The Data-Driven Sales Funnel

The traditional sales funnel is a stage-based approach to turning prospective leads into buyers. Picture a real funnel into which you pour liquid; capturing a lot of material on top in order to direct it into a narrow, specified location at the bottom. This is a perfect analogy to what actually occurs in the sales process, where information starts out broad in the beginning and gets incredibly granular towards the end.

Implementing a sales funnel helps business development leaders understand its entire sales cycle. Through consistent processes, leaders derive quick insights on how its sales organization attacks their market. In turn, small insights inherently uncover areas for incremental improvements within the process. This goes for everything from tactical approaches to business development research to the underlying characteristics that make said prospects qualified enough to engage in the first place. The revealed trends, both good and bad, equip leaders to identify effective tactics and expose inefficiencies.

Yet, despite obvious benefits, 68% of businesses fail to clearly identify its sales funnels, let alone measure success. Ultimately, the absence of proper guidelines for engaging leads and prospects makes it difficult, if not impossible, to clearly understand the levers that determine what turns them into actual paying customers.

For most organizations, the problems behind launching a sales funnel are central to data management. Think about how much contact and account data your sales team needs just to prospect. Then, from a managerial perspective, think about whether the actual activity and outreach happening from the sales floor is captured to measure effectiveness. As valuable as the sales funnel is, it’s only useful when paired with reliable data pertaining to each stage of the sales cycle.

In our current digital landscape, change has a way of accelerating trends. The buyer’s journey is no exception to this rule. The information age has led to a dream state for procurement professionals. Similarly, buying habits change at a rate that have made tactics, once considered effective just five years ago, outdated. And such, what was once a straight path down, the sales funnel is now more of a winding road.

Bottom-line: a one-size-fits all approach to defining a B2B sales funnel isn’t likely to result in much success.

Today, every buyer is different. But the one thing that remains consistent among them is that they start their buyer’s journey with an online search.

Consider the following statistics:

• 68% of B2B customers prefer to research independently online (source)
• 60% of buyers would rather not communicate with sales reps as their primary information source (source)
• 71% of buyers begin with a generic search query (source)
• 73% of millennial workers are involved in decisions to purchase products or services for their companies (source)
• 84% of CEOs and VPs use social media to make purchasing decisions (source)
• 67% of the buyer’s journey is now done digitally (source)

Gone are the days when the salesperson can act as a gatekeeper of information, forcing the buyer to have to meet with them throughout the information-gathering stage. Prospects have access to more information than ever. B2B procurement professionals and buying groups have an endless portal to which to conduct a huge amount of research before making a purchase. And make no mistake — buyers prefer self-service.

Enter, data.

With business development professionals seemingly in less control over the funnel, forward-thinking organizations are creating data-driven, go-to-market frameworks, and maximizing sales through accelerated, hyper-targeted outreach to the right prospects, at the right time.

Related Infographic: Ultimate Guide for Sales Outreach in 2020!

How data can help guide prospects through the sales funnel

While typically depicted as a simple four step visual, modern sales professionals should be simultaneously thinking about two different funnels in various snapshots that account for the different perspectives of the buyer and the seller, respectively.

Awareness

Buyer Perspective

At this stage, potential customers have diagnosed pain points and are beginning to conduct preliminary research about available solutions in the marketplace.

As the widest section of the funnel, the main purpose of this stage is to improve the visibility of a brand and demonstrate expertise by accommodating prospects value-centric, top of funnel resources. The focus is visibility and domain authority.

Seller Perspective

For business development professionals, moving a prospect from the Awareness stage to Interest stage requires sales intelligence that goes beyond standard firmographic data points, like management level, job function, alongside firmographic classification, like company size.

Instead, deeper insights about a target account are required:

• Does the organization outsource key components of its business?
• What technologies does the organization use?
• How many employees sit in the particular job function a solution supports?
• Does the organization have multiple locations?

