8 Steps of the Marketing and Sales Funnel

The sales and marketing funnel concept is a fundamental principle of marketing theory. A model that shows a potential customer’s journey, from the first interaction with a brand or product till the final purchase. This model is also known as the AIDA-model, an acronym for four stages: Awareness, Interest, Desire, Action, published in 1925. However, the fundamentals have not changed. What Salesforce calls the “Customer 360” is a modern way to convert the target group into customers. The funnel concept builds the backbone for successful 360°-degree customer management—from a member of the target group, to a won customer.

The AIDA concept provides an important base for details of the funnel concept. The figure maps the 4 stages with duties of the marketing and the sales department. This classic approach to marketing and sales is still often found in today’s companies’ organizations.

The prejudice is that marketing is the creative and communicative department that spends money. Sales, on the contrary, is out in the field with direct customer contact, selling and making money. Marketing and sales don’t always get along.

“All too often, organizations find that they have a marketing function inside Sales, and a sales function inside Marketing.”

(Kotler, Rackham & Krishnaswamy, 2006)

Because of the Covid-19 pandemic, the fast push towards digitalization, and the high importance of customer centricity, the fight between marketing and sales seems even more outdated than ever before.

An elegant way to solve this problem is to use Lead Management as an interface. The mutual definition of interfaces helps to streamline both departments. Therefore, Lead Management is the missing link between Marketing and Sales.

Based on the AIDA model and the three steps of the funnel concept, the following picture outlines a streamlined Marketing – Lead Management – Sales process. It includes 8 steps:

• Potential Customer
• Contact
• Cold Lead
• Marketing Qualified Lead
• Sales Accepted Lead
• Sales Qualified Lead
• Opportunity
• Sale

The classic marketing job is to raise awareness and spark interest. This can be done on a company level or directly for a product or service. The key question is where to generate awareness and how to spark interest. The target group, in B2B Marketing often the buying center, are per your definition of potential customers. A common concept to describe the target group are buyer personas. At this step, the target is defined, but there is no personal data available. The potential customer is unknown to the company.

Therefore, the consequent next step is to create a contact. A contact is a potential customer and member of the target group of which basic, personal details are known. This happens after a first engagement with the company and your content. The minimum information that marks a contact is the e-mail address. This is also referred to as a unique identifier and can be transferred to a CRM system. However, a contact has not yet specifically expressed interest. His intentions, desire, and problem are blurry. Consequently, marketing aims to further engage with the contact to gather more information.

Caveat: CRM systems often use “contact” differently, e.g. for existing customers or fully developed leads. Be careful not to mix up terminology internally.

A Lead, also called Cold Lead, is a contact with minimum contact information who asked about the product or service. Criteria when a contact converts to a lead strongly depends on the process definition. Typically, a lead is transferred to CRM, whereas a contact remains with marketing systems like the website. Common criteria for a lead are:

• Comprehensive personal data, including name, job title or company
• Multiple touchpoints with the company, e.g. downloads, webinars or contact forms
• Trigger signals such as “buy now” CTAs or “request for quotation” contact forms

At any rate, the lead status marks the end of the awareness phase. From a cold lead to a hot lead, lead nurturing aims to generate interest and convert the lead down the funnel. For details on whom to nurture and score a lead, read this article. Further, align your criteria with your company’s aims and structure.

A hot lead is also called Marketing Qualified Lead (MQL) or Qualified Contact. An MQL reached a certain lead score, previously defined by Marketing, Lead Management and Sales. This is a very important aspect, because a MQL is a typical output KPI of Marketing and Lead Management. Cost per MQL helps to argue budget and shows the Marketing efficiency.

The third step of the Lead Management Funnel (fifth step overall) is the Sales Accepted Lead (SAL). The MQL is handed over to sales. Sales cross-checks the defined criteria and reasons if the MQL is ready for the Sales funnel. If so, Sales accepts the lead and the MQL converts to a SAL.

The transition from the lead funnel to the sales funnel is defined by accepting a Marketing Qualified Lead and converting this MQL into a Sales Accepted Lead. At this point, the work for the sales team starts. The sales representative engages with the SAL and discusses key aspects of the case. These aspects are often referred to as BANT, an acronym standing for budget, authority, need and time. If all criteria are met, the SAL converts to a Sales Qualified Lead (SQL). This qualification marks the start of the sales funnel.

In an early phase of the sales process, the sales representative further discusses the customer’s needs and desires. An opportunity or, casually, “sales case” is worked on by the sales team. Comparable with nurturing a lead, the sales representative develops the opportunity by providing case relevant information, USPs, and ultimately, an offer.

Last, the final step of this journey is to close the deal and win the customer. This final step is the output KPI of the sales team.

There are two approaches to do so:

• Measure absolute numbers

Each step and hence, each status can be measured in absolute numbers. E.g. how many leads were generated by marketing? How many MQLs were accepted by sales, etc. This perspective helps to measure the effectiveness.

• Measure rations of absolute numbers

The absolute numbers of each step can be compared to the absolute numbers of another step. These ratios describe the effectiveness. The closer the rations to 1, the higher the effectiveness. If you can convert 100 opportunities into 100 closed deals, your effectiveness is 100%.

Ratios also help to estimate how much input you need to meet a certain output aim. If your goal is to close 100 deals and your ratio to opportunities is 25%, you need 400 opportunities to meet your goal. This works back to e.g. how many contacts are necessary to meet your final aim.