Do you have enough sales leads to hit your revenue targets? Is your sales team’s close rate high enough to reach your sales quota? Is your average sale or deal large enough to consistently make your numbers? Do you know which sales and marketing levers to pull to optimize your funnel quickly and efficiently?
If you have a hard time answering any of these basic sales and marketing key performance indicator (KPI) questions, you’re not alone. Many B2B businesses have great difficulty understanding the KPI metrics that impact their sales and marketing funnel’s performance. Why? It all comes down to money, resources, and expertise. They don’t have the internal business intelligence resources, custom CRM reports, and experience to capture and analyze their sales and marketing data effectively. Today, many companies also have serious issues with poor CRM adoption. In fact, a 2014 survey by CSO Insights reported that less than 37 percent of salespeople actually use their company's CRM system. With the billions spent on CRM system deployments every year, this is a huge problem. This is especially true if you want to measure the sales and marketing team’s performance based on data in the CRM system. To make matters even worse, salespeople often rely on yesterday’s anecdotal evidence to estimate their sales and marketing pipeline instead of taking a big picture data-centric approach to their sales and marketing efforts. Sometimes CEOs even fall into the irrational trap of assuming there is too much historical variability in the sales funnel to spend the time and resources to model it. In our experience, taking any of these shoot-from-the-hip approaches to managing your sales and marketing funnel is a serious strategic mistake that will eventually hurt your bottom line.
As management consultants always like to say, you can’t manage what you don’t measure. Consequently, to truly begin to understand your problem, you need to develop an accurate model of your sales and marketing funnel. The good news is anyone with basic Excel skills can easily discover their KPI metrics by conducting a simple two-stage sales and marketing funnel analysis. A two-stage sales funnel analysis models the top of the funnel (TOFU) and the bottom of the funnel (BOFU) and the key high-level variables that impact the input and the output of the funnel. How does it actually work?
With a simple two-stage funnel analysis you have three inputs:
By taking these three input numbers and doing some simple multiplication, you can see the actual impact of adjusting each input on your sales revenue. Building a basic two-stage sales funnel model like this is fairly straightforward in Excel. To be honest, if you do a Google search you can find plenty of examples on how to create a sales and marketing funnel spreadsheet analysis. However, the really tough part is finding a simple funnel model that is easy to use and can represent your business model accurately. This is absolutely crucial because when you discuss the model with members of your sales and marketing team, they need to be able to quickly grasp how the model works and the relationships between the input and the outputs. Otherwise, you’ll have trouble getting buy-in from fellow team members and you may actually have issues with getting sales and marketing in complete alignment. So to save you the time and effort of creating a sales and marketing funnel model from scratch in Excel, we’ve created an easy-to-use two-stage model that virtually anyone can use.
With DMZ Interactive’s easy-to-use online sales and marketing funnel calculator, you can perform a basic what-if analysis to determine the impact of increasing your lead volume, close rates, or average order size. With this practical and valuable information you can then determine where to focus your sales and marketing optimization efforts. Admittedly, while not a comprehensive analysis, it will allow you to perform a quick sanity check on your sales and marketing funnel to determine if you need to make adjustments to hit your numbers. The true beauty of the two-stage funnel model is its pure simplicity. It only measures high-level inputs and allows you to avoid getting bogged down in the ongoing esoteric debate about highly informed buyers taking non-linear journeys. With this simple model buyers can skip funnel stages and it really doesn’t matter. The stages in the middle can be a black box. Buyers can even jump stages or enter the funnel at different points. The end result: You’ll know whether to look at the top, middle, or bottom of the funnel and where to focus your efforts for the most ROI. You can then dive in and do a more in-depth analysis with a more granular toolset to evaluate the ratios between things like the close rate on sales-ready leads or middle-of-the-funnel (MOFU) leads.
So once you know the sales and marketing levers you need to pull, what’s next? Creating a basic funnel model is just the starting point of understanding what is broken and where to focus your time and resources. First a little disclaimer: we are fully aware that there are critics of modeling your sales and marketing stages using a funnel concept. There are well-publicized blog posts out there that actually say the “sales and marketing funnel concept is dead,” or “marketing can no longer rely on the funnel.” While there is some truth to this criticism and we completely agree that B2B buyers often don’t follow a linear path through your sales and marketing funnel, we completely disagree that creating models of your funnel and a what-if analysis is a pointless exercise. Why? Very few of the vocal critics of the sales and marketing funnel concept provide a viable alternative to modeling your sales funnel in stages. If they do, they are often selling some complex proprietary model analysis tool or an opaque consulting services methodology that is self-serving at best. In our opinion, the real and practical solution is to create even more granular sales and marketing funnel models that provide deeper visibility into the complex buyer’s journey. To us, there is no one-size-fits-all sales and marking funnel when you go beyond a two-stage funnel model. In our experience, each funnel model must be customized to represent each customer segment and buyer persona. To understand and model today’s buyer behavior requires a deep understanding of the stages each buyer goes through during the customer lifecycle.
