Predicting Revenue with the Four Funnels Framework

The Four Funnels Framework is a systematic methodology for generating high-quality B2B leads that deliver predictable revenue. This framework helps to overcome the “missing link” that sometimes develops between a company’s marketing and sales functions. Businesses can bridge this gap by implementing the following four funnels.

SOMAmetrics Four Funnels Framework

 

Funnel 1: Build Awareness

In order to sell to buyers, companies must first build awareness with their target market. The constant noise and crowding of increased market flooding creates buyers who are habituated to tuning out. Due to this, it takes nearly 16 distinct touches to sway prospective buyers to purchase; and this number only continues to rise.

Regardless of this tune out, businesses must still sell. To do so, they must first generate attention from prospective buyers. Buyers cannot purchase what they do not know exists. The most effective way to generate attention is by generating and publishing genuine marketing content. B2B sellers need to display knowledge of the pains and problems faced by their targeted buyers. Only when buyers feel that sellers understand their troubles will they consider entering into a purchasing transaction.

The goal of Funnel 1 is to drive a high number of the target buyers to where they can find out more and deepen the engagement with the seller.

Funnel 2: Build Trust

B2B buyers have little to no care about sellers’ particular products and services. Their primary concern is how to identify and address the problems they face in their companies and industries. To capture potential clients, B2B sellers must demonstrate care and understanding by freely providing the information required by prospects to solve their concerns and complications.

While such actions may appear to be giving away something for little to no return, providing this information establishes trust in the vendor. Trust generates quality leads that are more likely to transition into loyal clients.

The goal of the second funnel in the Four Funnels Framework is to feed the pipeline for Funnel 3—where Business Development Reps (BDRs) call those that have shown marketing engagement, qualify these, and pass on to Sales.

Funnel 3: Qualify

Until this point, seller engagement with buyers has primarily occurred electronically through the sellers’ websites, social media, and email campaigns. Now that contact information has been exchanged, it is time to qualify the potential buyer to determine if they are ready for engagement with Sales.

The object of this third funnel is to create a sales pipeline for the fourth funnel. In order to achieve this, sellers must ensure that the first point of in-person contact is done a professional, senior-level staff.

Many sellers have the mistaken notion that this is “telemarketing” and believe this is an entry-level job. Nothing can be further from the truth.

The task here is to interrupt a busy senior level buyer and in a matter of 20 seconds intrigue her enough to agree to a longer call or meeting at a later time. Most of the time, this requires not only knowledge of the subject matter and industry of the prospective buyer, but also an ability to know when to push and not, when to chat and when to get down to the point, all in a matter of seconds and over the phone. This is a task for an experienced Business Development Rep (BDR).

If the buyer agrees to talk for a bit, the BDR’s job is to make sure this buyer is qualified and then set an appointment with a sales rep as soon as possible.

A predictable revenue stream depends on two qualities of the Sales Pipeline:

  1. High Quality leads that close at a higher rate and close faster
  2. Sufficient number of HQLs to meet the company’s new revenue targets

Funnel 3 is responsible for achieving these objectives.

Funnel 4: Engage

With BDRs focusing on keeping the sales team’s pipeline full, sales reps can now focus on their primary role— deeply understanding the buyer’s world and building a partnership in solving the buyer’s issues, leading towards a successful close of the opportunity.

This is the primary function of salespeople—to work closely with motivated potential buyers and place their full attention on solving the issues of the buyer. Holding them responsible for both Funnels 3 and 4, while it may seem reasonable, is actually counterproductive.

In fact, a survey of sales professionals by Sales Insights showed that they spend over 26% of their time on average trying to generate a qualified lead. This is clearly a demanding task and takes a great deal of time away from a sales rep primary role.

Once a healthy sales pipeline and a quality sales lead has been established, the sales team can focus on continuing to qualify prospects while integrating them into the buying cycle.

The Four Funnels Framework provides a methodology for consistently achieving predictable revenues by generating High Quality Leads through a process that integrates marketing, prospecting, and sales. This integration removes duplication and waste, significantly lowering the total cost new customer acquisition.

