Systematically manage sales with the sales funnel

While there is software for „Customer Relationship“ (namely a CRM-system), winning new customers is still proving difficult for many companies. It is rare for companies - Apple is the best example - to be able to create demand for their products again and again with new products. Instead, a company has to use other means to fill the sales funnel.

Process quality is highly relevant for customer acquisition today. In particular, it is about expertise and quick action that must be communicated to the potential customer. In this case, it should be obvious that sales is the top priority when it comes to acquiring new customers. However, the market research company Gartner Group found that up to 70 per cent of all enquiries are not answered at all or are answered far too late. However, the Costs in marketing for the acquisition of new customers.

This is hardly surprising if the potential customer contacts gained from this are only utilised to a limited extent. However, at a time when process quality should be emphasised in sales, this is more than questionable. After all, the cost-benefit ratio in marketing is not easy and success can only be achieved with a high degree of strategic discipline.
One of the currently frequently used and tried-and-tested methods for increasing sales efficiency and improving the handling of new customer contacts is the „Sales Funnel“. This „sales funnel“ system shows the phases of the sales process within a company.
To work with a sales funnel, you have to go through seven phases:

Phase 1: Break down the sales process

In the first phase, the sales process is broken down into individual steps. For example, taking enquiries, sending information, determining needs, presentation, the offer followed by the closing of the deal. The number of steps varies depending on the company and there are no limits. Of particular importance are the steps in which the company could lose the prospective new customer. Here, a documented systematic approach should provide steps to convince and retain the interested party. It is better if more steps are defined. This way, the company can focus more on the „weak“ steps and discover and avoid mistakes.

Phase 2: Define the processing times

In the second phase, the time allowed for each step is defined. This „target processing time“ determines, for example, when the customer is contacted after receiving the information documents. However, such fixed times are not particularly popular, and the individuality of each sales order is frequently cited. Without some definition of the target processing time, it is difficult to identify best practices or make comparisons. Furthermore, time is one of the most important factors customers consider when making a purchase. Those who offer first are often chosen. Therefore, a definition of at least the „desired“ – i.e., „target“ – processing time is necessary.

Phase 3: Determine the processing quota

The third phase is usually the most difficult for „sales funnel“ beginners. Setting a conversion rate, i.e. how many interested parties are actually relevant for the next step – the on-site presentation – is rarely done in sales. In this case, it often has to be tested. Customer feedback can be very helpful with topics such as response time and reaction behaviour. Sales should neither act too slowly nor overwhelm the customer with too much effort.

Phase 4: Determine the (distribution) process costs

The fourth phase consists of determining the process costs of the distribution process. Normally Sales and marketing costs charged to a cost centre. However, this makes it difficult to define the costs incurred to acquire a customer. Therefore, process costs in sales are rarely calculated. The „Sales Funnel“, however, is intended to provide more precise information on these costs. Defined processes and volume structures are the basis for this.

Phase 5: Introducing the control system

The fifth phase serves to introduce a control system with early warning indicators. This is because a sales funnel is useful if it controls processes and, above all, recognises undesirable developments in good time. Graphical early warning systems are usually used for this purpose. Traffic light colours are often used in order to alert sales staff to exercise caution at critical points in the sales process.
Green = All areas in which the individual process steps of the sales funnel can be carried out without specific measures. For example, making contact.
Yellow = All areas where caution is needed such as identifying the needs of the potential client.
Red = critical areas in which the potential customer can be lost, e.g. contract template. The potential loss of time and costs for the order is particularly high here.

Phase 6: Defining responsibilities and capacities

The sixth phase is dedicated entirely to defining areas of responsibility and determining capacities. Here, the co-operation between Marketing and distribution important. Marketing should only generate as many real potential customer enquiries as sales can handle. An employee must have enough capacity to be able to handle the relevant sales processes - e.g. support for new enquiries or presentations, as well as existing customer care. However, the sales employee should also always be sufficiently busy to be able to achieve the sales targets.

Phase 7: Check & fill the sales funnel

The seventh phase is used to review the sales funnel. This is primarily done by asking how many enquiries - taking into account all defined times and quantities - are needed to achieve all sales targets. A calculation should be made to determine which possible scenarios and results of the sales process are possible. In order to always be able to work with correct and up-to-date data in the sales funnel, the use of software for controlling is necessary.

Based on sales funnels, marketing can now utilise campaigns and promotions to promote sales and conserve resources. Sales can simultaneously adapt to the market and fulfil all requests. The insight into the sales process that the sales funnel provides leads to better process quality, which is particularly beneficial for the customer.

SAP B1 blog