What is a sales funnel and how can it help your business?

What is a sales funnel and how can it help your business?

If you are self- employed, starting your own business or working in sales, you will most likely have to learn about the sales funnel. For those who have never heard the term: a sales funnel is a concept used in the marketing industry that describes the journey prospects take on their way to purchasing something. The name comes from the shape usually associated with the average diagram of a sales funnel- a cone that is large at the top and gets smaller as you go down.

There are many different versions of a sales funnel, and some companies choose to use a unique version of their own based on their own sales and marketing processes. To keep things simple, this is the version we're going to be discussing.

What are the stages of a Sales Funnel?

Stage 1: Leads

The top of the sales funnel is where we find our leads: people who show interest in a company's product or services. At this stage of the funnel, leads are usually both qualified and unqualified - an unqualified lead being someone who does not freely give their details or interact directly with your brand, and a qualified lead being the opposite (also known as a prospective customer or prospect).

Stage 2: Marketing Qualified Leads

A Marketing Qualified Lead (MQL) is a prospect whom the marketing team has deemed more likely to become a customer than others. This means your company might be able to resolve the pain point of your potential customer, which gives you a reason to reach out to them through your marketing. However, a Marketing Qualified Lead can only enter the next stage of the sales funnel if they're ready to talk to your sales team.

Stage 3: Sales Qualified Leads

A Sales Qualified Lead (SQL) is a prospect who meets the criteria for a sales outreach by directly expressing interest in your product or service. To decide on whether or not a prospect is likely to buy your product can be determined by following something widely referred to as the 'BANT' system.

Budget: How much money is your prospect currently willing to spend on your product or service?

Authority: Who makes the ultimate decision of purchase? Is it just your prospect, or will somebody else on their team need to agree to the decision?

Need(s): Does the prospect truly need my product or service? Is it essential?

Timeline: When is the prospect looking to purchase your product or service?

If your prospect meets at least three of the four BANT criteria, you might just have a sales opportunity on your hands and can move on to the next stage of the funnel.

Stage 4: Sales Opportunity

Now that your prospect has been officially deemed viable and likely to buy your product/service, you and your team can now begin the process of winning them over. Put together a quote for your potential customer

Stage 5: Customer

Did your prospect go ahead and buy your product or service? If they did, great! If they didn't, that's okay. Stage 5 is still valuable even if a sale is unsuccessful because it allows you to look back on your process and figure out where you went wrong, so you can build on that experience for the next time.

What is a Sales Funnel Report?

If you believe that your current sales or marketing techniques aren't working, a sales funnel can help you to re-evaluate your business processes. This usually happens in the form of a sales funnel report. In its most basic form, a sales funnel report is a representation of your total business opportunities broken down into the stages of your sales process. At the very least, it should identify how many opportunities are currently sat in each stage of your sales cycle and how successful each stage is.

Let's say your business starts with 200 leads at the beginning of the month. Half of those leads might become MQLs, 70 of those people might progress to SQLs, 50 are then offered a quote or sale opportunity by your business, and 40 end up buying your product or service. If these numbers appeared in your sales funnel report, you would see that there is a larger gap between stages 1 and 2 than the gaps between the later stages. This could suggest that there's a problem with your marketing campaign or the way you convert leads into MQLs.

Another example: your business starts with 200 leads at the beginning of the month. 170 become MQLs, 150 progress to SQLs, 120 are offered a quote or sale opportunity, but only 40 end up buying your product/service. This could suggest that there's a problem with the sales pitch, quotation or demonstration of what you are trying to sell because your SQLs aren't becoming customers. Without a sales funnel report, this problem might not have been so apparent

How can we help?

Zigaflow's Lead Management module has the flexibility to cater to any unique sales funnel- and if you change your processes, the system has the ability to adapt right alongside you.

If you want a better way to view your leads or a system that manages them for you, book a demo with Zigaflow today and see what we can do for your business: