Manage and strengthen the sales funnel
Do you want more success in sales? Then it's important to master and strengthen the sales funnel. In this article you will read how to achieve that.
What is the sales funnel?
The sales funnel is a visual representation of the buying process. The funnel runs from getting to know leads to bringing in the customer.
The sales funnel is used to:
- Get a grip on the marketing and sales process.
- Learn and improve based on results.
- Make the sales process consistent and clear for everyone.
- Understand where problems occur in the sales process.
- Calculating how many visitors, leads and customers you need to achieve a certain sales target.
- Make as accurate as possible estimates of expected sales.
Sales funnel vs marketing funnel
Marketing and sales funnels used to be two separate processes. Marketing handled a marketing funnel that ran from visitors (from a website) to leads. These leads were transferred directly - that is, cold - to Sales. Then Sales took over and handled the sales funnel that ran from (cold) leads to winning the order.
Today, this image is rightly seen as old-fashioned. This is because you create two incomplete and separate images of the buying process. In addition, there is little or no cooperation between Marketing and Sales. In inbound marketing we see the sales and marketing funnel as one entity.
We therefore consider a CRM system not as a sales tool, but as a sales and marketing tool. We strive for an integrated picture where Marketing and Sales together contribute to bringing in and keeping customers. Even better: to obtain a fully integrated picture, we must also involve Service in the process, because the Service department makes an important contribution to customer retention.
Funnel or better cycle?
Opinions are divided on whether the buying process should be visualized as a funnel or funnel. 'Sales funnel' may not be the most appropriate term for what it stands for. Nevertheless, we continue to use it because it is an established term and the focus is still on bringing in customers. In the integral sales funnel model, we assume a lead is generated online. It looks like this:
Proponents prefer the funnel because leads or customers fall off at each stage of the funnel. This is because at each stage the chaff is separated from the wheat and a better match remains. For example, only a portion of your website visitors perform an action that turns them into leads. And only a portion of leads eventually convert to customers.
Opponents of the funnel model stress that the whole process should be a cycle. After all, a customer can become a lead again, for example, for a more expensive or different product or service. For many companies, this is even an objective (up-sell and cross-sell)
The funnel at HubSpot
HubSpot also uses a cycle for the inbound model, but has simplified the cycle to make it universally applicable within Marketing, Sales and Service.
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Attract - attract visitors, leads and customers.
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Engage - activate visitors, leads and customers.
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Delight - exceeding the expectations of visitors, leads and customers.
Sales funnel vs. buyer journey
The sales funnel is an inside-out model. We reason from the perspective of the company and therefore not from the customer. The company wants to convert a visitor to a lead, or a lead to a customer. While this is a very useful exercise, it is not enough to look at the buying process in this way alone.
In the buyer journey, the roles are reversed. Here, the buying process is modeled from the customer's perspective. In fact, the customer's needs are at the center of the inbound method.
Calculating the sales funnel
The advantage of the sales funnel is that it allows us to make calculations and predictions.
For this, full set of conversion data is needed for closed-loop reporting. In other words, you need to be able to follow a website visitor up to the moment of order. HubSpot's software makes this possible.
With this data, you have all the funnel percentages in view. These are also called conversion rates. You then know:
- How many visitors you need on average for one cold lead.
- How many cold leads you need on average for one warm lead.
- How many warm leads you need on average for one order.
Funnel calculations from a revenue goal
Armed with the funnel percentages, average order value and revenue goal, you easily calculate the entire marketing and sales funnel. You calculate:
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How many customers you need to reach the sales target: Sales target / average order value = number of customers
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How many warm leads you need to achieve the desired number of customers:
Number of customers / conversion rate warm lead → customer = number of warm leads
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How many cold leads you need to achieve the desired number of warm leads: Number of warm leads/conversion rate cold lead → warm lead=number of cold leads
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How many website visitors you need to achieve the desired number of cold leads: Number of cold leads/conversion rate visitor → cold lead=number of visitors
Revenue forecasts
In the same way you make calculations, you can also make predictions. For example, did you get 35 warm leads from Marketing this month? And do you know what the average conversion rate is from warm leads to customers? Then you also know approximately how many customers you will bring in.
Sales funnel example
Below is an example of a sales funnel calculation. To make the example as clear as possible, we use simplified (round) data:
Given is:
- Sales target = €5 million
- Average order value = €100,000
- Conversion rate warm lead → customer = 10%
- Conversion rate cold lead → warm lead = 10%
- Conversion rate visitor → cold lead = 10%
Outcome: The above example shows that you need 50,000 visitors to your website to achieve sales of €5 million.
Tip: read the image below from bottom to top, because the starting point is the sales target of 5 million euros.
Strengthen the funnel with sales & marketing automation
The reliability of calculations and predictions are completely dependent on your data. It is therefore crucial that marketing and sales data are integrated. Only then will you have a complete picture of the entire marketing and sales funnel.
In addition, Marketing needs to provide leads with the right information at the right time over and over again. This is how they get warmer step by step. Manually, this process cannot be scaled up.
An all-in-one Sales and Marketing automation platform helps with both challenges. In one environment, all marketing and sales data come together, resulting in a 360-degree lead and customer view. Plus, you have all conversion rates on your radar. The software is also able to classify and divide leads into lifecycle stages, such as Marketing Qualified and Sales Qualified. This makes the lead management process a lot more effective.
Marketing automation
Marketing automation helps the Marketing team scale up the lead nurturing process indefinitely. Marketing effortlessly provides leads with the right content that moves them forward in the buying process.
Sales automation
Sales automation automates repetitive sales tasks, such as email follow-up. In addition, deal management helps get the sales process in order.
Need help?
Do you have questions about the marketing and sales funnel? Our inbound consultants are ready for you. Call 085-7608181 or ask your question via the live chat (bottom right).
