The funnel metaphor for sales is well known by now: opportunities go in, then, as marketing and sales further qualify and work those opportunities they turn to leads or are eliminated. It’s an easy metaphor to grasp visually, and it reflects the fact that a minority of opportunities close.
But it’s also a one-way metaphor – opportunities move down and through the end of the funnel. That single direction does a disservice to the lead generation and sales process, because as any modern marketing or sales pro knows, there are lots of directions that leads end up going.
Leads can be determined to be immature and go back to marketing for additional nurturing. They can stall at a stage in the funnel and demand inordinate attention to get them moving again. Or they can simply disappear from the funnel for reasons that are largely invisible to managers.
The latter phenomena is what Australian author and marketing expert Hugh Macfarlane dubbed “the leaky funnel” (which was the title of his excellent book). Although the cost of lead generation is better understood than ever before, funnels are just as leaky as ever. Why is that?
One reason is that B2B product sales are becoming more and more complex. That puts real pressure on nurturing: most companies have a lot of top-of-the-funnel content, and most have seen bottom-of-the-funnel content as critical. But it’s tough to identify and create content for the middle of the funnel, the place where customers who have shown interest are looking to companies to prove to them that they’re worthy of additional consideration. If the middle of the funnel content is ignored, nurturing will not help in moving the customer toward a decision and, over time, these leads will become useless as they buy from companies that did get nurturing right.
Other internal behavioral issues cause the funnel to leak in more insidious ways. One of them is, perversely, a surplus of leads. Even when they’re well-qualified, giving sales reps too many leads to work is a waste of marketing efforts. They can work only so many leads in a given time period; the surplus tends to be set aside for future attention and thus comes out of nurturing programs, making those once-hot leads even colder.
Your author once worked for a company that sold highly-qualified leads to major technology vendors, at a rather high price per lead. Even though companies were paying top-dollar for those leads, our audits revealed that 30 to 50 percent of those leads were never so much as called by sales reps. With apologies to Mae West, too much of a good thing is not wonderful when it comes to leads loaded on sales reps.
If leads aren’t well-qualified, things get even worse. Our report on the dangers of filling the funnel with sheer quantity of leads lays it out in some depth, but the gist is this: too many poorly qualified leads in the funnel keeps your sales reps from devoting sufficient attention to the leads that are most likely to close. It also means that leads that should be in your nurturing program are instead in the hands of reps who are swamped and can’t pay proper attention to them.
There’s also a leadership issue at work in leaky funnels. A lot of “leakage” occurs on desktops, in lead management software and other places because the people working with leads make a call or two and then forget about that lead. That’s the equivalent of throwing the lead in the trash – and, again, in an era where the cost of acquiring leads is well-understood, it’s the same as throwing money away.
Marketing leadership must emphasize that leads need to be taken care of at every step along the way. Once a sales rep makes a call and determines that the lead is not yet ready to buy, sales leadership must provide a system to return that lead to marketing – and marketing leadership must have a method for returning that lead to its programs. Sales leadership needs to emphasize that no one – sales rep, sales development or anyone else – gets to sit on leads without an intention to work on it. If it’s not going to be worked it needs to go back to marketing.
The secret to keeping tabs on these issues is internal reporting – something many companies have at their disposal but simply don’t use. Automate the creation of reports on lead status, and use these reports as the alarm system that indicates when you’ve got a leak that needs fixing.