Access to sales intelligence will inherently categorize business dependencies, pain points, and ultimately help establish segments. Its made up of the following:

• Total Addressable Market (TAM): The entire spectrum of prospective buyers who could potentially use a product — even the outliers. Once you’ve calculated your TAM, you can start to narrow it down.
• Ideal Customer Profiles (ICPs): An ICP is a categorical description of a potential buyer that would benefit significantly from an offering. The micro-segment inside a TAM represent prospective buyers that are likely to hold the high Customer Lifetime Value (CLV).
• Buyer Personas: The average size of a B2B purchasing committee is quickly approaching double digits. Needless to say, while accounts buy, ultimately, people decide. And just like an ICP can be segmented into various cohorts, go-to-market teams should understand how to engage various stakeholders, influencers, decision makers and – gasp – gatekeepers involved in the purchasing process. Keep in mind, each may represent a different department, with various — or even competing — agendas.

Related blog: How to Manage Expectations Around Marketing Vanity Metrics

Interest

Buyer Perspective:

At this stage, the prospect is actively looking for solutions to improve business outcomes. Understanding just how active a prospect is can be measured through third-party intent data, such as surges in online search and consumption of content related to specific topics related to a product or service.

Conversely, first-party data reflects activity directly in response to internal sales and marketing efforts, such as surge in anonymous traffic to web domains from specific companies, and the ability to capture and map behavior to conversions such as downloading an eBook or signing up for a webinar.

Seller Perspective:

Remember, at this point in the funnel, a buyer is already aware and actively looking for a solution in the marketplace. The interest stage is all about driving the continued interest of a solution. Success at this stage requires go-to-market teams to decipher which channels and messaging turns prospects into customers.
Understanding these conversion points is imperative because it can determine how and when salespeople should intervene.

In order to optimize sales activities during the interest stage, sales reps should understand the data that qualified the lead in the first place. In other words, the lead is qualified and going through an education process, heavily rooted in how to buy. Get in their head with the following data-driven insights:

• Intent data: When it comes to intent data you can analyze either internal or external.
  • Internal intent data refers to the campaigns a company is running, and who is responding to them. What actions has a prospect taken on your company website? What kind of content are they downloading?
  • External data, on the other hand, refers to the relevant topics a company is researching online.
• Social Media Data: Another kind of data that often gets neglected is social media behavior. Has your prospect followed you on social channels? What content are they engaging with and how can you then use that information to tailor content that matches their interests?

Related blog: What is intent data?

Consideration

Buyer Perspective

In the consideration stage, leads are officially converted to sales qualified opportunities and are viewed as prospective customers. They have a clear understanding of what their problem is, the solutions that could solve it, and what their budgets are.

Seller Perspective

Data is imperative to progressing through the consideration stage because it’s when sales is finally actively engaged with a prospect and identified an open opportunity. The heavy lifting happens here. So the more data they can get a business development can get their hands on, the better prepared they can be to guide qualified leads through this process.

Deeper Company org charts and Intelligence

You may have done top of funnel outreach to various buyer personas at the outset of the qualification process. More homework is often required at the consideration stage.

It’s not just understanding the challenges the various personas within a sales opportunity face, but rather, conveying the tangible business value a solution can offer to alleviate those specific challenges and achieve desired results.

Decision

Buyer Perspective

The light at the end of the sales funnel tunnel — at this final stage of the funnel, qualified leads know everything there is to know about their pain point, the best solution for the problem, and are ready to select the provider to buy from. At the consideration stage, questions are mostly vendor-driven, as they are trying to decide what’s going to give them the best bang for their buck.

