Sales Funnel Management

At the core of every successful business is its sales funnel—the start-to-finish approach to converting leads into customers. Sales funnel management is the practice of understanding, tracking, and optimizing each step of this process from prospect to buyer to maximize ROI from its marketing, sales, and customer engagement efforts.

What is Sales Funnel Management?

Sales funnel management describes the process of optimizing the customer journey from first contact to purchase. Typical sales funnel management activities include segmenting leads, analyzing customer behavior, creating personalized experiences for prospects, and measuring ROI from sales execution.

Another significant function of sales funnel management is prioritizing the various interactions that happen simultaneously throughout the sales funnel.

A sales funnel is commonly visualized as a top-to-bottom cone with increasingly fewer leads as they move through it.

In actuality, it’s far from a linear process. Customers don’t move through the sales process as smoothly as the common depiction suggests in most sales orgs.

That’s why an effective sales funnel management strategy is so critical—it helps companies tailor their customer experience on an individual level and meet the nuances of their specific needs.

Synonyms

• Customer journey management
• Purchase funnel management
• Sales pipeline management

Sales Funnel Stages

The sales funnel has three stages: top, middle, and bottom. Each sales stage requires different customer engagement tactics and entails different objectives.

Top of the Funnel (ToFu): Awareness Stage

The top of the funnel is all about generating leads—capturing customers’ attention, getting them interested in the product, and establishing a relationship.

At the top of the sales funnel, outright selling is less important than brand awareness, education, and building connections.

Typical top-of-funnel selling activities include:

• Content marketing
• Social media campaigns
• Lead generation forms
• Email send-outs
• Webinars
• Sales prospecting
• Lead qualification
• Cold calling and emailing

Think of top-of-funnel sales like planting a seed. Most B2B buyers are over halfway through their buying decision process before they’re ready to talk to a sales rep, meaning the top of the funnel is where salespeople and marketers should focus their energy on making their brand top of mind.

Middle of the Funnel (MoFu): Qualified Lead

Customers in the middle of the sales funnel typically have a basic understanding of a company’s product or service but need more information to help them decide.

Middle-of-funnel selling activities include:

• Product demos
• Case studies
• Testimonials
• Price quotes
• Free trials

When working with potential customers in the middle of the funnel, sales teams have a unique advantage: They have already shown interest in the company’s product (or at least the type of product they offer).

Since reps have already attracted the customer through inbound and outbound activities, they can focus on asking questions and getting to know the prospect.

Bottom of the Funnel (BoFu): Decision and Close

At the bottom of the funnel, customers are close to making a product decision and need to know what it’s like to work with the company.

Bottom-of-funnel activities include:

• Contract negotiation
• Closing tactics
• Price discounts
• Upsells and cross-sells
• Customer onboarding

At the bottom of the same funnel, time is of the essence. The average B2B sales cycle is between 6 and 12 months, so constant communication and sales productivity are the bread and butter of success.

How to Build a Sales Funnel

An effective sales strategy starts with building a clear and measurable funnel. That way,  sales managers can align their efforts, identify customer patterns, and track progress.

Here are the steps to building an effective funnel:

1. Capture Leads

All businesses capture leads differently depending on their industry, ideal customer profile (ICP), and goals.

The best ways to generate new leads include:

• Cold calling and emailing
• Social selling
• Content marketing
• Sign-up and opt-in forms
• Search engine optimization (SEO)
• Paid search advertising
• Referral programs

The main purpose of lead capture is to get in front of as many ideal customers as possible. Most businesses use some or all of the above tactics to attract new prospects.

In this first step, the goal is not a Closed Won deal—the conversion rate is based on a lesser action, such as a booked meeting, a request for information, or an appointment.

2. Qualify Leads

Qualified leads that turn into new customers are less likely to churn because they close on the product (or set of products) they actually need.

The problem is many of the leads generated from inbound and outbound efforts are either:

• Not ready to buy
• Not a good fit for the company’s product catalog
• Unable to purchase due to constraints
• Not decision-makers
• Lacking in budget

Especially with campaigns designed to cast a wide net for testing purposes, this is natural. But customer churn and low sales efficiency directly result from poor lead qualification, making the second step in sales funnel building a critical point of inflection.

There are three steps to a truly qualified lead, each with a critical distinction.

