A Leaky Funnel Decreasing Your Sales? Improve Your Pipeline Management
17 October 2014 Leave a comment
Ever since companies are using a pipeline to manage their commercial opportunities, many of them lost quite a few good sales leads. Companies started with a sales funnel, using cold calling and erasing leads who were not ready to buy. A few years ago, the environment changed, both customers and consumers started using internet to check out suppliers and products and were not interested in receiving sales people right away. So how are companies dealing with the new situation?
The attached video is a short introduction to sales pipeline management the way it’s normally implemented within various companies.
In the beginning, Sales was responsible for the entire pipeline management
Although I use the word ‘was’, maybe around 80% of the companies are still working this way. In traditional Marketing and Sales, the common workflow goes something like this:
- Marketing drops leads at the Sales desk without qualifying. The leads come from the website, events and other networking opportunities
- Sales starts cold calling these leads finding out that 80% of the Marketing leads are not sales ready. It turns out that visitors were only shopping around
- As a result, collaboration between Marketing and Sales starts failing and Sales decides to develop their own sales pipeline. At the end of the day, they are responsible for turnover and margins
What is wrong with this approach? Since Sales needs to provide contracts and business, they will delete the leads who are not sales ready. In fact they hand them over to the competition.
Around five years back, the commercial environment changed dramatically
Both for Business to Business (B2B) and Business to Consumer (B2C) providers, the market started changing radically when internet and social media were being used more heavily. Because internet and online media seem less biased than a sales person, this information source became very popular, especially for checking out companies and products.
Consequently, prospects and clients were not interested in receiving a sales person. Why should they? Internet and social media provided more information than a sales person could give and the customer became aware of the power shift. Finally they could keep the sales guy outside the door until they were ready to buy. Many B2B and B2C providers had to deal with a whole new situation. What now?
What does modern Marketing and Sales look like?
Now that traditional Marketing and Sales are working less effective, service providers have to look for an approach in which they can adequately connect with their audience. The new workflow would look something like this:
- Leads have more access to information through internet and social media. Knowing that the customer is in control, Marketing should direct their message and content to online and social media, because that’s where can find their audience. The first step is developing a Digital Marketing strategy
- Leads are in control of what information they receive and how. Again, the customer is in control and Marketing should start developing a Content strategy
- Combining the two steps above, Marketing needs to automate the process by searching, selecting and implementing a Marketing Automation system
- Leads need to be nurtured. If Marketing comes across leads who are not ready to invest yet, they have to nurture these leads until they are ready. Otherwise they will lose them to their competitors
- Sales will only contact leads who have been converted to prospects by Marketing. This makes it easier for Sales to score the deal, since Marketing has nurtured the leads in a earlier stage
- As a result, collaboration between Marketing and Sales is successful and needs to be formalized in a Marketing & Sales Alignment to avoid misunderstanding regarding the process
What is right in this approach? Marketing and Sales are working on the same commercial goals, execution and results and are therefore creating a commercial powerhouse. The only point of attention I can think of, is the change in compensation for both Marketing and Sales. Marketing salaries will raise a little with variable commission and Sales will have less commission. In some companies that could be a showstopper, however there’s hardly any alternative. Companies just have to deal with the new situation.
Here’s my takeaway
If your funnel is leaking too much business, you have to change to a new approach. Traditional Marketing and Sales doesn’t work for many companies anymore, since internet and social media have caused a power shift from the provider to the customer. In modern Marketing and Sales the silos are broken down and they work together on finding new business and closing contracts. The new approach also shifts the power between Marketing and Sales and the compensation packages will be different.
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