Performance Improvement Plans

Performance Improvement Plans: Why I Hate Them

There are two sides to everything: Yin and Yang; Good and Evil; Hot and Cold; Black and White. For Sales Management, its two sides are the fun and not so fun parts of managing a team. While managing teams has its benefits, team management also includes making tough decisions. You might think about various practices

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GOSPA Planning by SOMAmetrics

GOSPA Planning: Manage Your SDR Team Their Way

Your company has assigned its targets for the year. How does your team translate those targets into viable actions for them to achieve their goals? GOSPA is a short planning tool that helps team members to stay on track throughout the year.

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Building a Unique CRM Ecosystem to Access Important KPIs by SOMAmetrics

Building a Unique CRM Ecosystem to Access Important KPIs

This blog discusses the importance of building a SDR specific eco-system within your CRM. SDRs aren’t Sales people; they are tasked with finding qualified prospects which build a quality pipeline for your company. The CRM fields required to support your SDR team are addressed in this blog, and in the book The Radical Pipeline Strategy: How to Grow Pipeline and Revenue by Optimizing Sales Development.

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Use SPIFs to Spice Up SDR Performance

Use SPIFs to Spice Up SDR Performance

This blog elaborates on the best way to utilize Sales Performance Incentive Funds (SPIFs) to energize your team. Use SPIFs to provide an incentive to improve lackluster KPI’s and other performance metrics.

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Developing New Business (Quadrant 4)

develop new business

“How to Develop New Business and Break Into New Industry Sectors” is part of our “Four Quadrants for High Growth Quick Start Guide”.  To access the full series click here

 

Quadrant 4: Develop New Business Outside your Industry

Overall Goal: Find a new customer type for each new product every two years, thereby increasing sales by product by another 10%-20% every two years.

SOMAmetrics-Quadrant-4
Four Quadrants – Quadrant 4

 

By now, it may be apparent that the first three quadrants are very similar to each other. Quadrants 2 and 3 are closely related  since they consist of your existing customers, and Quadrant 1 addresses the same industry as your existing customers.

Quadrant 4, however, is different. It consists of non-customers from different industry sectors than those you normally market to. It is actually an exercise in new business development.

The right approach to developing Quadrant 4 is to follow Geoffrey Moore’s advice in Crossing the Chasm and first establish a beachhead.  Assemble a team of your best people to target a few selected accounts that will generate key wins for you within the new industry, allowing you to establish credibility early on. Your team members should be highly entrepreneurial and have a very strong “whatever it takes’’ attitude to winning these new customer types in an industry that no one in your company is familiar with.

In Quadrant 4, your objective to sell a product you first developed for a different market segment, with some modification and customization. You have some idea of what that customization might look like, but in truth you won’t really know until you are trying to make your first sale in that segment. This is more like a custom project, which is why you need a team that is highly entrepreneurial— capable of building something from the ground up and finding  solutions for problems that you have never really addressed before.

Below you will find a Best Practices checklist for optimizing high growth within Quadrant 4 for Marketing, Sales, Customer Service, and Innovation.

 

Marketing Checklist

GOAL

Identify other market segments similar enough to your current market segment so you will be able to leverage many of the capabilities you already have.

KEY OPTIMIZATION ACTION ITEMS
  • Set up a Market Strategy team that explores applications of your current products in solving problems outside your current market.
  • Build a disciplined market segment analysis approach to identify the best opportunities.

 

Sales Checklist

GOAL

Find the early adopters and key accounts in the new market segment

KEY OPTIMIZATION ACTION ITEMS
  • Set up a New Business Development unit charged with finding the right entry points within the selected potential growth area.
  • Define the compensation plan for rewarding success.

 

Customer Support Checklist

GOAL

Do everything necessary to create highly satisfied and referenceable customers.

KEY OPTIMIZATION ACTION ITEMS

Set up a “Special Accounts” team whose priority is to do whatever it takes to make these early adopters highly successful with your products.

 

Innovation Checklist

GOAL

Make it easy to custom fit your products to new market needs within 90 days.

