The funnel, when properly primed, is a well-oiled machine that can pull in leads and convert them into customers in an organized and efficient manner. The funnel gives your marketing team tools to help identify when leads become qualified and ready to deliver to the sales team.

With a well-designed sales funnel, only the best, most qualified sales-ready leads are sent to the bottom of the funnel where sales picks them up, contacts them, and sells your product or service. Wouldn’t it be nice if it was this easy? Companies invest a significant amount of time and money to ensure that their funnel is full, because, theoretically speaking, the more leads you have in your funnel, the more sales you’ll close.

However, although many organizations focus their energies on all stages of the funnel and filling it with as many contacts as possible, eventually the funnel start to leak, leads drop off, and conversion rates become a fraction of what they could—and should—be. Leaks in the funnel occur for a variety of reasons: There are people in the funnel who shouldn’t be, people who should be in the funnel aren’t, people get wrongly positioned in the funnel, and so on.

How to maximize marketing efforts and sales time

Imagine a scenario in which the sales team calls a marketing qualified lead who is supposedly eager to buy, only to find out that the lead just discovered the brand. Selling too soon not only turns potential customers off, but also wastes sales’ time— both mean lost revenue.

In fact, misalignment between sales and marketing costs companies as much as $1 trillion every single year. When marketing struggles to determine which leads are sales-ready and the sales team receives unqualified leads, the entire sales cycle can fall apart. But it doesn’t have to. When marketing and sales are properly aligned, your business can close more leads and experience higher marketing revenue.

Defining the funnel

Most marketers are well acquainted with some version of the funnel and its impact
on how organizations track, manage, and convert leads. Here is one popular funnel:

  • Marketing’s responsibility
  • Shared marketing & sales responsibility
  • Sales’ responsibility
  • Top of the Funnel
  • Middle of the Funnel
  • Bottom of the Funnel

In this example, the top of the funnel is the marketing team’s responsibility, and the bottom falls to the sales team. The middle of the funnel is the responsibility of both marketing and sales, and this is where most of the leaks happen. Although different companies sometimes have their own terminology, MQL and SQL are the most common terms associated with leads in the middle of the funnel:

  • Marketing Qualified Lead (MQL): These are leads that have a high level of interest and meet certain lead-qualification criteria (e.g., someone who downloads an e-book and is a decision-maker at the company, such as a CEO or VP).
  • Sales Qualified Lead (SQL): These are leads (who usually have already met the definition of MQL) that the sales team has qualified and determined to represent solid opportunities.
  • Prospect/Visitor
  • Lead
  • MQL
  • SQL
  • Opportunity
  • Customer

There is one caveat to this model with B2B sales, however, and that is the Sales Accepted Lead (SAL), which falls between MQL and SQL. In the sales pipeline, an SAL matches key targeting criteria and is believed to be ready to buy, based on a follow-up assessment by a salesperson. In essence, an SAL shows signs of being ready to buy, but an SQL actually has the approved budget, timeline, and decision-making power to make the final purchase and is thus fully “qualified” by sales.

The demand waterfall

Sometimes, determining whether a lead is an SAL or an SQL can hinge entirely on stakeholders of whom neither marketing nor sales were even aware. In this case, B2B sales can benefit from a type of account-based marketing known as the Demand Waterfall.2 This model takes into account the fact that, in many cases, purchasing decisions require the monitoring and nurturing of multiple stakeholders in order to close a sale. At most companies, a team or committee of buyers and influencers, known as a “demand unit,” is tasked with solving an organizational problem.

The Demand Waterfall model begins with sales and marketing establishing an ideal customer profile and proceeds as follows:

  • Identify which accounts to pursue based on the established ideal profile
  • Engage with and prioritize those leads
  • Reach out to leads in a personalized manner
  • Close the deal by making a sale

Marketing and sales have to work together in this model to persuade every member of the demand unit to work throughout every stage of the sales cycle—and sometimes different stakeholders are at different stages of the sales cycle. By taking into account everyone involved in the decision-making and buying process, the “waterfall” method should result in more closed sales and greater revenue.

Measuring the leak

Before you can institute a change to better align sales and marketing and fix your leaky funnel, you’ll need to determine your conversion rates at each stage of the sales process. This means carefully determining the following conversion rates:

  • Prospect to MQL
  • MQL to SAL
  • SAL to SQL
  • SQL to customer (revenue gained)

Determining each of these metrics can provide a good picture of efforts being made across marketing and sales and where leads are being lost. For example, if you’re in the Event Services industry and your sales team starts with 115 SQLs and closes 65 sales, your SQL-to-customer conversion rate is 56.5 percent.

Tracking performance and conversions

Some companies may also choose to evaluate conversion rates by looking at a specific period of time and dividing the total number of leads generated by the number of sales opportunities created or customers gained during that period. It’s also worth assessing the lead value (Lead Value = Value of Sale/Number of Leads) in order to determine what kind of conversion rates (Conversions Needed = Desired Revenue/Lead Value) will help both marketing and sales reach the desired goals.

With these figures in hand, you can compare your results against those of others in the industry through Google research and reports. You can also find industry standards by reviewing relevant case studies or even reaching out to industry colleagues who work at companies offering a similar product or service to yours and that are fairly equal in size, locale, and scope.

Finally, look for trends and track performance over time across both sales and marketing. Your focus of tracking might include:

  • Demographics: lead title, email domain, job functions
  • Firmographics: company name, location, industry
  • Behavior: links clicked, content read/watched

Documenting this data will reveal any correlation between a lead’s advancement—or lack thereof—through the funnel and conversion. Additionally, it can help uncover any shortcomings within teams, such as whether marketing is failing to pass on qualified leads with a personal email address or if the sales team is avoiding follow-up opportunities within specific industries. With all of this information at hand, you are now ready to determine the source of your funnel’s leaks.

Learn more about what steps to take to optimize your sales funnel. Download our eBook “Fixing Your Leaky Funnel” here.

Download our eBook Fixing Your Leaky Funnel