The Sales Funnel is Fatally Flawed... LET'S FIX IT.
By ERIK WOLF, CEO, estound

There are not many ideas in marketing or sales more iconic than the “sales funnel,” the idea that closing revenue can and should be expressed as a downward-facing cone where strangers become prospects, prospects become leads, leads become opportunities and opportunities become sales, which is the bottom of the funnel. 

The conical shape is meant to represent the idea that we have fewer people at each stage of the process: for example, if we have 5,000 people enter the top of the funnel (perhaps they are names on a mailing list or visitors to a website for example), perhaps only 250 show any real interest in your products or services, while just 100 of the 250 express any willingness to enter a sales process, only 40 of them end up getting a quote or proposal, and we end up with 8 sales at the bottom. 

The problem is that the funnel analogy only works in expressing a mathematical relationship, the slow whittling of a big number down to a final result. Business managers use the funnel to describe much more though, it’s used to represent a buying process, which it absolutely never should be— “we need to create some sales funnels to build sales for product X” and “our funnel for service Y is costing us opportunities” are they types of things that are commonly said in business meetings, as examples of this misunderstanding.

Here are a few reasons why your sales process (or your buyer’s journey) should never be described using the funnel analogy.

If I have a giant funnel and I dump a bag of marbles into it, SOMETHING is sure to come out the bottom, that’s just the way gravity works. It’s only logical, therefore, that if I want to increase my odds that more marbles will make it to the bottom, I just need to dump more marbles into the top. If more go in, more will come out. 

People are not marbles being poured into a giant funnel and the expectation that we should expect them to behave as such is obviously flawed. There is never a guarantee of success in any sales process no matter how big your funnel, no matter how many marbles.

It was hinted at above but it is important to remember that people have wants, needs, and feelings. People need to be validated and served, marbles do not. I can decide to go shopping for a car tomorrow but I can also abort that process at any moment and for no good reason— that’s my prerogative. I can also abandon a lifelong dream to own a specific make and model of car because I was hopelessly turned off by the salesperson. That too, is my prerogative.

There is only one way into a funnel and there is only one way out. So how do we pour 5,000 marbles in the top and only get 8 at the bottom? Where did the other 4,992 marbles disappear to? How and why did it happen? The funnel replaces important questions of human nature with smoke and nonsense. The funnel does not take into account that people (frequently!) abandon processes, lose interest, or are otherwise dissatisfied with their experience. Ultimately, whether or not we successfully sell to a customer, successfully see them emerge from the bottom of the funnel, is not our decision— we can only influence and encourage the customer and we never get final say. 

The funnel may represent an oversimplified version of a selling process, i.e., as the purveyors of certain products and services, we witness a set of steps from start to sale that can be simplified easily in a linear, funnel-like way. What we witness as vendors is, however, vastly different from what actually happens. 

The vast majority of the buying process, most of the research, deliberations, requirement-setting, etc. happens behind closed doors and without any direct input from us. Buyers decide how they are going to make decisions, what is important to them, who they will lean on for advice, buyers decide what the stages in the process are. 

At the end of the day, the funnel serves an administrative purpose in helping us understand sales math, but cheats us out of real understanding of what is happening when we approach the marketplace.

The funnel analogy teaches us that success is having someone enter at the top of the funnel and leave through the bottom. The buying process, though, does not end when the sale is made. The customer still has the opportunity in many cases to unmake their decision in one way or another, a scenario that the funnel does not take into account. 

There is an alternate visual that has become popular in recent years called the “sales bowtie” in which two funnel shapes are pictured end-to-end with one side representing the pre-sales process and the other representing the post-sales process, and it resembles a bowtie. This is a better way of viewing our relationship with a customer because it does at least acknowledge that there is life after the sale. But it also carries all the weaknesses of the funnel and creates a similarly arbitrary company-focused view of retention that does not pay much mind to what the customer needs and wants at any given moment.

This may seem like a lot of words wasted on dissecting a silly analogy, but the sales funnel is ubiquitous in our discussions of these types of processes, to the point that in many conversations, people conflate the sales funnel and the buyer’s journey, as if the latter is something within our control to construct and engineer as we do with the imaginary funnel. We need to stop looking at customers as if they are pieces to position in a game of chess: we are living in their world, not vice versa.

“The funnel does not take into account that people (frequently!) abandon processes, lose interest, or are otherwise dissatisfied with their experience. Ultimately, whether or not we successfully sell to a customer, successfully see them emerge from the bottom of the funnel, is not our decision.”

Let’s take a different approach and remove the funnel from our lexicon

We’ve discussed the deficiencies in the funnel analogy, so now it is time to abandon that phrase altogether and replace it with something more meaningful. 

Every time we make a sale, it means that we have successfully led a buyer to the top of a very steep hill. Many people shopping for our products or services, over time, will find our hill or approach our hill but very few by comparison will begin the climb, much less make it to the top. Most prospective climbers give up early in the journey, turn around and go home. 

It is our job, in sales and marketing, to lead a climber to the top of the hill but sales and marketing play very different roles in guiding that journey. 