• Lead: When a prospective customer first shows interest in a company’s product offering they will enter their information, download a few materials, and engage with different elements of the company website. This does not guarantee they are a good fit for the product but provides insight into their interest.
• Marketing Qualified Lead (MQL): After engaging with some of the company’s content, a lead may become an MQL—a prospect that has downloaded multiple pieces of information and revisited the website. Most companies manage their MQLs with B2B marketing automation, meaning they are comparatively inexpensive to nurture.
• Sales Qualified Lead (SQL): A prospect that downloads several pieces of content, including pricing pages and buying guides, and has clearly demonstrated interest in buying is considered an SQL. This increases their management cost significantly since a sales rep will be assigned to personally manage them. If a company’s selling strategy includes outbound, sales reps will also find their own SQLs.

To maximize sales efficiency and keep the conversion rate high, salespeople can’t focus on leads that are too early in the marketing funnel. Before reaching SQL status, a lead must go through rounds of pre-qualification.

3. Engage Qualified Prospects in the Funnel

The pool of leads qualified for sales engagement will be smaller (sometimes considerably) than the initial funnel, and that’s okay. Sales reps have limited bandwidth, so it’s best to focus on leads with the highest chance of conversion.

The first touchpoint between a rep and an SQL is similar to a screening process.

In outbound, it starts with a cold call or email meant to start a conversation. For inbound leads, a rep will typically email or schedule a meeting if the prospect hasn’t already.

The purpose of this stage is twofold: confirm the lead’s information (so there are no surprises upon closing) and gauge their need for the company’s product.

Common elements of introductory calls with SQLs include:

• Discussing customer pain points and needs
• Asking questions to better understand their current problems
• Qualifying them based on budget, timeline, and requirements from using the product
• Noting other decision-makers, influencers, and gatekeepers

The goal is to continue the sales cycle, not close the deal. SQLs that are still interested in a company’s product after the initial meeting are now considered “opportunities.”

4. Move Opportunities Through the Funnel

Sales opportunities represent customers that are ready to start the buying process. The next step is to nurture these prospects into customers by:

• Providing personalized guidance and consultation
• Exploring different buying scenarios to suggest the best solution for their needs
• Building relationships with decision-makers to ensure a smooth purchase process
• Resolving customer objections to switching or adopting a new product

This stage is all about helping the customer make an informed choice. It’s better to take the time and provide support than rush them through the process with little understanding of the product.

Of course, the end goal is a sale. But even in the decision stage, there are plenty of reasons a highly qualified lead might back out.

Sudden changes to internal company structure, an overly-long sales cycle, and price competition are all dynamic factors that impact a deal’s chances of closure.

5. Re-Engage Lost Leads

Just because a sales lead didn’t turn into a buyer the first time doesn’t mean they won’t in the future. As long as a lead has gone through the funnel—even if it didn’t result in a sale—they should still be included in automated marketing campaigns.

Much of the continued lead engagement is based on the same principles:

• Delivering value, not over-selling
• Nurturing relationships over time
• Offering personalized content and advice

Just like leads that were about to convert can change for the worst, lost leads frequently become buyers later on.

6. Continually Evaluate Funnel Performance

Sales funnel management immediately follows the initial process. For long-term success, companies need to continually monitor the performance of their funnels.

Regular evaluation is necessary to ensure that:

• Leads are successfully moving through each stage
• Sales reps are taking the right approach with prospects
• The right systems and tools are in place to facilitate sales execution
• The team is taking actionable steps to increase lead quality, close more deals, and achieve strategic objectives

Individual reps play a role in evaluating and improving funnel performance, but the true responsibility falls on management and upper leadership to make strategic decisions for the team.

Challenges in Managing the Sales Funnel

Even with a solid sales funnel management plan, sales managers and their teams face plenty of unique challenges when it comes to lead generation and conversion.

Striking the Perfect Balance Between Outreach and Personalization

For a sales operation to be profitable, it must accomplish two things:

1. Reaching enough prospects that a portion will become customers
2. Being targeted enough in the approach that prospects will actually convert

Filling a sales pipeline with bad leads for the sake of numbers is counterintuitive, but so is spending too much time on prospects that might bring nothing to the company.

The sweet spot lies somewhere in the middle. Sales reps ultimately need to figure out where it is themselves, but having a well-defined sales funnel management process can provide the necessary guidance.

Distinguishing Between Qualified and Unqualified Leads

61% of B2B marketers send all their leads to sales, even though only 27% are qualified. And ReachForce and Marketo say sales reps ignore 50% of marketing leads.

When the marketing team doesn’t differentiate between qualified and unqualified leads, sales reps waste their time trying to close deals they never should have pursued.

Unfortunately, sales and marketing misalignment is one of the most frequently cited issues within organizations, making it a significant challenge in sales funnel management.

Data Inconsistencies

Data comes from numerous sources, including CRM, the company website, marketing campaigns, and sales and marketing team members themselves.

