J. David Green

Four Reasons Why Funnels Are a Marketer’s Best Friend

Funnels are like the central nervous system of the best sales organizations. Few marketing departments depend on funnels to run their business the way sales leaders do. Yes, messaging, segmentation, branding, and numerous other considerations are extremely important. But no tool can impact financial performance for marketing as much as a funnel. It’s a topic I’ll be speaking about this coming Wednesday, May 25, at an American Marketing Association webinar.

There are four reasons marketing funnels should be the central nervous system of B2B companies:

1. Simplifying complexity. The great challenge in B2B is complexity. There are lots of moving parts that are growing and changing everyday. Social media, lead nurturing, lead scoring, webinars, data-as-a-service, web-crawling technologies, and many other advancements can be overwhelming. With all of these ever-expanding moving parts, finding revenue leakage is extremely challenging and often very subjective. The beauty of the marketing funnel is that you can break down complexity into very discrete components. In fact, the more discrete the funnel and sub-funnel stages, the easier it is to deal with complexity. The key is tying all the funnels and subfunnels together into a unifying framework.

2. Isolating the leakage. Once you have a comprehensive funnel framework, you can measure the conversion of prospects from one stage to the next. You can gather benchmark data from companies like MarketingSherpa and see how you compare to other organizations. Over time, you can aggregate data from your own corporate-wide efforts and develop internal baseline conversion ratios; that way, every variance from the benchmark or the baseline should prompt you to examine why.

3. Improving financial performance. Instead of having endless debates, marketing can simply set up tests and discover what really works by measuring conversions and looking at the impact on downsteam efforts. Having conducted thousands of experiments, we’ve seen that quite often the best answer is often counter-intuitive and defies “best practices.”

4. Forecasting results. With benchmarks and especially your own baseline data, you can start to make increasingly accurate predictions on the results you will have from a given marketing initiative. And, as a general rule, the more granular your funnel stages, the more accurate the projection. Of course, accurate projections are key to getting and keeping funding.

There’s a reason sales executives absolutely run sales organizations based upon the funnel while their best sales people use it to manage their pipeline. If marketers want to drive the highest ROI possible, it’s time for them to do the same.

What are your thoughts? I welcome your feedback and if you want to learn more, be sure to attend the AMA webinar on May 25 that I’m presenting with Steve Woods, Chief Technology Officer of Eloqua, and Mike McKinnon, Senior Demand Manager of ReadyTalk.

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Marketing Strategy, ROI Measurement, Uncategorized, Webcasts/Webinars



  1. | #1

    Interesting insights David. I’m pretty sure that the webinar will be able to help a lot of marketing and sales executives into having a better understanding about the importance of a marketing funnel, specially if there’s a falling out of leads in the middle of the funnel, and how these situations can be prevented. Thanks for sharing! http://bit.ly/ayeen

  2. | #2

    Excellent article – Couldn’t agree more about the complexity of the funnel/Pipeline in B2B companies and the importance it plays. It becomes even more critical when the sales period averages over 6 months.

    We find that companies by defining their funnel, they can start to understand then address where it leaks

  3. | #3

    Wish we could get rid of the funnel notion, marketing is not a funnel. If you pour a quart of oil into a funnel, you get a quart of oil out the bottom!

    (explained at http://www.bestconsultingpractices.com/blog/2010/03/why-marketing-is-not-a-funnel.html )

  4. | #4

    @Will Kenny
    Will,
    Excellent point about the problems with the funnel metaphor. A few years ago I wrote a book in which I used the metaphor of an oil refinery (The B2B Refinery) to talk about a systematic and scalable way for marketing to process leads and to apply the level of processing appropriate to the probability of purchase and the revenue potential of each account.

    But your larger point is spot on: there really are people who respond and who must be filtered out. Some might be ready later and can be nurtured but many are out of the target market or otherwise not a fit. Thanks for the insightful comment.

  5. | #5

    @Duncan Macdonald
    Duncan
    Thanks for the kind words. I agree that the longer the sales cycle, the more important the funnel. That said, there’s even a very useful sequence of events that happen when someone buys a book at Amazon. At each of those event stages, some people abandon the effort to buy the book. Measuring that series of conversions can help marketers identify the magnitude of the problem and decide whether experimenting with another approach is worth the effort. Developing statistical baselines of a given conversion metric can then aid in spotting leakage, too.

    Thanks again for the comment.

  6. | #6

    @Ayeen Benoza
    Aveen
    Thanks for the kind words.

    To Will’s point, I think a lot of time the big value is actually filtering people out who will waste the time of a teleprospecting or sales team. That said, there are definitely some revenue leakage that better processes can salvage.

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