Sales is about communicating with individuals, one-to-one relationships, and it’s the job of sales to make the journey as easy as possible for EACH climber. Marketing is about communicating with audiences, one-to-many relationships, and so it’s the job of marketing to make the journey as easy as possible for EVERY climber.

The graphic above shows the Sales Hill and the various stages of the climb from our perspective on the left, and from a climber’s perspective on the right:

 This is displayed as a body of water, a very real barrier to making a sale. From our side, this is where we seek to understand the needs of the market, where we need to build a bridge between what we have and what the marketplace really needs. The ease of this crossing ultimately determines how much success we have. From the climber’s perspective, the journey up our hill is only compelling if they understand that they have a particular need that a brand/company/product out in the world can potentially solve.

 This is a steep cliff, another barrier, representing the idea that people need to see the journey up this hill as a potential solution to their problem. From the bottom of this cliff, you can only see the cliff itself, not the summit, but you will only go forward if you believe there is a worthy hilltop to be found. At this point, we are trying to convey that, “if you have problem X, you should be aware that our company Y has a solution you should consider.” The climber, for their part, needs to recognize that “Company Y potentially has an answer for this pain I am having with X.” This is very much an equal and opposite relationship.

This is a much more crucial moment for us than it is for the climber. From here, anyone who moves forward is an MQL. By “connecting” they are telling us that they are potentially interested in seeing the top of our hill. As a climber though, you are still relatively uninvested: the vast majority of them are wondering if they would rather be somewhere else, they are assessing the potential value of moving forward, and they are often skeptical.

Here, a climber becomes an SQL in our eyes and our sales “guide” will be fully engaged in managing the rest of the journey up the hill. This is where it becomes feasible that a climber may reach the summit and our guide will be very excited to get them there. The climber is still deciding though. At this point, even while walking alongside our guide, other guides from other hills are constantly in their ear, telling them why it would be so much better for them to turn around and come to their hill instead.

 Here we agree that we’re going all the way to the top. Our guides would do most anything at this point to get a climber to make that sort of commitment. The climber, though, likely needs approval from other people back home in order to keep moving forward. Passing this milestone is the easiest decision we could make at this point, but arguably the hardest for the climber: they could end up being “stuck” on top of this hill for a while and they need to be OK with that.

A climber has made it to the top, and we want to keep them there as long as possible. We’ll offer them a campsite and we’ll sell them additional food and water as we look to optimize LTV. The climber, though, needs to be convinced to stay, other venues are perpetually trying to get their attention and spur the desire to climb somewhere else— their experience on the top of the hill and how we serve them is going to be a key driver in that decision. One thing is certain though: absolutely no one remains on top of any given hill forever.

Marketing’s job is essentially to help prospective climbers find our hill, to cut and maintain the trails, to clear obstacles, and to provide access and a clear and visible path up. This is obviously necessary work if we want to increase the number of people who climb, and it’s also scalable work: it takes the same amount of effort to clear a path for one person as it does for 100. Sales is like a guide or a sherpa, leading individuals to the top. Clearly this is also necessary work if we are invested in getting people to the top, but it’s less scalable because of the one-to-one nature of sales: each guide can only manage a small group of climbers at once. 

RIght after the sale is made, we reach the top of the hill where the product or service is delivered. Some climbers will be unimpressed with the view and turn around to leave almost immediately. Some will set up camp and stay for a while. The amount of time that someone stays is what drives the Lifetime Value of a customer, or LTV for short. What we spend, on average, to get a customer to the top is our Cost to Acquire a Customer, or CAC for short. Given the nature of business overhead (i.e., we blaze the first few trails for a capacity of 1000, we hire a salesperson who can, at capacity, manage several climbers at once) the very first trip up the hill is the most expensive. 

The most important aspect of this climb, though, is to recognize that although we share this journey with our climbers— same trail, same destination— the experience of making the climb is very different for our climbers… They experience uncertainty, fatigue, and anxiety differently than we do along the way, they process the journey differently seeing the landscape with us the first time. A salesperson will only occasionally tell a potential customer that they should probably turn around and start a new journey with someone else, but sales leads will make that decision for themselves quite frequently. After all, a sales lead usually has many hills to choose from and has the ability to choose the easiest climb or the best scenery at any time they want, they can even decide that, after looking at several trail maps, no hill is really right for them at this moment.

“Recognize that although we share this journey with our climbers— same trail, same destination— the experience of making the climb is very different for our climbers… They experience uncertainty, fatigue, and anxiety differently than we do along the way, they process the journey differently.”

The obvious criticism of the Sales Hill is that there are a lot of people at the bottom, very few make it to the top— it’s just an upside-down funnel, right? Not really.

The math relationship described in either analogy is basically the same: big numbers get winnowed down to small ones over time and we seek to maximize the number on the small end. 

The process though is entirely different, and reminds us of one of the most important foundational principles of marketing: we can not force anyone to the top of the hill, purchasing is ultimately the choice of the buyer, not the seller, and our success is largely determined by the experience we give them as they climb our hill, not by how many people we can crowd at the bottom. 

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