How the Sales and Marketing Funnel Got Its Shape – Part 1

27 Jul

How the Sales and Marketing Funnel Got Its Shape – Part 1

k_schaub_m2
By Kathleen Schaub
Program Vice President,
CMO Advisory and Customer Experience

The shape of the classic sales and marketing funnel – wider at the top and narrowing toward the bottom — seems so ordinary that it is hard to imagine it could ever look any different. But that ordinary shape is rapidly becoming obsolete in the 21st century, and it is hiding some problems for today’s digital world.

The sales funnel first got its name and shape back in 1898, but the concept really took off in the 1930s, when sales went from an individual competency to a real profession. Driven by three great ideas of that era – the invention of the first trainable sales methodology by IBM founder Thomas Watson, the publication of The Psychology of Selling by E.K. Strong, and the popularity of self-help icon Dale Carnegie’s best seller How to Win Friends and Influence People — the funnel became the heartbeat of the sales revolution. It drove both the methodology and the model of persuasion.

In those days, the funnel focused on sales and interpersonal relationships. Salespeople were the ones who prospected, persuaded, and closed, while interpersonal relationships enabled a very rich information exchange between the buyer and sellers. High engagement existed between the two. A good sales rep could personally gauge the prospect’s psychology right from the start. However, the sales process was very inefficient since salespeople were constrained both by time and by geography. As a result, the funnel was very narrow from top to bottom, and it was very high cost. Companies naturally sought a more efficient way to create demand.

Like sales, marketing has been around for a long time. However, the 1950s saw the rise of the one-to-many approach. More efficient and cheaper than traditional marketing, this approach accelerated during the next few decades. In the 1970s, marketing (especially advertising and direct mail) became a numbers game. Direct response — coupled with the spread of databases — made it possible for marketing to become a science.

What was the impact of these changes on the funnel? The top of the funnel broadened significantly as marketers started segmenting, mailing, and cold calling, contacting zillions of prospects. Marketing, however, could do little with those leads at that time other than to attract and capture them. Leads passed in pretty raw form to salespeople for development. Meanwhile, the narrow sales funnel continued to function just as it had before marketing was involved.

Although there was a huge gain in efficiency at the top of the funnel there was a distinct downside to this development: marketing was extremely one way. There was no ability to listen so it was just one-to-many. Any information that customers could provide and the relationship value that had been such an important part of one-to-one selling began to be lost.

While companies benefited greatly from this arrangement, buyers did not. Instead, buyers got flooded with junk mail and calls from telemarketers. When they wanted to get some information, they had to go through the salespeople to get it.

But as a new century dawned, buyers gained an information tool that tipped the balance of power and began pushing the funnel into its current shape. We’re talking about the Internet. With power of the Internet at their fingertips, buyers became much more self-sufficient. They no longer had to wait for an ad or a mailer or a salesperson to tell them about their choices or to answer their questions. Self-sufficiency was so important that it took off and disrupted everything.

Today, regardless of what kind of product or service your company sells, salespeople are much less involved in the process. And whether a company has customers going through 20% of their decision journey or 100% of their decision journey (as in e-commerce), the “Y” part of the funnel, where marketing’s one-to-many plays, has expanded. The narrow part of the funnel, where sales takes over, now comes much later in the relationship.

But while buyers have benefited from the power of the Internet, has it really been that good for B2B brands? We’ll examine the answer to that question in the next installment of this two-part blog post, “What the funnel looks like today.”

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