Sales Funnel

The Sales Funnel{note1} defines how new customers are created at your company through the combined efforts of Marketing and Sales.

Suspect

At most companies, Marketing is responsible for developing a profile that defines what a suspect looks like.  This profile is derived by analyzing existing customers and looking for behavioral and descriptive attributes that define who our customer is.  The best source of new customers is suspects that “look like” existing customers. 

Prospect

Marketing then reaches out and touches suspects using advertising, direct mail, seminar selling, permission-based email and other types of outbound marketing activity.  Suspects who raise their hands – i.e. tell the company they are interested in learning more about the company’s products or service – are called prospects.  Often the way a suspect notifies the company of his or her interest is by filling out some sort of form on the website or elsewhere, called a “lead qualification” form. 

Qualified Lead

Prospects generated in this way may or may not be qualified to engage with a sales person and to ultimately buy the product or service you sell.  Qualification criteria vary and may combine questions designed to get at DAWN (desire, authority, willingness, need) as well as logistical questions that allow sales to engage with the potential customer by phone or email.  Once prospects are qualified according to a set of criteria agreed upon by both Marketing and Sales, the prospect is considered a lead, and ready to engage with Sales.

Opportunity

For Sales, this engagement can take many forms:  a telephone call, a dialogue over email or instant messaging, a presentation over the web or face-to-face, creating a proposal or purchase order.  What turns a lead into an opportunity is the fact that Sales is engaged with at some level with the potential customer. 

Sale

Opportunities typically show up on some kind of sales pipeline report.  Most sales-force automation products assign probabilities to each opportunity based on various criteria (type of customer, size of business entity, product interest, level of engagement, credit score, etc.)  These probabilities are used to take the opportunities in the pipeline and turn them into a revenue forecast.

The process is summarized in the table below:

	Status	Description	Touchpoint
Suspects	Passive	May have a need for your product or service	Marketing
Prospects	Active	Have expressed some interest in the offering	Marketing
Leads	Qualified	Prospects who meet a set of qualification criteria showing some readiness to buy	Marketing{note2}
Opportunities	Engaged	Leads that sales has engaged with, say by setting up a first meeting, demo opportunity, or the like	Sales
Sales	Closed	An opportunity that results in revenue to the company	Sales{note3}

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Notes

1.  Really this should be called the Marketing & Sales Funnel, since marketing is responsible for at least the top-half of the funnel.
2.  Hand off to Sales.
3.  Hand off to Marketing et. al. functions at the company.

 

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Related posts:

1. Contact Strategy
2. Cost per Lead (Qualified)
3. Using Customer Valuation to determine your contact strategy
4. Cost per Prospect (Unqualified)

Related posts:

1. Contact Strategy
2. Cost per Lead (Qualified)
3. Using Customer Valuation to determine your contact strategy
4. Cost per Prospect (Unqualified)