What is a sales funnel?

This post marks the end of the introductory phase of this blog and begins to dig into the meat of what we’ll be talking about here for all time to come. And that’s the sales funnel. We employ a sales philosophy that has as its backbone the sales funnel – oddly enough, we call it “Sales Funnel Selling.”

A great way to learn what Sales Funnel Selling is all about is to read our free white paper “What is a sales funnel?” It represents the first in a long series of papers that will dig deep into our philosophy and provide tools and tactics that can be put to immediate practical use.

Just like a typical funnel moves liquid from the big end to the small end, a sales funnel moves opportunities in a predefined path from initial contact through receiving a purchase order. Think back to when a big order came through your company’s door. Did it magically appear on your fax machine or in your in-box? Doubtful.

Think farther back. Back to a time before you even knew this client. From the day of first contact to getting that sweet piece of paper from your fax machine, that client went through several steps, transforming themselves from an unknown outsider to one of your most cherished customers. Those steps are what the sales funnel is all about and why it is the key to any sales process or philosophy.

A sales funnel illustrates how your sales pipeline is flowing now and what it might look like in the future.

What is a sales funnel?A typical sales funnel is shown here. The key to surviving in sales is to make sure that each respective layer never goes empty – it really is that simple. You should always know how many companies are in each of your respective layers – in general there should be more and more companies as you move up in layers. New opportunities are put in the top of the funnel and walked through the maze of layers until they either become disqualified prospects (hopefully we find that out early) or they give us a purchase order and fall to the bottom layer.

Now it could take weeks or months to bring this prospect through the entire funnel, so you better have some deals close to the bottom of the funnel or you’ll be going hungry until you push something down. And don’t think for a minute that a purchasing agent doesn’t know when your funnel is a bit dry. They can smell that a mile away and make you pay dearly to expedite the sales process.

So the bottom line is pretty straightforward.

Make sure that you have action at all levels in the sales funnel and you’ll never be desperate for a close again.

When you aren’t desperate for opportunities in the bottom end of the funnel, you can stay detached from the prospects in the top of the funnel. Detachment means that you aren’t pressuring you or your prospect to move too fast through the sales process because you don’t need the sale. Once you begin to feel that pressure, you can lose sight of the real goal – to help your client. And when that insight is lost and you don’t have your client’s best interests at heart, you can damage your relationship and reputation beyond repair. Nothing is more important to your clients than your integrity.

A well populated sales funnel gives you the time to help ensure that your proposed solution becomes the chosen solution.

Although we can’t go into too much gross detail here because of space requirements, each layer of the sales funnel is briefly defined below. Remember to download the What is a sales funnel? white paper for a much more detailed explanation regarding the sales funnel process.

New Opportunity – This layer contains new leads that you’ve either uncovered or that were passed onto you from the marketing department. See the “Where do sales leads come from?” article for information on how to make sure this layer is chocked full of thirsty prospects.

Initial Communication – Will it be the dreaded cold call, or do you have an in because you both graduated from the same school. The article “Getting the initial sales appointment” details the process for getting yourself noticed and gaining the all important foot in the door.

Fact Finding – This layer is where you ask question after question after question to make sure that you exactly understand what the real problem is. “We need a lightweight material for this shaft” is not a problem statement; “We need to reduce our fuel consumption by 15% because of new FAA regulations” is a problem statement. Do you have anything in mind that can help them save fuel; perhaps a lighter material for that heavy steel shaft?

Develop Solution – After all the facts have been gathered, collated and restated, work with your technical team and do what you do best and come up with a proposed solution. Depending on the complexity of your product, try to have your client in on some of your brainstorming meetings to get their buy in – even if it’s over the phone. Do you think you would have an edge in winning the work if the solution was partly your client’s idea? I’d bet on it.

Propose Solution – This is the layer where the gross glossy proposals and PowerPoint sludge-pits are created. You won’t be doing that however. Since your prospect was intimately involved in developing the solution, they already know basically everything that’s in the proposal including the price. You’ve created a “zero-surprise proposal”, and your prospect loves you for it. As an added bonus it’s only four pages long compared to your competitor’s 28-page behemoth that no one is going to read anyway.

Solution Evaluation – This is the time that your prospect earns his keep. Since he already bought off on the proposal, you need to work with him to push your solution through his buying process and not worry about selling him anymore. Of course you already know what that buying process is from the Fact Finding step right?

Negotiation – Ah, yes; if you buy today I’ll knock off $300 and throw in a free oil change! We certainly don’t want to come off like Crazy Jerry from Crazy Jerry’s Used Cars. Of course since we’ve had the client involved in the process the entire way and created this wonderful zero-surprise proposal, we should actually be able to skip this step on many occasions. As deals get bigger and more complex, however, the legal, purchasing, and accounting departments usually want to take a few swings at you. Don’t fret; you’ll be ready and waiting.

Purchase Order – Here it is, the big rush of getting exactly what you were expecting at the exact time you were expecting it. But even knowing that, it’s still a climatic experience that will drive you to jump back in the funnel and keep shuffling deals downward.

Account Maintenance – Don’t think that this is an afterthought; it is one of the most important layers in the funnel. I’m sure that you’ve heard how much easier it is to sell to an existing customer than to acquire a new one, well it’s true. You’ll be able to skip the first few layers and jump right into developing solutions with your client right at your side.

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