KEY OPTIMIZATION ACTION ITEMS
  • Create a platform for your products that enables you to customize and support various versions of your products.
  • Rapidly complete Proof of Concept (POC) projects.
  • Rapidly convert approved POC into stable products.
 

Does Strategy Impact Revenue Growth?

The answer is  “maybe”. When strategy doesn’t deliver growth, the issue appears to be more on alignment than anything else. And yet, companies spend ample time on crafting go-to-market strategies without first investigating possible roadblocks to execution. In our experience, the number one roadblock to execution tends to be lack of commitment by senior management, typically due to inconsistencies between what the company is all about and how it presents itself in the marketplace. Here is why.

What is Strategy?

Strategy is defined as the thought process of focusing limited resources on a few well-chosen activities that are most likely to produce the best results. It is the process of deciding what to do and what NOT to do.

It turns out, however, that strategy is not a single process, but actually consists  of two components that must work well together. In addition,there is arguably a right and wrong sequence to strategy formulation, and getting that sequence wrong is typically what leads to poor execution.

Business Strategy

The first component is Business Strategy, which involves the internal DNA of the business. It addresses the following questions:  What are we really good at? Are we a product company, an operationally excellent company, or a highly customized service company that provide unique services to a very select clientele?

These three types of companies require  very different strategies. A company cannot excel at all three—nor will it need to. Mac buyers are not in the same market as Dell Inspiron buyers, for example. They buy different things and are willing to pay different prices for what they want. Neither are BMW and Toyota buyers in the same market, or DHL and UPS customers. Each company has a different value proposition based on its DNA.

Market Strategy

The second component is Market Strategy, which deals with the questions:  Where do we want to compete? Who cares most about the issues that we are the best at addressing?  It is about finding the right customer for whom the company’s value proposition is a painkiller (must have) rather than a vitamin (nice to have).

Go-to-market strategy deals with the selection of a market segment with a specific compelling need that the company can address. That means specifically targeted competitors, partners, and distribution strategy. It also entails a carefully selected pricing model that works for that market segment, as well as a positioning that guides all communication. Though all of these factors may be carefully assembled, they may still not be aligned with the core business strategy of the company, which can result in  friction and hurdles.

Getting these two equally critical, very different and yet complementary facets of strategy right is not trivial. Executing flawlessly on both is extremely challenging. The companies that figure out a highly viable strategy (for both business and market) and execute well on this strategy will have the best chance of becoming market leaders.

The Challenge of Strategy Execution

Strategy seems to work best when it starts internally (business strategy) and works outward (market strategy).

Most likely, the biggest reason why execution fails is due to lack of commitment—financial and emotional. This lack of commitment arises when senior management is not in agreement on how to proceed. Sales and Marketing managers? are typically externally focused and want to execute on go-to-market strategies that may not be in alignment with the core identity of the company. Because product companies are quite different from service or operations companies, their go-to-market strategies need to be different.

Misalignment occurs most often when a highly accomplished senior executive is hired and asserts his or her will to shape the company after an image this executive understands very well—the go-to-market strategy that he or she has previously executed with great success. The question here is: Is the go-to-market strategy the right one for this company’s DNA?

For example, in the 90’s, manufacturing companies tried to hire ex-Toyota managers in hopes of achieving zero quality defects and operational efficiency. However, in a number of instances, this tactic didn’t work well and was frustrating to both the hiring company and the ex-Toyota manager. How a product company achieves zero quality defects may radically differ from how an operations company achieves it–and strategy is always about answering the “how” with the resources available to the company.

Executing strategy requires discipline, which involves a commitment to do certain things and not others. Operationally excellent companies make different choices from product excellence companies. The entire management team needs to be in strong agreement on what those choices are, which is what business strategy is all about. With that in place, the work of finding the right market in which the company’s competencies allow it to dominate becomes more intuitive.

Market Strategy Flow

However, things can break down at this step as well. Market strategy has a certain flow to it. It starts with identifying a compelling need that a company has the best chance of solving more effectively than alternatives. Again, the idea is to find a market space where the company’s capabilities provide a painkiller (must have) rather than a vitamin (nice to have).

