How relationships change a sales funnel into a sales pipeline

“In 1898, E. St. Elmo Lewis developed a model that mapped a theoretical customer journey from the moment a brand or product attracted consumer attention to the point of action or purchase.”

That is the first Google response I received when searching for “sales funnel theory started”.

Funnily enough, Lewis did not talk at all about a sales funnel. He described the theory of the purchase funnel, something which looks similar, but in reality is totally different. His model, called the “AIDA” model, describes four basic steps in the purchasing process:

• Awareness – the customer is aware of the existence of a product or service
• Interest – actively expressing an interest in a product group
• Desire – aspiring to a particular brand or product
• Action – taking the next step towards purchasing the chosen product

A fairly logical assumption by a seller of products and/or services is that the more awareness you create, the more prospects will start considering a purchase, more of those will develop a preference for your brand and, ultimately, more of your product will be purchased.

The issue with the purchase funnel is that it suggests control of the process by the buyer, not by the seller. That is not what sales managers and company directors really feel comfortable with. Changing the purchase funnel into a sales funnel suddenly shifts perception of control towards the seller. The logical conclusion is that the more leads you pour into the sales funnel, the more signed deals and thus revenue you’ll see. So, what should sales reps be doing most of their time? Yes, filling the funnel with leads. The more the better. Automatically the revenue will follow.

In particular for start-up companies, this looks like a very attractive idea and it very much simplifies the definition of measurable personal targets: the number of leads generated. And you know what? It will probably make sense in a context of simple, off-the-shelf, low-value sales.

But, when we talk about specialised, complex or high-value solutions or services, that premise suddenly collapses. The simple reason is that in today’s world, where online is becoming the standard, the quality of leads has become crucial to success. Lead generation – call it growth-hacking, if you wish – has become a business in itself. Some people might call it “intelligent spam”. So, when the number of leads generated is the only measure of success, how many of those leads will turn into real sales opportunities (“consideration” in the purchase funnel) and ultimately into sales, is of minor or no importance at all, at least for the lead generators…

The obvious pitfall for the seller of solutions is the huge waste of time and resources in following-up on a mass of unqualified leads. Especially for start-ups this can have the same effect as having too much fuel injected into an engine: drowning it, so it stops working.

The key to revenue growth is NOT a high and ever-growing number of leads, it’s building a pipeline of genuine, qualified sales opportunities.

To find this key you need to look at the century-old purchasing funnel. Yes, awareness still needs to be generated, but not indiscriminately. What’s needed is effective, well-defined targeting of users, business managers, your prospect’s clients, integrators, finance directors…. The more specialised the solution, the more effort, expertise and personal contact is required to generate a qualified lead. Online marketing is not the way to do this, and nor is cold-calling. Just as it was in Elmo Lewis’s time, personal relationships and business expertise are what’s needed.

Although a challenge in itself, creating awareness is possibly the easiest step. Turning a lead into an opportunity requires much more effort and will often require influencing different people within an organisation. “Influencing the influencers” is the fun part of the job, but also the trickiest. It requires real knowledge of the decision-making processes and the people within the target organisation, along with an understanding of the business and its culture. Last, but not least, it requires consistent exchanges of information, formal and informal.

If everything goes well, the prospect comes to a point where the need or the business case for a potential purchase has been identified. Now it’s time to differentiate the solution, company and team from the competition. The competition can be external and/or in-house. Now you are in negotiation mode and you need to know everything and everybody involved in the decision-making process. You should be in a position to capture every important event leading to the decision. This is the time to use your money and resources, because here is where you make or break your opportunity.

It doesn’t require a PhD to understand that the likelihood of finding the high-quality opportunities will not be the result of simple “lead generation”, but the result of early discovery of the potential opportunities and targeted awareness creation. This in turn is the logical result of close personal relationships and regular “meeting” events.

Although online has become the standard for communications, much accelerated as a consequence of Covid, existing personal relationships and their quality have become the real differentiators, but establishing them has become extremely difficult.

I recommend to every head of sales, in particular every head of technology solution sales, to consider the obvious: revenue growth is the ultimate desired outcome. Although seemingly cheap and easy, the gain in the number of sales leads will not produce the same outcomes as targeted opportunity and awareness creation, although the initial investment might be higher.

Maybe, as a century ago, it’s still a good idea to start with a bit of market research with one outstanding source of information and feedback: your potential customers.