Inside Act-On: 10-Step Guide to Rebuilding Your Lead-to-Revenue Funnel
Everyone in marketing and sales and on the executive team knows about the “lead-to-revenue funnel.” A well-running funnel is vital to your company’s success. And the key to building a well-running funnel is creating efficient funnel stages.
These stages increase revenue by allowing sales to focus on those individuals and accounts most likely to result in a closed/won deal and also those ready to engage with a salesperson.
Efficient funnel stages also shorten sales cycles by enabling marketing and sales to more quickly and easily identify and remedy issues with a lead’s or a deal’s progression to closed/won status.
Yet — if you’re like most companies — depending who you talk to, you’ll probably hear different takes of how well your funnel functions. That’s because it’s easy to unnecessarily complicate a funnel when you first build it. Then, over time, funnels tend to break down as different teams with different goals, focuses, and contexts modify them to meet their own needs. The funnels become too complex. And, when funnels are too complex, often what happens is:
- the top of the funnel becomes cluttered;
- inside sales teams are overwhelmed by the number of received leads (many of which aren’t sales-ready); and
- the company suffers from both insufficient pipeline and unpredictability.
Does this sound familiar? It did to Act-On, too. That’s why I recently helped Act-On completely rebuild its lead-to-revenue funnel. Through the process, together we learned an incredible amount about what works and doesn’t work when it comes to lead-to-revenue funnels and enabling your sales and marketing teams to be successful. Here’s the skinny:
The Building Blocks of an Efficient, Effective Funnel
First, some basics. A high-performance funnel stage:
- consists of a simple term and easily understood definition followed by everyone across all involved departments;
- possesses a firm, clearly-defined trigger for progression to the next stage that’s followed by everyone across all involved departments;
- is easily replicable in a consistent manner by everyone; and
- is agreed upon by both marketing and sales leadership.
Here’s an example of a lead-to-revenue funnel whose terms, definitions, and triggers abide by these guidelines:
|Anonymous||An inquiry whose web activity is tracked but whose identity is not yet known.|
|Known||An individual whose email is known but who has not yet taken any action to achieve success in a program (such as downloading content, visiting your tradeshow booth, registering for webinars, clicking on your website, etc.).|
|Responded||A known individual who is actively engaging in marketing activities and/or achieving success in a program (i.e. downloading content, visiting your tradeshow booth, registering for webinars, clicking on your website, etc.).|
|Marketing-Qualified Lead (MQL)||A responded individual who reaches the agreed-upon lead score threshold and is passed to sales for follow up.|
|Sales-Accepted Lead (SAL)||An MQL with whom sales schedules a live or online appointment.|
|Sales-Qualified Lead (SQL)||An SAL with whom sales completes the appointment and deems as having future potential.|
|Opportunity||An SQL for which sales defines budget, authority (decision-maker), need, and timeline (BANT).|
|Closed||An opportunity won or lost, or for which there is no outcome; upon closing, the opportunity is removed from pipeline reports.|
Seems straightforward, right? But if your lead-to-revenue funnel lacks the clarity and consistency outlined above (we were guilty of this), it’s time to rebuild it.
How to Rebuild Your Lead-to-Revenue Funnel in 10 Easy Steps
Contrary to popular belief, rebuilding your funnel doesn’t have to be a long, arduous project. Here’s a best practice tried-and-true (by us) process to get you there.
1. Identify key members to participate on a cross-functional team.
You want to form a cross-functional team (CFT) composed of two segments: a working team that develops, implements, and monitors the new funnel, and an executive stakeholder team that reviews, approves, and supports your new funnel stages.
Your working team needs to meet weekly, at a minimum. We found that we were meeting sometimes two or three times a week in order to stay on the same page. Your working team should consist of:
- a project manager who maintains overall ownership and accountability for the project;
- the manager of the team responsible for following up on MQLs — typically an inside sales/business development/demand gen function; and
- representatives from demand generation/lead generation/marketing programs, marketing operations, marketing reporting, sales operations, and sales reporting.
Obviously, the size of your CFT depends on your company size — the smaller the company, the greater the chance a single person handles one or more of the above duties. The key thing to remember is you want your CFT people, who are experts in their respective areas, to be empowered to make decisions on their team’s behalf. Our CFT was quite sizeable, and it was important for us to maintain regular communication throughout the process in order to ensure we had buy in from all parties.
