It’s a good idea, from time to time, to go back to the basics and review the concept of the revenue funnel:
A series of planned milestones in the sales cycle from awareness to customer to advocate, from marketing to sales to customer success, and from advertising spent to booked revenue on your income statement.
It’s the foundation of all sales & marketing efforts whether you’re a multi-national corporation or a solo entrepreneur. It provides the basis to set goals and measure the performance of campaigns, personnel, and your company as a whole.
Through my years as a marketing consultant, I’ve seen many variations on terminology, but the basic principles remain the same. All funnels start with basic awareness and end with a customer who hopefully becomes an advocate of your brand.
Funnels Come in all Sizes
If you’re in a niche with a very short sales cycle a customer may complete your funnel in a matter of seconds. For example, while waiting in line to check out at a grocery store, a person scans the chewing gum display for something that looks appealing. They pick one with blue packaging, because they like the color, and throw it on the belt behind the grocery divider.
The new chewing gum owner has gone from awareness to customer in just a few seconds. From the company’s perspective, they converted traffic into a sale in the same timeframe.
On the other hand, an average customer of a company with a very long sales cycle might take months or even years to get through the entire revenue funnel.
Here are the major funnel stages in order. Companies with shorter sales cycles will skip some stages in the middle.
All funnels, large or small, start with traffic. This is the stage where a prospective customer becomes aware of your brand.
Traffic can be on the internet, like when someone sees your ad, browses your website, or comes across your social media profile. Traffic can also be offline, like when someone walks by your storefront or booth at a trade show; or when someone sees your ad in the paper.
A potential customer becomes a prospect when they engage with your brand. This could be when they sign up for your newsletter, download a content offer, follow you on social media, or drop their business card in your fishbowl. The indicator of engagement is the exchange of access.
The potential customer exchanges a small piece of access to them, such as an email address or a social follow, for access to something from you, such as some content, a coupon, or a chance to win a prize.
Marketing Qualified Lead (Interest)
A potential customer becomes a Marketing Qualified Lead (MQL) when they express interest in your products or services and fit your marketing qualification criteria. This could be when they request a demonstration or ask for more information about your offerings.
Sales Qualified Lead (Consideration)
A Sales Qualified Lead (SQL) is defined by four criteria: budget, authority, need & timing or “BANT”. This designation is used in organizations with a sales team and determined by a one on one meeting with a member of the sales team.
When the potential customer gives you money, they become a customer, even if it’s a very small amount.
A customer becomes an advocate when they start telling others about your brand.
It’s pretty common for companies to have their own sub-stages for tracking purposes. For example, within the Traffic stage, you might have impressions, clicks, and page views. Within the Marketing & Sales Qualified Lead stages, you might have meeting needed, meeting set & meeting attended. Each company will have their own terminology and way of doing business.
On the other hand, companies with shorter sales cycles might skip most of the stages in the middle. In the chewing gum example, the customer went straight from Traffic to Customer.
Customer Journey vs. Revenue Funnel
It’s important to distinguish the Revenue Funnel from the “Customer Journey.” The milestones in the Revenue Funnel are put in place by the company. The company attempts to guide prospective customers through it in an orderly fashion. But in reality, the customer journey is rarely orderly.
The actual customer journey will most likely be non-linear. They may see an ad, then hear a reference on the radio, then go months without thinking about your brand before they stumble upon your blog article or see your product on the shelf.
The Revenue Funnel is the path we want prospective customer to take; the Customer Journey is the path they actually take.
Why Map Out A Revenue Funnel?
Mapping out a revenue funnel should be one of the first things you do when going to market with a product or service, and should be revisited at a high level from time to time. It’s important because it serves as a road map for just about everything else in your sales & marketing departments.
All of your sales & marketing activities should be focused on moving people through the funnel in the most efficient way possible. For example, your advertising department should be focused on converting traffic into prospects; your content department should be focused converting prospects into MQLs, your Sales Development Reps should be focused on converting MQLs into SQLs; your Sales Account Reps should be focused on converting SQLs into Customers; and your Customer Success Reps should be focused on converting customers into advocates.
The Revenue Funnel Report is the master of all reports on the revenue side of any business. Whether you’re the Chief Revenue Officer of a large corporation, or a solo-entrepreneur; checking The Funnel Report is a daily ritual, if not an obsession.
