Everyone in Marketing and Sales and on the executive team knows about the “lead-to-revenue funnel.” A well-running funnel is vital to your company’s success. And the key to building a well-running funnel is creating efficient funnel stages.
These stages increase revenue by allowing Sales to focus on those individuals and accounts most likely to result in a closed/won deal and also those ready to engage with a salesperson.
Efficient funnel stages also shorten sales cycles by enabling Marketing and Sales to more quickly, easily identify and remedy issues with a lead’s or deal’s progression to closed/won status.
Yet—if you’re like most companies—depending who you talk to, you’ll probably hear a different take of how well your funnel functions. That’s because it’s easy to over-complicate a funnel when you first build it. Then, over time, funnels tend to break down as different teams with different goals, focuses and contexts modify the funnel to meet their own needs. The funnels become too complex. And when funnels are too complex, often what happens is:
Does this sound familiar? It did to leading marketing automation provider Act-On Software, too. That’s why I recently helped Act-On completely rebuild its lead-to-revenue funnel. Through the process, together we learned an incredible amount about what works and doesn’t work when it comes to lead-to-revenue funnels, and enabling your Sales and Marketing teams to succeed. Here’s the skinny:
The Building Blocks of an Efficient, Effective Funnel
First, some basics. A high-performance funnel stage:
Here’s an example of a lead-to-revenue funnel whose terms, definitions and triggers abide by these guidelines:
An inquiry whose web activity is tracked but whose identity is not yet known.
An individual whose email is known but who has not yet taken any action to achieve success in a program (such as downloading content, visiting your tradeshow booth, registering for webinars, clicking on your website, etc.).
A Known individual who is actively engaging in Marketing activities and/or achieving success in a program (i.e. downloading content, visiting your tradeshow booth, registering for webinars, clicking on your website, etc.).
Marketing-Qualified Lead (MQL)
A Responded individual who reaches the agreed-upon lead score threshold and is passed to Sales for follow up.
Sales-Accepted Lead (SAL)
An MQL with whom Sales schedules a live or online appointment.
Sales-Qualified Lead (SQL)
An SAL with whom Sales completes the appointment and deems as having future potential.
An SQL for which Sales defines Budget, Authority (decision-maker), Need and Timeline (BANT).
An Opportunity won or lost, or for which there is no outcome; upon closing, the Opportunity is removed from pipeline reports.
Seems straightforward, right? But if your lead-to-revenue funnel lacks the clarity and consistency outlined above, it’s time to rebuild it.
How to Rebuild Your Funnel in 10 Easy Steps
Contrary to popular belief, rebuilding your funnel doesn’t have to be a long, arduous project. Here’s a best practice tried-and-true (by us) to get you there.
1. Identify key members to participate on a cross-functional team. You want to form a cross-functional team (CFT) comprised of two segments: a working team that develops, implements and monitors the new funnel; and an executive stakeholder team that reviews, approves and supports your new funnel stages.
Your working team needs to meet weekly, at a minimum—we found we met sometimes two or three times per week in order to stay on the same page. Your working team should consist of:
Obviously, the size of your CFT depends on your company size—the smaller the company, the greater the chance a single person handles one or more of the above duties. The key thing to remember is you want on your CFT people who are experts in their respective areas and empowered to make decisions on their team’s behalf. Our CFT was quite sizeable, so it was important for us to maintain regular communication throughout the process in order to ensure we had buy-in from all parties.
Your executive stakeholder team needs to consist of the following (or your company’s equivalent):
Meet with this stakeholder team at the project onset to gather their specific opinions and criticisms of the existing funnel/funnel stages; then meet with them frequently enough throughout the project to obtain their approval on, support for and potential changes to key elements before you move too far ahead with your funnel re-design.
You might be surprised to see CFO had a spot on this list, but remember, your lead-to-revenue funnel is much more than just a marketing/sales issue—it touches all aspects of your business’ success.
2. Audit existing funnel stages. After you brief the CFT on why rebuilding the funnel benefits your company—and them—work with your CFT to collectively and systematically outline your existing funnel. For each funnel stage, identify:
Auditing your existing funnel should be a relatively easy part of the funnel overhaul process. If your CFT struggles to complete the above steps, you either have the wrong people on your CFT, or your funnel is so broken that your CFT’s time is better spent developing new funnel stages, rather than autopsying old ones.
3. Establish baseline metrics for existing funnel stages. Once you’ve identified your existing funnel stages and process, it’s time to gather metrics. You’ll use these funnel metrics to identify any remaining issues and also as baselines against which to measure upcoming improvements.
You typically want to establish baselines using the most recent 12 months of data; if, however, you recently changed your go-to-market strategy significantly, you may opt to shorten the timeframe for your data pull to make the data as relevant as possible.
Gather as much of the following data as possible within your current environment, all based on net-new:
Once you have your baselines, you can compare that data against industry funnel averages to see where your existing funnel over- or under-performs (both Forrester Research and SiriusDecisions provide this type of funnel data; SiriusDecisions also can customize their funnel data to make it as relevant as possible to your company’s specific demographics and firmographics).
4. Agree on proposed new funnel stages. This is where it gets fun. Taking into account everything you learned and the goals for your new funnel, gather your CFT to identify and agree upon what the new funnel needs to look like.
Remember the rules outlined earlier—each funnel stage needs to:
I find it easiest to start at the top of the funnel and work my way down. And start fresh—don’t try to Band-Aid existing funnel terms, definitions and triggers.
5. Gain buy-in from executive stakeholders. Once the CFT develops and agrees to new funnel terms, definitions and triggers, it’s time to gain the approval and support of your executive stakeholders. But don’t just present those elements—at the beginning of your presentation:
Then present your new funnel terms, definitions and triggers. And be ready to explain or defend your recommendations. C-level executives may not be as deep into the funnel data as your CFT—don’t assume their questions are criticisms. Rather, use this project as an opportunity to educate them on all things funnel, gaining their respect and trust in the process.
6. Implement and test new funnel stages. Once the executive stakeholders approve your new funnel stages, it’s time to put your new funnel into action and then test it. Things to keep in mind:
7. Launch to Sales. After working through any issues found during testing, it’s time to launch your new funnel to the rest of the sales and marketing teams. Here are a few tips:
8. Go live with new funnel stages. Finally—it’s time to go live! Things to keep in mind:
9. Monitor and measure. Once your new funnel is live, it’s important to monitor it and measure the progress made with it.
10. Tweak as needed. Finally, you need to remain open to tweaking your new funnel as needed over time. But it’s a fine line—you don’t want to over-complicate it along the way. To avoid the funnel complexity creep mentioned earlier:
There they are—10 easy (ha) steps for rebuilding your lead-to-revenue management funnel. In conclusion, if you suffer from indistinct, complicated lead-to-revenue funnel stages, you’re wasting marketing dollars and wasting your sales team’s time. With this clear, 10-step process, you can quickly rebuild your funnel, regain your sales team’s trust and generate more pipeline for your company.
Have other tips for rebuilding a B2B L2RM funnel? Share them here.