Your executive stakeholder team needs to consist of the following (or your company’s equivalent):
- Chief marketing officer (CMO)
- Chief revenue officer (CRO)
- Chief financial officer (CFO).
Meet with this stakeholder team at the project onset to gather their specific opinions and criticisms of the existing funnel/funnel stages. After that, meet with them frequently enough throughout the project to obtain their approval on, support for, and potential changes to key elements before you move too far ahead with your lead-to-revenue funnel redesign.
You might be surprised to see that CFO had a spot on the list, but remember that your lead-to-revenue funnel is much more than just a marketing/sales issue, it touches all aspects of your business’ success.
2. Audit existing funnel stages.
After you brief the CFT on why rebuilding the funnel benefits your company — and them — work with this team to collectively and systematically outline your existing funnel. For each funnel stage, identify:
- the current terms and definitions used (and, if multiple terms and definitions are used for a single stage, note that, too);
- the current triggers that need to be hit for progression from one stage to the next;
- areas where there’s known confusion or dissention, and who it impacts; and
- areas where there are known issues, and what they are.
Auditing your existing funnel should be a relatively easy part of the funnel overhaul process. If your CFT struggles to complete the above steps, you either have the wrong people on your team or your funnel is so broken that your CFT’s time is better spent developing new funnel stages rather than autopsying old ones. (We may have been guilty of this as well.)
3. Establish baseline metrics for existing funnel stages.
Once you’ve identified your existing funnel stages and processes, it’s time to gather metrics. You’ll use these funnel metrics to pinpoint any remaining issues and to determine baselines against which to measure upcoming improvements.
You typically want to establish baselines using the most recent 12 months of data. If, however, you recently changed your go-to-market strategy significantly, you may opt to shorten the timeframe for your data pull to make the data as relevant as possible.
Gather as much of the following data as possible within your current environment, all based on net-new:
- Volume within each funnel stage (count) — How many net-new records were added to each funnel stage in the last 12 months?
- Average conversion rate between stages (percentage) — On average, what percent of net-new records moved from each stage to the next in the last 12 months?
- Average velocity between stages (days) — On average, how quickly did net-new records move from each stage to the next in the last 12 months?
Once you have your baselines, you can compare that data against industry funnel averages to see where your existing funnel over- or under-performs. (Both Forrester Research and SiriusDecisions provide this type of funnel data. SiriusDecisions also can customize their funnel data to make it as relevant as possible to your company’s specific demographics and firmographics.)
4. Agree on proposed new funnel stages.
This is where it gets fun. Taking into account everything you’ve learned and the goals for your new funnel, gather your CFT to identify and agree upon what the new funnel needs to look like.
Remember the rules outlined earlier — each funnel stage needs to:
- consist of a simple term and an easily understood definition that can be followed by everyone across all involved departments;
- possess a firm, clearly-defined trigger for progression to the next stage that can be followed by everyone across all involved departments; and
- be easily replicable in a consistent manner by everyone.
I find it easiest to start at the top of the funnel and work my way down. And start fresh — don’t try to Band-Aid existing funnel terms, definitions, and triggers.
5. Gain buy-in from executive stakeholders.
Once the CFT develops and agrees to new funnel terms, definitions, and triggers, it’s time to gain the approval and support of your executive stakeholders. But, don’t just present those elements. At the beginning of your presentation:
- remind them why the funnel needs to be rebuilt in the first place;
- share the baselines you developed and how your existing funnel data compares against industry averages; and
- emphasize that sales and marketing is aligned on this — a CFT consisting of both sales and marketing functions is making this joint recommendation.
Then present your new funnel terms, definitions, and triggers. And be ready to explain or defend your recommendations. C-level executives may not be as deep into the funnel data as your CFT — don’t assume their questions are criticisms. Rather, use this project as an opportunity to educate them on all things funnel, gaining their respect and trust in the process.
6. Implement and test new funnel stages.
Once the executive stakeholders approve your new funnel stages, it’s time to put your new funnel into action and then test it. Here are some key practices to keep in mind:
- Think through the best ways to implement your new funnel stages — opt for methods that make for easy, accurate reporting and easy transitions from one stage to the next.
- Implementing these new funnel stages likely will require adjustments to both your marketing automation and your CRM systems/processes — plan enough time for this stage to allow you to thoughtfully work through the obstacles you will encounter (there are always some).