Seller Perspective

For business development professionals, the bottom of the funnel is when they must reaffirm trust and reinforce the fact their solution can in fact solve a prospect’s problem better than competitors in the marketplace. Regardless of outcome, with sound data-driven practices, your funnel can improve exponentially through the following:

• Product Data: As prospects consider purchasing, an implementation plan will be discussed. Here is where prospects will start asking the nitty gritty questions, trying to find holes in the solution. Extensive product knowledge is a given for business development professionals, but here is where you can identify blind spots hidden further up the funnel.
• Final Proof of Concept Content: While moving prospects from the top of the funnel requires content, the bottom funnel should take the same approach — with even more hyper-targeted messaging. Presumably, the sales side will have a sound understanding of what the prospect needs. Forward-thinking business development teams marry fact finding exercises with proof of concept content to underscore how its solution helps the prospect.
• Feedback Loops: The decision stage is when organizations must take the time to synthesize data amassed at the preceding stages of the funnel in order to recognize trends that can influence future performance. By connecting insights from closed won and closed lost sales, you can 1) identify similar accounts to go after and 2) recognize what led to a closed loss decision.

New ideas, strategies, or campaigns often fail when there are no efforts made to actually track how well they impact overall quota attainment — and the sales funnel is no different.

While the funnel is important to understand, it’s even more important to recognize if it’s working or not. That is, are prospects moving through it, or do they get stuck somewhere in the middle and fizzle out?

What are key ways to track sales effectiveness at every stage of the funnel?

Activity Metrics

Regardless of tracking source, activity metrics quickly provide sales leaders an understanding of how much work it requires a business development team to generate revenue:

• Total Unique Prospects Worked → Connections/replies made: How many prospects do you have to reach out to in order to make a connection?
• Total Connections → Demos Created: How many connections does it take for one of them to ask for a demo?
• Demos Scheduled → Demos Completed: How many demos that were scheduled actually happened, in other words, what were the quality of demos booked?
  Demos Completed → Pipeline Created: How many demos completed resulted in someone moving into the sales pipeline?
• Pipeline Created → Closed Won: How many prospects who entered the sales funnel resulted in a closed won sale?

Sales & Marketing Alignment

Alignment between sales and marketing is critical to the success of a sales funnel. What does good look like? Baseline metrics can give an organization a clear picture:

• Marketing Qualified Leads→Sales Accepted Lead: Marketing Qualified Leads (MQLs) are leads that marketing deems are qualified and ready to be contacted by a sales rep, based a response or multiple responses to campaigns. This could be filling in a web form or downloading an ebook. So how many MQLs are successfully converted into sales accepted leads?
• Sales Accepted Lead→Sales Qualified Lead: Sales Accepted Leads (SALs) are MQLs that have been passed on to sales reps, who should contact them as high-priority leads and convert to a business opportunity. The question then becomes how many SALs turn into sales qualified leads (SQLs)?
• Sales Qualified Opportunity→Closed Won/loss: Sales qualified leads (SQLs) are prospects that have been contacted by a sales rep to explore their interest and actual capability to purchase. Leads become sales qualified once they have a clear idea of what they need in a solution, know their budget, and have been nurtured by marketing and sales. Once they’ve been qualified, they can move down the sales funnel, eventually either closing a deal, or not. How many SQLs end up making a purchasing decision?

Outbound Sales KPIs

Outbound sales refers to the process of initiating customer engagement without leads having expressed any kind of prior interest — so your classic cold calling, mass email kind of outreach.

• Number of accounts contacted→Total Targeted Universe: The number of accounts contacted refers to the total number of companies that our outbound SDRs have prospected to. One company might have multiple points of contact. How many accounts contacted resulted in the right people getting informed about the product?
• Number of accounts engaged→Total Number of Accounts: The total number of companies that have responded to our outreach. It’s critical that the SDR and AE teams agree on what level of contact is required before the account is converted to a sales opportunity. At this stage, many companies become obsessed with tracking sales activities, especially if they’re doing outbound sales. While there is value in tracking activities like the number of calls made or emails sent, you can’t hang your hat on a seventeen-part cadence and having your SDRs call it 17 activities. Your SDR leaders need to be able to put these key inputs in the context of driving the right outcomes.
• Number of accounts engaged→Total Pipeline Created: Based on the number of accounts engaged, how many actually entered the sales pipeline?
• Total Pipeline Created→To Closed: Of the accounts that entered the pipeline, how many were closed won or closed lost?

Related blog: 3 Key Sales Productivity Metrics