If the data is siloed or inconsistent, it can make sales funnel management difficult. Incorrect data is worse than no data at all and poses several threats to the company:

• Reps may end up chasing poor-fit leads putting time into deals with a low chance of closing.
• Unreliable sales forecasting makes it tough to accurately make projections against revenue targets.
• The team might have an incomplete view of leads, resulting in a lack of proper follow-up. 

Even if all company data is centralized, unclear communication between sales and marketing teams will make it difficult to measure previous efforts and decide where to make changes.

Building a Sales Funnel as an Early-Stage Company

Budding startups usually have the most difficulty implementing a sales funnel management process. Without much historical data, outlining its shape is haphazard and error-prone.

Sales funnel management requires a company to identify the steps to guide leads toward closure, which is tough without any reference points.

Most of the time, startup companies also lack resources, which makes it difficult to dedicate time and money to sales funnel management or hire an experienced sales executive to lead the effort.

In such cases, they usually rely on intuition and feedback from customers to create a process that works for them.

Sales Funnel Management Best Practices

Ongoing effort and optimization define sales funnel management. To get the most from it, businesses need to:

Ensure Pipeline Visibility

True pipeline visibility means sales, marketing, and leadership teams can access real-time data.

Everyone should be able to view the funnel from top to bottom, including stages, conversion rates, and sales velocity.

Use Data Insights to Optimize the Funnel

Companies that achieve full pipeline visibility can use it to measure results and optimize the sales process accordingly.

Interpreting data from multiple sources, such as marketing campaigns, customer feedback, sales reporting, and website traffic, shows teams where they can improve and where they should double down.

Standardize the Sales Funnel

Standardization is a gradual process—as teams eliminate strategies that don’t generate enough revenue for the company, they’ll test others and eventually arrive at an effective solution.

Creating a sales playbook based on the tested strategies and best practices will ensure a uniform process across teams and make it easier to onboard new reps.

Nurture Leads at Every Funnel Stage

Leads that reach the sales team should already be educated and qualified, ideally by the company’s marketing materials. But every stage of the funnel requires different customer engagement tactics.

In the earliest stages, marketing automation saves time and pre-qualified leads based on basic criteria. As prospects move through the funnel, they require a higher degree of attention.

Create a Frictionless Sales Process

Frictionless sales describes a process that is both seamless and automated.

The goal should be to make it easy for customers to buy from the company without sacrificing customer service or product quality.

Process automation saves significant time and human effort for non-selling activities like lead scoring, data analysis, and customer segmentation, making the sales funnel easier to manage.

Sales Funnel Metrics

To optimally manage a company’s sales funnel, its management team needs to pay close attention to the following quantitative metrics:

• Number of leads, MQLs, and SQLs
• Lead conversion rate
• Average deal size
• Sales volume
• Sales velocity
• Win rate
• Customer lifetime value (CLV)
• Retention rate

Companies should also pay attention to their qualitative metrics—such as customer responsiveness, brand awareness, and sentiment analysis—for a complete picture of their sales funnel’s success or failure.

Effective Sales Funnel Management Tools

In the age of digital transformation, a sales stack with the right tools for a company’s exact processes is the difference between the success and failure of a sales org.

CRM

Customer relationship management (CRM) software (such as Salesforce) is the backbone of any sales funnel management strategy.

Rather than visualizing your sales funnel from scratch, the CRM system automatically collects and stores customer data, which you can then use as the basis for it.

CRM tools also allow you to move customers through different stages of the deal cycle as they meet with reps and purchase products or services. That way, you’ll know exactly where in the sales funnel they are at all times.

Sales Engagement Software

Sales engagement software is designed to help reps qualify deals quickly and increase their conversion rates.

They provide reps with tools that make it easier to interact with customers, like dynamic email templates, automated follow-up sequences, and branded sales materials.

Like most programs, engagement software enables companies to capture and analyze all the interactions between their reps and customers throughout the sales cycle, giving them valuable insights into what’s working.

Configure, Price, Quote (CPQ)

CPQ software allows companies to automate their product configuration and sales quoting processes, which makes it easier for reps to give their prospects transparency and accuracy in their pricing.

By automating quotes, contracts, proposals, and other documents, reps show their potential buyers that they are organized and prepared, giving them an edge over competitors in the negotiation process.

DealRoom

Sales teams that lack a unified approach to their sales funnel management process significantly benefit from DealRoom, a digital sales room platform.

DealRoom centralizes all the sales team’s activities, including (most importantly) communication. One of the hardest tasks for sales reps is tracking multiple deals that all have several decision-makers.

DealRoom eliminates the need for manual tracking and organization by unifying all the details and members of sales conversations in one digital space.

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