- Test all stage triggers (what needs to happen for a record to move from one stage to the next) to ensure they’re set up correctly — this includes thoroughly testing all automation you put into place.
- Walk through a “day in the life” of each role responsible for a record’s progression through each funnel stage. Make sure the progression is intuitive and that any automation that can be done is in place. Also verify that your marketing automation and CRM systems properly sync.
- Create and check daily reports to identify any issues with the new stages.
- Leverage resources outside the CFT as needed, especially when there’s manual work to be done.
7. Launch to Sales.
After working through any issues found during testing, it’s time to launch your new lead-to-revenue funnel to the rest of the sales and marketing teams. Here are a few tips:
- Timing — It’s best to launch your new funnel terms/definitions/triggers to sales before going live, but only by a day or two. That way, they’re less likely to forget what they learn during your training sessions.
- Content — Give your sales and marketing teams the same kind of overview you presented to your executive stakeholders; you want them to understand the why of what you’re doing, not just the how. You also want them to understand how it benefits both them individually and the company as a whole.
- Sessions — If you have separate inside sales and field sales teams (one to qualify MQLs, one to close deals), it’s best to hold separate, live sessions for each team. That way, you can customize the content, screenshots, and benefits to their specific roles. Plan to record both sessions for easy on-demand access afterward. And lastly, record a shorter, on-demand funnel training session for new hires that doesn’t refer to the old funnel or old processes at all.
- Presenters — Leverage your CFT as presenters, so the presentations are as relevant as possible to each audience. So the CFT project manager might choose to co-present with the marketing/sales ops CFT member for presentations to the executive stakeholders; likewise, the manager of the inside sales team probably will want to present to that team (although he or she might choose to have the CFT project manager or other CFT team members also available for the Q&A portion).
- Tools — As a marketer, you know different people prefer to consume information in different ways. So create different types of tools for the sales and marketing teams to use as they get up to speed on the new funnel. You can easily create Quick Reference Guides by converting the session slides to PDFs. Build an FAQ for each team that answers the questions they’re most likely to ask. And if your company uses a collaboration platform such as Jive or Slack, consider posting all tools to a discussion thread there, so users can easily locate related information and get answers to other questions in real-time.
8. Go live with new funnel stages.
Finally — it’s time to go live! Things to keep in mind:
- Choose your go-live timing wisely — don’t go live during your busiest season of the year, and don’t do it at quarter’s end unless your sales leadership approves that timing in advance. Make sure key members of the CFT aren’t on vacation during go-live so they’re available to help resolve any last-minute issues.
- Celebrate! Your CFT put a lot of thoughtful work into this new funnel — celebrate their efforts and the upcoming improvements you can expect to see.
9. Monitor and measure.
Once your new lead-to-revenue funnel is live, it’s important to monitor it and measure the progress made with it.
- Create and monitor daily a set of base reports for each stage of your new funnel.
- Measure and report on progress against the baselines you established from your old funnel — volume, conversion rate, and velocity. You usually can build these reports in your marketing automation or CRM system.
- Encourage users to alert you to any issues they encounter, then quickly resolve the issues and close the loop with the users on how you fixed their problems.
10. Tweak as needed.
Finally, you need to remain open to tweaking your new funnel as needed over time. But it’s a fine line — you don’t want to over-complicate it along the way. To avoid the funnel complexity creep mentioned earlier:
- Stay true to the guidelines for efficient, effective funnels discussed earlier;
- dig into any issue that crops up to find out if it’s related to the new funnel itself or to some other factor;
- educate new marketing and sales leadership on your funnel terms/definitions/triggers as soon as possible after they assume their position;
- reconvene your funnel CFT to review and then approve or veto any changes to the funnel that are deemed worthy of consideration. Decisions that impact your funnel stages can’t be made in a vacuum after go-live.
There they are — ten easy (ha) steps for rebuilding your lead-to-revenue funnel. In conclusion, if you suffer from indistinct and complicated lead-to-revenue funnel stages, you’re wasting marketing dollars and wasting your sales team’s time. With this clear, 10-step process, you can quickly rebuild your funnel, regain your sales team’s trust, and generate more pipeline for your company.
Have other tips for rebuilding a L2R funnel? Share them here!