Four Steps to Defining the Stages of Your Sales Funnel
Most staffing industry sales leaders understand they're supposed to have a clearly defined sales funnel but often struggle with defining the stages of the sales funnel and even more struggle with articulating the value of the sales funnel to their sales team. The value of the sales process and sales funnel for sales people is that it helps them organize and align their sales activities with the steps the buyer must complete in his or her buying process. If your stages fail to align with how the customer buys then your sales team’s activities will have no impact on the prospect's decision making process. Below are four steps to help you define the stages of your sales funnel.
STEP 1-Understand Lead Quality
Understanding and recognizing the qualify of the leads your sales team is pursuing is a MUST for all staffing sales leaders. This is the critical starting point where any and all sales cycles begin. Chance are your sales people are spending most of their time calling on leads of low or poor quality. Getting the definition of a qualified lead right and AGREED ON with your team is critically important. Amazingly, the majority of the staffing firms I have encountered have no lead qualification process and no definition for what constitutes a "qualified lead." Below is a great illustration provided by Hubspot that can help staffing sales leaders examine their sales funnel to assess lead quality and determine which leads to pursue.
Lead Qualification Considerations
Your company might be a generalist IT staffing firm in which you place IT consultants across a wide variety of technologies and IT skill sets. On the other hand maybe you only target manufacturing companies between $800M and $1.5M in revenue who use SAP software. Within those target markets, you might also target and sell to certain buyer personas or lead types based on their job title or job description and role in the decision-making process -- e.g., economic buyer, technical buyer or end users. The point is, how closely do your leads (that the sales team is pursuing) align with your ideal customer profile (the customers your company has had the most success with)? This alignment will determine your likelihood (and speed) for success in converting leads to qualified buyers and opportunities and ultimately customers. So, do you prefer long sales cycles or short sales cycles? If you have not already, figure out the characteristics of your ideal target customer profile and gain agreement on this profile from your team.
Interest Level & Consideration
A lead’s activity and interest level in your company and you (the sales person) can reveal how seriously they are considering you and your IT staffing firm and how close they are to a buying decision. For example, if the lead never returns your calls or emails or never does what they say they're going to do to than that is a tell tale sign that your consideration (their interest) level is low. Additionally, if a lead has only visited your website once, or has just begun following you on Twitter or Linkedin, they may be aware of your company but aren’t particularly engaged yet. A lead that requests or agrees to meet to discuss a specific project, opportunity or pricing is showing a lot more interest.
Where a lead falls within the four quadrants of this matrix dictates the next step of your sales follow up. For example:
- Good Fit & Interested: Leads in the upper right quadrant are a good fit for your company and are highly engaged with you and your sales efforts. These leads possess the same or similar characteristics of your most successful customers. These are hot leads that require immediate follow-up.
- Good Fit But Less Interested: Leads in the upper left quadrant are a good fit for your company but don’t show a lot of interest or are not yet giving you strong consideration. Perhaps they’ve only heard from you a couple of times or maybe they have yet to hear much about your value proposition. These are leads that that still need to be nurtured. These leads still need to be convinced you have something of value to offer them.
- Lots of Interest, But Not a Good Fit: Leads in the lower right don’t necessarily fit your ideal customer profile, but are highly engaged with you and/or your company. They might have subscribed to your blog and email newsletter, downloaded your ebooks, or attended your webinar. Heck, you have probably taken these leads out to lunch a few times or perhaps even out for a round of golf or a ball game. These leads can and often are a huge waste of the sales person's time because they are just not a good fit. Don't let the smokescreens fool you!
- Little Interest & No Fit: Leads in the lower left quadrant aren’t a good fit for your company and haven’t shown much interest in you and your offerings. They’re definitely not worth a sales rep’s time. Don’t be afraid to take them out of your lead nurturing follow up plan.
Step 2-Define & Agree on Lead Types and Definition
Considering the information offered above you can develop a definition for a qualified lead based on a combination of fit and interest that makes sense for your organization. Some staffing firms have a tightly defined target market and thus a tight definition for a qualified lead while others have a broad target market and thus a more loose definition for a qualified lead. This is purely a business decision that depends on the nature of your business and who you want your sales team to pursue in the marketplace. Just remember, base your definitions on quantifiable and measurable data -- not on gut instinct. Even experienced sales people can be way off base in their assumptions about what makes a good lead.
