CSO Insights Blog Posts

Funnelology: The Study of Sales Funnels

There are several noted funnelologists sharing their wisdom with us. Ron Hubsher talks about inverting the funnel in his sales negotiations book, "Closing Time," and Mark Sellers has written an entire book about it in "The Funnel Principle." In fact, a Google search of "sales funnel concept" comes up with over 500 results covering everything from forecasting, to territory management, to sales & marketing alignment.

The first time I heard of the sales funnel was when I joined Miller-Heiman back in 1983. I taught the topic hundreds of times. For starters, the funnel notion was intended to be differentiated from the sales pipeline in one important way: a pipeline suggests that everything that goes in one end comes out the other. [Note to those who don't cook much or put oil in their own cars: the same is true of funnels.]

The idea was to reinforce the fact that a lot more goes in the top as leads/prospects than comes out the bottom as orders/customers. Another distinction back then was the introduction of phases or stages of the funnel which have since been overlaid on the pipeline metaphor as well. What wasn't talked about much and is critical to maintaining a productive sales funnel (or pipeline) is the stuff that does not come out the bottom but rather leaks out the sides.

Like everything else in life, the secret to a healthy sales funnel is balance. You want to take reasonable scoops of your Universe, and process these efficiently so that you find real opportunities and pursue them successfully. Also important, you want the leads/deals that leak out of your sales funnel or pipeline to leak out early. It is much less painful to have a lead evaporate near the top of the funnel than after you've done all the work and moved it to very near the bottom of the funnel. For these reasons you want the holes in your funnel to get smaller as you move down the length of it (see Fig 1). There are variations on this concept, however, which I enjoyed sharing with groups-especially in naming the variations.

First up: The Whistle.

This funnel is very narrow and essentially straight (see Fig 2). It doesn't taper because the deals that get into this funnel whistle right through. Close rates are high and cycle lengths relatively short. So what's wrong with this picture? While the perfect deals are whistling through, plenty of darn good business is whistling by. The problem is being overly selective; generally not seen in slow economic times like now.

Next up: Trade Show.

This funnel is very wide at the top and narrows to a pin hole at the bottom (see Fig 3). These folks chase anything that moves, love meeting people and saying, "I can't believe I get paid to do this." Back in the home office their manager is feeling the same way-namely, "I can't believe we're paying for this." Sales cycles extend forever and close rates are non-existent. These folks are not discriminating enough and that's a common problem during times like these.

[Note: Trade show can often devolve to something else over time. See Fig 3a.]

We'll pick this up next time - with a little data from our surveys to help sort through strategy development.

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