It then examines market segments with that compelling need and determines which one is the most accessible in terms of its decision makers and decision making process. Understanding the value chain of how goods and services flow from the company to the end user helps the company see how many stakeholders must be convinced to make a sale. The level and type of competition has significant impact. There are always competing alternatives. The question is how entrenched these are and how hard it will be to dislodge them.

With that knowledge, the company can position itself attractively against both a direct and market alternative. Whatever distribution channel is selected must meet the aforementioned requirements . It must be able to access the decision makers and know how to support the entire product that the customer wants to receive. Moreover,  it must be able to do this at a cost that leaves a healthy margin for the company while simultaneously showing strong ROI for the customer.

What we have described above is how to arrive at the right strategy for your business— one that is practical and executable. While this process is not easy, it aims to avoid major hurdles that can turn out to be showstoppers.

The SOMAmetrics Approach

At SOMAmetrics, we help our clients define a coherent strategy that is built on who they are and focuses on target markets with compelling needs that our clients can fulfill better than their competitors. Furthermore, we supplement our client’s resources with additional ones—from building marketing content to lead generation and qualification, and then delivering these sales qualified leads to our clients’ sales teams.

Our approach of aligning strategy with best practices makes execution smoother by shortening sales cycles and improving closing ratios, which leads to accelerated revenue growth.

Contact us today for a short conversation to see how we may be able to help.

A Culture of Continous Recognition

Modern work place

Why do people work? Do people work only to earn money, pay bills, and live in some comfort? Or might they also work for a more inherent reason?

We all need money to live in comfort and to support our families. However, I believe that most human beings thrive in environments that provide recognition for their accomplishments. While you can assist your roommates or family members at home, whether or not they will notice and appreciate your efforts is often a crapshoot.

On the other hand, I believe that a place in which we can be recognized consistently is at work. When we are at work, we are measured for our contributions toward revenue growth, or for our efforts that increase net profits. Revenue growth and net profits can be measured, and their increases are easy to appreciate because increases in these areas impress investors.

It is important that all individual employees be given a set of metrics or Key Performance Indicators (KPIs) that they can be measured on. If everyone is held accountable for their jobs and measured accordingly, they have a framework by which they can be recognized.

Once you have created the metrics and KPIs, you have the framework to build a consistent recognition process for every contributing member of the company which can be implemented across the organization. As I mentioned earlier, I believe that people thrive on recognition. To help your employees thrive, your company should consider building a continuous recognition program.

A continuous recognition program may recognize those individuals who consistently meet their objectives. This is an easy place to start. To get your entire organization to flourish, however, your company might consider recognizing employees who have made incremental improvements. You may want to recognize people who contribute to the greater community, for example. The continuous recognition program can be run as often as you’d like — monthly, quarterly, semi-annually, etc.

Give Managers the opportunity to do “spot” recognition, on the fly and in front of their teams. This type of recognition will prevent complacency. Imagine how you might feel if, out-of-the-blue, your manager recognized you and gave you the rest of the day off because of your contribution to the company.

The method of recognition can take many forms. As a company, decide if you will give days off, gift cards, cash, etc. However, don’t let these be the only forms used for recognizing your team members. A nice letter, on company letterhead, or a note of thanks can go a long way in motivating your team and building a “thriving” organizational culture.

Once you design a continuous recognition program and implement it, you will watch your team members and organization prosper

How To Reach The Land of Opportunity

Every self-professed expert who tweets, blogs and uses other forms of media becomes an authoritative source to lead you to the Land of Opportunity. Beware of the hype, many have never been involved in sales and truly are bottom-feeders as the economy grows weaker.

With that backdrop, you can be aware of their message, but you need to establish your own path to success. It starts with an understanding of your organization, your market, what works and what doesn’t and hiring the right individuals to make great things happen. Talent, hard work and using the right tools can make a big difference to attract prospects that are going to buy your product or service or not.