So now you’re armed with new information from your funnel model and you’ve identified that you actually have a problem inside your sales funnel: what’s next? The next step is to drill down into that area of the funnel. For top of the funnel (TOFU) and middle of the funnel (MOFU) issues, this starts with an in-depth analysis of your buyer’s attributes, trigger events, demographics and search behaviors (intent). Fundamentally, you need to understand how prospects and suspects become aware of your product or service. More specifically, you need to identify all the potential channels they could use to discover your brand and your content whether online or offline. Once you‘ve determined how they discover your brand, you need to analyze their buying process (a.k.a., buyer journey) or the criteria they are using to make the purchasing decision. Developing a comprehensive awareness of your customers’ behavior typically starts by creating buyer personas to capture and model this information. (If you’d like to learn more about persona development and modeling, stay tuned to our blog: we will be publishing future posts on the subject.) With your persona modeling in hand, you can now validate your funnel model stages against each persona and determine if you’ve captured the appropriate level of granularity in your sales and marketing funnel model. Creating realistic persona models will allow you to address the apparent non-linear behavior of your buyers. You can also assess whether the content you are creating and publishing is in alignment with their buyer intents. For addressing BOFU issues, you’ll need to scrupulously analyze data from your CRM system. For example, you’ll want to evaluate opportunity close rates, deal sizes, sales activities with opportunities, and sales cycle length based on customer segments and lead sources. Data from one-on-one sales pipeline review sessions will also provide insight into issues within the sales funnel. With this analysis you will be able to determine why deals are not closing and if you need to make adjustments to plug leaks in the BOFU section of the sales funnel.
With the basic analysis of the two-stage funnel data and insights into customer intent and behavioral data in hand, you can now synthesize a roadmap to address each weakness within the sales and marketing funnel. For example, if you have determined that you have a lead volume problem and need to increase the sheer volume of leads entering the top of the funnel, you’ll most likely need to create inbound lead generation programs that produce more leads.
Typically, online B2B lead generation programs include:
More conventional marketing approaches could also include:
Of course, what you decide to invest in and how you actually allocate your budget will always depend on the amount of funds available and how expensive the media channels are for your target audience. After you have established a budget and your lead generation goals you can begin to create and execute a marketing program to achieve these specific lead generation targets.
OK, so you have an action plan, you’ve started to execute, and you’ve increased your lead volume but a very small percentage of leads are ready to engage with sales or make a purchase. More specifically, sales is having a really hard time trying to close these TOFU leads. So now what? This is where applying what you’ve learned from developing your customer personas comes in handy. At this point, you’ll need to develop an engagement strategy that draws customers deeper into the buyer journey. In most cases this involves developing a content strategy that deeply engages the buyer and creates a desire for them to learn more about your services, establishes trust, or shows them how you can solve their problems. Strategically, you’ll need to create a content engagement program that moves the buyer closer to the point of being ready to engage with sales or make a purchase. In addition, you will need to heavily leverage the data from Google Analytics to determine if leads and customers are engaging with your content. For example, you’ll want to track behavioral Google Analytics stats like page views, average time on page, and bounce rates for content that you publish to your website. This will allow you to determine if people are actually reading and engaging with your content. Doing so will allow you to verify if your content strategy is actually on track.
In the B2B marketing world, typical content engagement tools include:
If you are fortunate enough to be able to offer a free trial of your product or service, that is another great way to foster engagement and move customers deeper into the sales funnel. However, free product trials have some serious downsides when it comes to actually converting leads into sales. Even SaaS products that fall into the self-service model can have these issues. This can drive up customer acquisition costs and kills the profitability of the business. In the SaaS software market, providing free trials or a demo today is almost an essential part of the early-stage sales process. The really tough part is making sure customers actually try and use the product during the trial period. Making this happen is critical to getting free trials to convert into actual customers. This is where the technology of instrumenting your SaaS software application to record trial logins and feature usage is critical to fostering engagement and adoption of the product. With real data on actual product usage, you can determine where customers are getting stalled in using the product. From there you can develop a strategy to address the problem. You can then either fix the product by addressing the issue that is preventing user adoption or you can provide automated customer support to intervene when customers get stuck.
Now that you have a content strategy and content creation roadmap, you need to publish and promote that new content.
Most of the time companies leverage their website as the primary platform for publishing content. However, the website is a passive medium for engaging customers. To actively promote your content you have four primary options:
For B2B marketers, email marketing is the current tool of choice to quickly and efficiently disseminate new content to existing leads and prospects. More sophisticated marketers with deeper pockets are deploying integrated marketing automation systems like Marketo, Pardot, and Eloqua to actively engage with leads. These systems allow marketers to conduct complex, targeted multi-stage lead nurturing programs (e.g., email drip programs) based on triggers, segmentation criteria, and behavior data like website page visits and email link clicks. With a powerful marketing automation system in place you can proactively stay top of mind with your customers and prospects. Most recently, the latest innovation on the marketing automation scene is to provide a contextualized website user experience based on segmentation data in the marketing automation system. This commonly known as real-time personalization and is the absolute holy grail for online marketers since it allows messaging to be fully customized across channels. Ultimately, by creating a more personalized user experience you will increase engagement and drive more conversions and sales.
Now that you know what to do, now go do it!
Need some help optimizing your sales and marketing funnel? DMZ Interactive specializes in helping companies fix their sales and marketing funnels. From Google Analytics data analysis to implementing marketing automation systems to creating complex pipeline analysis reports in Salesforce, we can help you fix your funnel and accelerate your growth and revenue. Give us a call for a free no-obligation consultation.