is a methodology for managing, forecasting and optimizing your marketing and sales funnel. It starts with building a foundation of core measurements — including funnel movement, conversion rates, velocity and aging — and then connecting the dots with reverse engineering goals, forecasting and comparison analysis.
When talking about a revenue funnel, it is easy to talk about a single overall funnel for a business. But in reality, 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 your data into sub funnels is where you really learn the details of your business. By comparing all of the key variables across different sub funnels, you can identify where the biggest areas of needed improvement are or what changes can lead to more effective revenue growth.
The exact sub funnels that you should use will depend on your business. Illustrations of the value of sub funnels can be found in many different businesses. For example, the overall main funnel for a business may show they are on track for their revenue goals, but breaking down their data into sub funnels could show that half of the sales team is exceeding goals while the other half is falling short. Funnel comparisons are where deeper insights are oftentimes found and can then be used to optimize and improve overall results.
Marketing Sub Funnels
The two most common marketing sub funnels are lead source and campaign. There are pros and cons with each approach.
Lead source is an easy way to track where leads are being generated from, as long as this data is captured in your marketing automation or CRM platform. A recommended best practice is to differentiate between lead source categories such as “Tradeshow” and lead source details like a specific tradeshow event. Creating sub funnels by lead source allows you to compare overall lead source performance, and the lead source details allow you to drill in for greater specifics.
A challenge with lead source; however, is that it is one-dimensional. In many organizations, marketing touches a lead multiple times before it is ready to go to sales or during the sales process. Looking only at lead source may not tell the full story of what influenced the lead to move forward in the funnel.
Campaign sub funnels address this challenge by allowing you to see sub funnels for each of your campaign activities. Similar to lead source, a good best practice is to look at both campaign categories and individual campaign details.
But campaign sub funnels also introduce additional complexity because you need to determine how to properly assign credit or attribution. If a lead is touched by multiple campaigns, how do you determine which touch caused it to move forward? The science of campaign attribution is a detailed topic that remains problematic for many marketers today.
Organizations should start by picking either lead source or campaigns as their primary marketing sub funnel. More mature organizations may choose to use both.
Sales Sub Funnels
On the sales side of the organization, there are multiple approaches to sub funnels as well.
For smaller organizations, it is helpful to look at sub funnels by each individual sales rep or account executive. In a sales team of 10 or less, comparing performance across the sub funnels for each team member can be very helpful to identify performance gaps and areas for improvement.
But for larger organizations, looking at sub funnels for each individual sales rep may be cumbersome. If you have 100 sales reps, that may be too much data to easily digest, plus different reps or teams may have different focus areas that prevent them from being true apples-to-apples comparisons. For larger organizations it is often better to look at their sales sub funnels by sales team or by sales manager. This way you can compare different teams and the performance of different managers against each other.
Other Business Sub Funnels
Most businesses have at least one or more dimensions that be used for additional sub funnels, but those dimensions tend to vary by the business. For example, geography or region may be important. Or in a different business, looking at sub funnels by target industry is very helpful. Other examples I have seen include looking at sub funnels by product, product line, business unit and deal size.
Best Practices for Sub Funnels
If you are just getting started with Revenue Funnel Science, I suggest starting with three sub funnels:
- One marketing-focused sub funnel (typically either lead source or campaign)
- One sales-focused sub funnel (typically sales rep or sales team, depending on your organization size)
- One other business sub funnel depending on what is most important to your business (for example, product, region, target industry, business unit, etc.)
Three sub funnels are a good starting point because they can provide valuable information without being overwhelming. Then as you continue to grow with your use of Revenue Funnel Science, you can layer on additional sub funnels as you are ready. Ultimately, sub funnels are a very powerful tool to help you understand your overall marketing and sales funnel and to answer critical questions about your business.
Learn More about Sub Funnels and Managing Your Revenue Funnel
Download my digital book, “Revenue Funnel Science: How to Optimize Your Marketing and Sales Funnel,” and follow the FunnelWise blog.