It takes a balanced, multi-tiered approach to doing things that requires constant feedback and adjustment. As you get started, you need to look at what serves you best to avoid costly headaches. You want to hear from prospects, your sales and marketing team. They are the front lines and face of your company. You want to receive accurate information from them and support their efforts, all within your operating budgets. You need to develop a plan, a course of action for all the pieces to fit together. Doing too much, like sending email blasts to prospects every other day, for example, while relatively inexpensive, can actually kill sales by as much as 50 percent.

Other things to watch out for include not doing your funnel math to determine how many marketing impressions you need to make and what your close rates is needed to help insure achievement of your sales goals. You can correlate many things like this that you are not doing and find that you need to pay attention, make change and cut through a paradox of issues.

If you haven’t seen the success from your efforts that you wanted, you need to consider bringing in a consulting organization to help you. The consultant can be more agile than your staff and look into the problems and challenges you’re confronting. If you want more sales, they can help build your pipeline. If you want better communication with your front-line sales they can help build and adapt your CRM system. If you want better communication with your client they can help with demand generation.

Two important things to remember: ask for help when you need it, ask someone who understands your business and market.

CEO Alert! Your Message- Does It Resonate?

women giving a sales presentation

Everyone Needs Our Solution, right?

You have a great product, solution or service. You’ve had a bit of traction with your target market and now you are ready to launch a full scale campaign which should rev up your sales engine. You launch your campaign and “nadda”. No leads or website hits happen. You were expecting, if not an avalanche of leads, at least a strong flow. But your marketing-mix isn’t attracting prospects to your website or generating leads for your Sales team. What’s the problem?

What Mom Told Us about the Word Assume

Over the past 20 years, the SOMAmetrics Sales Optimization team has worked with 100 Software and SaaS companies to improve our client’s Marketing and Sales processes, implement Marketing and Sales Best Practices and increase revenue. Nearly all of the 100 companies, we helped, had an issue with their message. Nearly all of these companies assumed that they knew what would resonate with their target prospects. They had created the best service, product or solution and knew that they could effectively communicate the efficacy of the service, product or solution to their prospect base. They were wrong. In every case, the assumptions were made in a black hole. The assumptions were made by individuals at these companies and tested on customers who had already made a purchase. The “early purchasers” were not technology adverse and had some need that could be filled by the solution. For the greater market, the more conservative buyers, the assumptions were wrong. If companies could stay in business based on a few “risk-adverse” and technology-savvy buyers, they would all be making money hand-over-fist and wouldn’t need support from Consulting Practices like SOMAmetrics.

Ask and it is Given

If you aren’t getting leads or if your prospects aren’t lingering on your site, you may have a problem with your message. If your message doesn’t resonate with prospects, your:

  • Key words won’t attract prospects or prospects won’t spend time on your site because the key words don’t match their search requirements
  • Lead flow will be low to non-existent
  • Telemarketing team will have to make cold-calls (which is a HUGE waste of time and money) because they don’t have leads
  • Telemarketing team will be frustrated because they can’t get any traction with prospects
  • Sales team will be frustrated because they aren’t closing any deals
  • Sales Funnel won’t be large enough to generate the revenue you need to meet your corporate objectives
  • Deals will be too few or non-existent

So, what do you do? Ask your prospect base what they think about your message. Launch an online survey to gather the information you need to improve your message.
You will be surprised. You can expect a 1.5%-5% response rate, especially if you offer a small honorarium to answer your questions. No, a corporate tee-shirt won’t do. You’ll need to offer cash ($40, $50, $100) to entice your target prospects to answer your survey.

The Building Block to Success

Get your best marketing, sales and telemarketing folks in a room and hash out a survey that will address your assumptions. Questions should, for example, revolve around your assumptions about:

  • Prospect Demographics
  • Messaging
  • Pain or Need
  • Price Points
  • Interest in Solution

Once everyone is confident that you have a solid survey, send it to your target prospect database. Fifty or more surveys will give you enough data to help you re-think your assumptions and improve your messaging. Once you do, your lead flow will increase and your web traffic will pick up.

It’s an easy exercise. Make sure that you survey your target base, at least twice a year. Allocate a budget for this market research. It will be well worth your time and money.