How the Evolution of the Funnel has Changed Sales

By Thomas Barrieau
Director, Sales Enablement Practice

The funnel is one of the oldest conceptions of how to manage a sales pipeline. It addresses the challenge of how an organization can efficiently identify and focus on those prospects most likely to make a positive purchase decision by filtering out poor candidates as they proceed through the pipeline. The funnel shape represents the process of casting a wide net for prospective customers (i.e., wide at the top to indicate a large number entering the pipeline) and then filtering out undesirable ones as they work their way through the customer-creation process (i.e., narrow at the bottom to indicate a small number of closed deals).

Just as Sales Enablement is a vital intersection between the worlds of Marketing and Sales, both serving the goal of creating customers, so too does the concept of a funnel span these two domains. Just as the customer creation process has evolved over time, with innovations such as email marketing, inbound marketing, content marketing, and lead nurturing all having a dramatic impact on a company’s capacity to contact prospective buyers, so too has the funnel evolved. Over the course of two posts, I’d like to talk about that evolution and—at the risk of stabbing a sacred cow—why we might want to move beyond this conception of the customer creation process. In this first post, I’ll talk about how the funnel has evolved and how its current state challenges and even imperils today’s sales professionals.

Before getting into how the funnel has evolved, I’d like to lay a very important concept (especially for Sales Enablement professionals) on top of how we think about the funnel: the role of information exchange. For prospects to advance through the funnel—or not, if they are to be culled—information needs to be exchanged between seller and buyer. The buyer needs to communicate a variety of information to the seller: product/service needs, situational context (e.g., company details, buyer personas, etc.), and relationship needs. Similarly, the seller needs to communicate various information to the seller: product/service details, situational context (e.g., experience with similar customers, skills of service providers, etc.), and relationship needs. This information sharing is vital to the filtering process we expect from the funnel, for it is through this sharing that buyers are removed from the pipeline, either through self-selection or by being dropped as a poor prospect. As we explore how the funnel has evolved, we will see that changes to the nature of this information exchange are the primary driver of that evolution.

Prior to the advent of mass marketing, funnels were extremely narrow. Customers were created exclusively through sales conversations. This had advantages and disadvantages, as shown in the graphic below.

With the advent of mass marketing, it was possible to reach a much larger population of prospects. At first, this was done through advertising and direct mail (the paper kind). Because buyer segmentation was very basic (e.g., selecting the magazine in which you placed your ad), targeting of specific buyer populations with information tailored to that population was possible in only the crudest sense. As such, messaging had to be pretty generic. However, we did see the funnel assume the shape with which we are familiar.

We’ve used dotted lines in this graphic to illustrate that the information being shared is much less precise then that which can be delivered through a sales conversation. After the mass marketing outreach has created awareness in the marketplace, Sales is then engaged (i.e., the point at which the funnel narrows) to pick up the conversation and the information exchange proceeds as before. While we’ve reached a much broader audience, there are some drawbacks.

Chief among these drawbacks: the beginning of the customer creation process, because it is necessarily much less personalized than a sales conversation, produces a large number of leads, only some of which are real prospects. This introduces the classic discord between Marketing and Sales at the point where leads are handed from one organization to the other. This friction is driven by the opening of an information gap between buyer and seller; the impersonalized nature of mass marketing deprives buyers and sellers of the opportunity to learn about each other. Salespeople, typically working on a leveraged compensation plan, don’t want anything but well qualified leads—something that can only be done through sales interaction.

The Internet changed the nature of information exchange dramatically and, as you might expect, the funnel. The web made available a veritable sea of information for prospective buyers, allowing them to conduct the early stages of their purchase journey independently. Marketing automation software exacerbated this change by allowing marketers to track buyer interest based on website behavior. As a result, information exchange between vendor and buyer could be targeted with much greater specificity (indicated by dashed lines replacing the dotted lines below). This targeting allows for the rise of lead nurturing practices, further delaying buyer engagement with Sales, as shown below.

The richness of this marketing-owned, digital dialog that makes up the early stages of the customer creation process has had a profound impact. Vendors now have the capacity to create an abundance of leads, educating buyers through a highly efficient, cost-effective process. As a result, today’s buyers are smarter than ever, knowing more about their options and the overall product/service landscape than previously possible without direct interaction with vendors.

Unfortunately, due to the even greater delay in sales engagement, salespeople have a much smaller window of opportunity to influence the buyer’s journey. They also have much less time to learn about the buyer, greatly inhibiting their ability to demonstrate the kind of buyer knowledge that instills trust.

To add insult to injury, these changes are having an impact on how buyers view salespeople. As part of our annual research into the behavior and preferences of IT Buyers, we asked both traditional IT professionals and line-of-business buyers why they reached out to salespeople when on a major purchase journey. Here is what they said.

As the results show, salespeople are not viewed as good sources of information that can add strategic value to the purchase decision process. Instead of reaching out to salespeople for insights on how technology can help improve their business, salespeople are typically engaged by decision makers for tactical reasons. This is especially true for the line-of-business buyers, an increasingly important group that now makes up 80% of buying teams and controls 60% of the IT budget.

My knowledge of the many salespeople who do bring great value to their customer’s purchase processes hastens me to note that these results represent averages and there will be exceptions to the pattern noted above. That said, an alarming trend is visible. Given that the tactical reasons today’s buyers reach out to sales can be handled by junior and less skilled call center personnel, this finding poses somewhat of an existential threat to highly paid sales professionals: If they are not bringing high value insights that add strategic value to the buyer’s purchase journey, what are they doing that differentiates them from a less expensive call center rep?

What we have is a pretty dire situation for Sales. Hyper-educated buyers that don’t like to engage with sales until the last possible moment. A wealth of leads, but precious little time to get to know them well enough to tune your sales approach to their specific needs. A shrunken window of opportunity to influence the buyer’s journey, which demands that you be on-point and relevant despite a lack of knowledge about what it is that the buyer will find valuable. Skepticism that sales can bring valuable insights that add to the buyer’s purchase journey.

What vendors can do about this situation and the role Sales Enablement can play in addressing these challenges will be the subject for my next post: Sales Enablement in a Post-funnel world.