A Structured Way to Close a Sale: 6 Essential Components of a Sales Funnel
When you’re thinking of sales pipelines and funnels, it helps to know a little about plumbing. For starters, pipelines are horizontal, and funnels are vertical. The pipeline is a series of activities a sales rep makes happen to bring someone along a line from prospect to customer.
A typical sales pipeline might include stages like Qualification, Appointment, Proposal, Conversion. And, it would diagram like so:
A sales pipeline helps sales reps and their manager’s report and track each deal in the works. Ideally, the salesperson should have activities distributed among the stages so they can meet sales goals now and in the future.
The sales funnel is another structured way to close a sale. But it is also a different way of looking at the process with six essential components.
Sales Funnel Essential Components
Marketing Performance: The wide top of the funnel takes in a large number of prospects who increasingly narrow down through the process because they are not qualified, refused to buy, or cannot buy.
The large number is drawn there by marketing and branding. There’s nothing to feed the funnel without a strong marketing foundation and effort to identify and develop a target accessible market. It’s marketing’s task to create a sense of value for the targeted audience.
Marketing Lead: Leads are people the sales rep has yet to meet or talk with. But the funnel draws them as correlating with the profile fitting the established marketing and sales strategy.
They are there because they may be worth pursuing. The plan is to convert leads to customers. The lead arises from information submitted in response to advertising, inquiries, direct mail or email campaigns, purchased lists, and more.
Willing Prospect: Leads are not prospects until they have expressed or shown interest in what’s for sale. There may have been a phone conversation, an email exchange, or an in-person meeting. One way or another, there is a reason to pursue the process.
Mindy Lilyquist, writing for The Balance, says, “A prospect is a potential customer that has been qualified as fitting certain criteria. In most cases, a prospect: Fits your target market. Has the means (money) to buy. Is authorized to make buying decisions.”
Qualified Prospect: Assuming the salesperson is in contact with an authorized decision maker, qualification may take a while. Qualification verifies the product is right for the prospect. It confirms the prospect needs the product. And, it determines the product offers value to the prospect.
Further qualification discovers the prospect’s timeline and budget. The process also looks at current customers as models. An analysis should identify its characteristics: demographics, budget capability, common habits, purchasing authority, and so on.
Closed Deal: Different businesses close in different ways. It might be a simple transaction for money. But it could involve settlement with numerous documents or special financing arrangements. Four typical closing techniques include these tips:
- Make it for granted. A salesperson can assume the deal is done, conveying a sense that decision has already been made.
- Accept the option. Salespeople might indicate the decision has been made and the only thing that remains is choosing the most favourable option for delivery, size, colour, or more.
- Play the expert card. Over time or through the process, salespeople will strengthen the relationship positioning themselves as a trusted expert and professional. It’s, then, not difficult to suggest this is what the pro would do.
- Put a deadline on it. People will buy when they think they could lose out. With a sense of urgency in place, the salesperson can press to make the deal before the deadline approaches.
Sales reps will tell you which approach works best for them and their product or service. They must also be flexible enough to move from one approach to another fit for the situation. They will also say they use the different approaches gingerly because they don’t want to stress the prospect relationship.
Going Forward: Sales are never over. Even after a close, a sale creates new opportunities. For one thing, they must confirm the delivery has been completed, the order arrived as promised, and the customer is satisfied. They will maintain the connection with hope for additional or renewed business.
Secondly, they will pursue the interest of those who did not buy. Many people will purchase on sequential contacts. Carol Japic, a member of Forbes Communication Council, says, “marketing must work harder than ever and that its efforts span the entire buyer’s journey.” That means proactive analysis, relationship building, optimism, and discipline. And, it means continuing the contacts and relationships beyond close and delivery.
Why Bother with Sales Funnels?
Sales Pipelines and Sales Funnels are necessary Sales Management tools. They communicate process and progress across interested departments and stakeholders. Posted on a sales dashboard, they also serve to spur competition among salespeople and supporting units.
But these plumbing metaphors also will serve the individual sales reps. Trained to create and follow their own illustrations to report and remind them of their place in the personal process as well as the larger scheme of things. Taught to use them well, individual salespeople can compare performance against the previous month, quarter, year, and so forth.
A Sales Funnel displays the whole number or percentage of possible sales among people who may or may not know the product or the business. It eliminates some of them right from the start because they cannot or will not buy.
The funnel narrows as the potential buyers drop away as the result of failed contacts or first contact refusals. The remaining numbers still lead, or they wouldn’t have entered the funnel in the first place. The leads’ potential has strengthened, but the sales rep continues to determine how qualified they are for the purchase. The remaining potentials have been identified as prospects who enter a stage where the salesperson can act on their established relationship to close.
In time, capabilities, skills, and talents can be numbered and weighed at each stage. Managers and sales individuals can spot where and when action is needed to adjust or improve performance results. And, because it is shaped, quantified, and organized, it takes the personal element out of it.