This report starts with the major and minor funnel stages in order down the left side of the report. Each sub-stage is often broken down by sources such as referral, paid inbound, organic inbound, outbound, etc. The numbers for each stage, sub-stage, and source are tracked by week, month, and quarter.
The conversion percentage between the stages should be tracked, as well as the cost per stage of conversion. This data becomes the basis of just about everything you do. It allows you to set goals, to see what’s working and what’s not, set pay incentives, and project for the future.
Download a free spreadsheet template of The Revenue Funnel Report in the Marketing Starter Kit here.
In a large, departmentalized company, different job titles work in different parts of the revenue funnel. If you’re in a smaller company, you may perform multiple roles, but it’s important to document the different roles you perform so that you’ll be ready to hand off a job function when the time comes to scale.
At Relevant Content Marketing, we use Toggl to track the job functions of each team member. Each job function is separated with tags. This way, it’s easy to run a report to know which job functions are taking the most time and could possibly be hired out.
Here are the typical job functions who work in each stage of the revenue funnel:
The traffic team mostly resides in the marketing department, more specifically: advertising and live events. Graphic Designers, Copywriters, Live Event Mangers and other Advertising personnel work together to create ads and displays that generate traffic in traditional spaces like television, radio, print and conferences or online in search, social, banner ads, etc.
Traffic people tend to be very detail oriented. They pour over data trying to optimize every headline, image, and line of an advertisement. They are laser-focused on what it costs to convert traffic.
Other job titles that may help to generate traffic are Search Engine Optimizers, Affiliate Mangers, and Content Creators to name a few.
When traffic converts into prospects in the form of an email opt-in, social follow, etc., the content team takes over. Bloggers, Video Producers, Social Media Content producers, etc., in the marketing department are responsible for nurturing prospects to the next stage in the funnel. For organizations with longer sales cycles, the next stage is Marketing Qualified Lead. For companies with shorter sales cycles, the next stage might be customer.
The type of person who fits into a content team is often a bit different than someone who fits into the traffic team. They might be less detail-oriented, but make up for it in creativity and big-picture thinking.
Sales Development Reps
When a prospect indicates interest and becomes a Marketing Qualified Lead, the content team hands off the lead to the Sales Department; or more specifically, a Sales Development Rep (SDR). SDRs are the front lines of the sales department and fill their days communicating with MQLs via phone, email, or in person.
People skills are a must as 80% of their job is communicating with humans. The goal of an SDR is typically to get an Marketing Qualified Lead on the phone for a “get to know you” call. Some organizations call these “discovery calls”.
On this call, the SDR and prospective customer get to know each other and the SDR makes a determination of Budget, Authority, Need, & Timing. If the criteria are met, he or she arranges a handoff with a Sales Account Rep and the lead becomes a Sales Qualified Lead.
Sales Account Reps
When a lead becomes sales qualified, the sales account rep takes over and is responsible for the close.
Customer Success Team
After the sale, the customer success team takes over and is responsible for on boarding, up-sells, cross-sells, and creating advocates.
Along with different job functions, there are different types of software that assist at each stage of the funnel.
The traffic team is typically very familiar with analytics software. Software such as Google Analytics, MixPanel, and others help to crunch the numbers to determine what is working and what’s not.
The content team uses marketing automation software to assist in converting prospects into marketing qualified leads. If you’re a small business or solo entrepreneur, this might simply be an email autoresponder service such as AWeber, Constant Contact or Mailchimp. If you’re a medium business, it could be Infusionsoft or Hubspot. If you’re an enterprise-level company, you might use Marketo or Pardot.
Customer Relationship Management (CRM)
The sales and customer success department typically live in Customer Relationship Management software. Enterprise versions include SalesForce and Oracle. Hubspot and Infusionsoft have built-in CRMs for medium businesses. Small business solutions include Pipedrive, Highrise, ZoHo and many others.
Content, Systems & Workflows
I like to think of Sales & Marketing in terms of Content, Systems, & Workflows. The Revenue Funnel is the roadmap that all content, systems, and workflows are directed from. Spend some time thinking through the entire funnel before going to market and revisit it from time to time.
Starting with a strong Revenue Funnel gives all of your sales & marketing activities meaning. That way, you won’t just blog to blog. You’ll blog to convert traffic into prospects, and prospect into MQLs. You won’t just advertise to advertise. You’ll advertise to convert traffic into prospects. You won’t just have your sales team talk to people, you’ll have your sales team convert MQLs into SQLs into Customers.