What the Hell is a Sales Funnel and Why Should You Care?

TLDR: sales funnels are predictors of sales success. Learn to use one and apply it to everyday life situations.

Sales Funnels don’t just have to be a boring business forecasting tool.

I worked in sales for close to a decade. In that time I conditioned my mind to think in terms of a funnel and it’s associated metrics.

Bear with me.

Essentially a sales funnel is a way at looking at your opportunities to sell a product or service to an audience. At the top of the funnel, you would have your largest audience, anyone who is a potential customer. As you progress ‘down’ the funnel potential customers fall off for various reasons and you’re left with the final customer.

My assertion is that we should be using the funnel concept in daily life.

Courtesy of FitSmallBusiness

Funnels allows savvy sales leaders to see where ‘blockages’ in the funnel are and identify where a sales executive may need to focus their attention more or even retrain.

A sales exec can sell software to companies of more than 1000 employees within the Portland, Oregon territory.

500 such companies exist.

The entire landscape for this exec is 500 companies — that’s it. The exec will diligently reach out to each company, one by one.

That initial outreach call is the ‘top of funnel activity’ -the first ‘touch’.

As these companies get used to hearing from the exec, some will ‘warm up’ and agree to a meeting.

Of course, execs will never get 500 meetings — companies will be working with a competitor, have no budget, or give some other reason they can’t buy.

So let’s say the exec gets 200 meetings from the 500 companies. 200 prospects.

This is a 40% ‘conversion rate’ of cold calls to meetings. From this, I would infer that this exec is extremely good on the cold call because around 1 in 2 companies agrees to meet with them. 40% is damn good.

However, further down the funnel, we’d track meetings that actually occurred. People ghost Zoom calls all the time. Assume only 100 of the 200 people show up…. the conversion of cold call to meetings booked would still be 40% but conversion of cold call to meetings actually held is only 20%.

Similarly the exec has a 50% meetings booked vs held conversion rate.

So there’s a steep drop off from booking the meeting to conducting the meeting. Perhaps this exec is:

  • Scheduling meetings too far out so urgency/ interest is lost
  • Not properly following up with the prospect via email
  • Misreading the prospect’s urge to just get off the call as a genuine willingness to meet and discuss the product

So these are all training opportunities for a manager to discuss.

Now imagine, of those 100 meetings:

30 people say: this is not a fit for us

30 people say: this is great but not right now

60 people say: this is great, send me a contract!

The exec and manager would fist bump and celebrate because sending contracts to 60 out of a total possible 500 prospects would be AMAZING.

That’s 60/500 x 100 = 12%. A 12% cold call to contract conversion rate.

Of those 60 contracts however… how many will pull the trigger and sign?

You guessed it, not many.

So you start to see that at each ‘stage’ in the funnel, people are dropping off left and right. Reasons for drop off could be ANYTHING. I have heard the following at all stages of the funnel:

  1. We are not a good customer for your product
  2. We hate your company because you market to us too much
  3. We can’t afford it
  4. I am going on maternity leave and will pick this up next year
  5. The guy who handles that got fired, call back once we’ve hired someone
  6. FUCK OFF!
  7. We are loyal to your competitor
  8. We love you guys, it’s just a bad time right now
  9. Our budget cycle is over, call next year
  10. We are out of business, take us off the list

I hope dear reader, you’re getting a good appreciation of just how thick of a skin sales people need to have. The constant optimism to come in each day and create deals out of thin air.

It. Is. Magic.

I have such immense pride for the profession. Though I’m now retired from specific software sales roles, I still use sales skills in my daily life.

So now we get to the point of this article:

IF YOU CAN UNDERSTAND THE SALES FUNNEL AND APPLY IT INSTEAD TO DAILY LIFE, YOU WILL BE ABLE TO MODEL PREDICTABLE SUCCESS

In the same way that I can tweak a sales exec’s behaviors at any stage of the funnel based on their funnel metrics, I can do the same for my personal life.

Let’s look at 3 LESSONS and attitudes you should take from the above and then 3 example SITUATIONS where you can use a sales funnel approach.

Sales Funnel Lessons:

Knock on 100 doors, 50 won’t answer, 40 tell you to fuck off, 10 people talk to you and 5 people buy. That’s it. Simple. Knock on more doors and improve your odds. But also tailor your pitch or pick better doors so that next month, instead of 40 fuck offs, you get only 30.

Sales execs and also people in daily life get caught up on why people reject them. Who cares? Every no is closer to a yes. From authority, to budget, to timing, there are myriad reasons why someone can’t give you what you want today. Move on to the people who will give you what you want.

Reflect on specifically where you’re seeing a drop off. Then correct that specific behavior. Booking loads of dates from Hinge but nobody shows up? — You have a hot profile pic to get matches but your text game is weak. Getting ghosted after the first date? — Your in person game is weak. Get laid on every first date (congrats!) but no second date?… Fill in the blank of what’s weak here ;)

3 Daily Life Scenarios to Use a Sales Funnel Approach:

This one is so obvious. The total pool of Hinge etc is your ‘total addressable market’. But you’re only going to get dates with a small percentage and an even smaller percentage will turn into a relationship. Be OK with that. Remember the 3 lessons.

I still find it incredible that sales professionals who understand the funnel and its metrics and approach get bent out of shape if they get a job rejection. When I used to train sales newbs they’d get so invested in one deal. If it fell through it would ruin their month. Don’t be that guy or gal. Just move the hell on.

Repeat after me: ‘there is no perfect home for me’. It’s bricks and mortar dude. Don’t get invested in any one place and just keep viewing places. If a broker ghosts you, it wasn’t meant for you. Every minute you waste pining over a place is time wasted. Get to a YES — ‘bottom of the funnel’. Signed contract.

Bonne chance, mes amis.

This guy gets it

Recovering salesman. Writer. Nomad. Bidet aficionado.

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