Step 3-Implement Lead Scoring
Agreeing on the definition of a qualified lead is just the first step. Lead scoring allows you to assign a value (a certain number of points) to each lead. Lead scoring helps sales rep’s, sales managers and marketing teams prioritize leads and increase efficiency. You can and should assign a point value to your leads based on their demographics (job title, team size, owns budget, location, etc.) and behaviors (opened emails, responds to emails, returns calls, web site visits, etc.). Because you are using data that is objective and quantifiable you will no longer have to worry about sales people making decisions off of "gut feel instinct." The data will tell them how to prioritize their leads.
Step 4-Defining & Aligning Your Stages With How Your Customers Buy
Now that you have the top of your sales funnel defined with lead qualification, scoring and conversion it is time to define the remaining stages of your sales funnel. Here you have two very important decisions to make. You must decide on what the definition will be for the lead to "enter" each stage (entry qualification) and you must decide on what the definition will be for the lead to "exit" each stage (exit qualification). In other words, you want it to be quantifiably and observably clear that the sales rep successfully completed the current stage and is now moving to next stage. Here again, this is where many sales leaders struggle by using subjective, "gut feel" qualification criteria. This is too subjective and allows for too many "what if's" where sales people make assumptions. Here is an example of what I would call a vague, "wishy washy" sales funnel.
- Intro Call (what is the entry and exit criteria for this stage)?
- Meeting (what is the entry and exit criteria)?
- Build Relationship (how is this defined? How it is measured)?
- Interested (How is this defined and measured)?
- Job Order
Bill Stinnett’s excellent book, Think Like Your Customer, should be required reading for anyone in sales. One of the key points he makes (that I love) is this:
Sales people get paid commissions for the tasks that their customer completes, not the tasks or sales activities that they complete
The point here being that sales professionals get too focused on sending more emails, sharing more literature, making more calls, and leaving more messages when none of it has any impact. Why? Instead of doing these things, sales professionals should be focused on compelling the customer take the next step in their buying process. In the IT staffing industry I think we would all agree that most customers (and sellers) must complete the following in order for a transaction to take place:
- Get on the approved vendor list (get approved by the decision makers)
- Sign an MSA (master services agreements)
- Interview your candidate (perhaps multiple times)
- Provide feedback
- Get HR approval
- Get Finance approval
- Get approval from the business
- Cut a purchase order
- Complete all background (criminal/drug/credit)
- Complete references
Notice those are all tasks the customer must complete, not tasks the sales rep completes. You likely have customers that must complete some of these steps or all of these steps. You also probably have customers that must complete other steps that I didn't include. To find out how your customers buy IT staffing services and how they would buy from you, simply ask them. Ask them to explain to you their buying process.
Finally, I'm not suggesting that you incorporate every single step into your sales funnel, but at a high level you do need to incorporate the customers major buying milestones. Once that is mapped out and you have defined the entry and exit criteria for each stage you can then align your sales methodology including the sales activities you will deploy to compel your customer to complete each of those steps.
What do the stages of your sales funnel consist of? How are you going about defining your sales funnel? Let's start a conversation in the comments section below.
About Dan Fisher
Dan Fisher is founder and owner of Menemsha Group, a provider of sales enablement solutions dedicated to helping IT staffing firms improve win rates, shorten their sales cycle, and increase revenue per sales rep. Since launching Menemsha Group in 2008, Dan has consulted with over 200 IT staffing firms and has invested over 5000 hours coaching IT staffing sales reps. He’s authored is his own proprietary sales methodology and has previously spoken at Staffing World, TechServe Alliance and Bullhorn Live 2012. Prior to launching Menemsha Group, Dan spent 16 years in the IT industry running local, regional and national sales teams. Dan worked for Kelly Services, Oracle Corporation and Alliance Consulting. Dan currently resides in Boston, Ma.