Symptoms of a Sick Sales Funnel

Can you believe that the sales funnel is 112 years old? Hmmm. Seems like a lot has happened since then. No wonder the ole’ funnel is showing signs of wear. IDC research shows that the time it takes for tech companies to create a B2B customer has increased by 15% in the past year. Is it time for a fresh approach?

The sales funnel first appears in a 1925 book by Edward K. Strong called The Psychology of Selling and Advertising. Strong attributes the funnel’s invention in 1898 to Elias St. Elmo Lewis, a sales manager for National Cash Register (NCR). St. Elmo Lewis, who later helped found the Association of National Advertisers, called his sales funnel AIDA for the four stages of “awareness, interest, desire, and action”.

The traditional funnel uses an industrial era paradigm that treats a buyer like a widget. With the right machine, a vendor can manufacture that widget into a product called a customer. In the industrial model, the marketing team works awareness at the upper funnel when buyers aren’t too interested. As soon as there is serious interest, marketing sends the “lead” down the assembly line, handing off to a sales rep whose must fabricate an opportunity and produce revenue.

The problem is…the traditional funnel doesn’t work that well anymore.

Alarming evidence of sick sales funnels show up in the data. Tech vendors now take an average of 19 months to create a large account customer, an increase of 15% in just the last year. Some of this lengthening is certainly due to uncertain economic times. Greater risk aversion has increased the size of the average buying team from 5 people to 6. But we can’t blame everything on the economy. Buyers, IDC finds, don’t like this slowness. They want vendors help to shorten the cycle. According to the IDC Buyer Experience study conducted earlier this year, buyers want to push for a 40% reduction in the time to buy.

Poor funnel health also shows up in unsustainable conversion rates. Research from IDC’s 2011 Tech Marketing Benchmark and 2011 Sales Productivity Benchmark reveals that it now takes over 1000 marketing awareness targets to get one sale.

Symptoms of a sick funnel. Beyond the data, tech vendors are experiencing the effects of their sick, out-dated, funnel approach. Here are some common symptoms companies complain about. Does your company experience any of these symptoms?

  1. Bickering: Sales and marketing teams bicker over the number & quality of leads.
  2. Bad Data: You don’t have the right data to judge performance, predict the pipeline, and refine strategy
  3. Wrong Tools: Sales people don’t have the tools needed to sell, in spite of the fact that they have access to a tonnage of content.
  4. Failed sales: Sales people fail to convert most leads. Marketing has no idea what sales plans to do with leads.
  5. Funnel Gaps: Prospects fall out of the pipeline, but you’re not sure when or why
  6. Silos: Sales team thinks it’s a waste of time to provide feedback to marketing and your marketing team rarely seeks input from sales.
  7. Missing Messages: You can’t nurture buyers because you lack the right content

We need a new funnel framework. Much has changed since the sales funnel’s 19th century invention. Business is far more sophisticated. The Internet and social media have dramatically changed the way buyers buy. IDC CMO Advisory has guidance for a funnel makeover in the form of a new Customer Creation Framework.

Here’s an introduction to that framework in an IDC webcast called, Transforming Lead Management: How the new buyer is killing your funnel (and what to do about it).” (The webcast is recorded. Register and you can get the replay.)

Building the Big Tech Brand: Dell and Xerox

The last two years have been hard times for tech marketers: there has been major pressure to transform execution, coupled with a significant reduction in the rate of budget growth. This is truly the “We are being asked to do more, with less” situation that marketers casually complain about. But this time, it is reality.

Despite the headwinds, I have been very impressed with the major brand campaigns that Dell and Xerox have been able to execute.

Both Dell and Xerox have spent billions for a major make-over of their product portfolios: acquiring and developing significant Services and Software capabilities. So much has changed at these companies that the brand perception no longer matches the product reality.

Brand perception simplified is: “What do you think of, when you think of Dell?” And, “What do you think of, when you think of Xerox?”. When I think “Dell”, I think of several cardboard boxes of new PC gear lying in my driveway, fresh off the UPS truck. When I think “Xerox”, I of course think “copiers”.

Changing a company’s brand perception is extremely difficult if not impossible. For how many years has our US auto industry been trying to change the negative brand perception for a now vastly improved product line? It has been, arguably, two decades. And still today, the brand perception does not yet square with the product reality.

If it doesn’t square up, you have to make a big move. The CMO’s of Dell and Xerox really had no choice but to undertake a major brand re-fresh and re-vamp. They needed to have brand perception start to match the product reality.

I am impressed by several factors in their execution:

1) The Dell and Xerox CMO’s were successful because they presented their case as not a marketing issue, but a company issue.

2) These marketers created the budgets necessary to start the Big job. Major shifts require major monies. Having studied marketing budgets for so long I am convinced there is just no way to do this by shifting around the marketing mix of the run-rate budget envelope.

3) They were able to do this during the time of a recession. With 20/20 hindsight: they get extra points for having a lot more marketplace “voice”, during a time when so many other vendors were hunkered down, scared and quiet.

The era of the Big Tech Brand is coming.

Going forward, our IT Industry will be one of consolidation and scale. It will be a slower growth industry and so the marketing challenge will be one of competitive share gains in addition to new market growth. And perhaps most importantly, the merging or our Business IT with our Personal IT will favor the biggest and best brands — as the power of consumer “pull” will become a major factor in the IT decision equation.

Think deeply about your brand!

Does it square with product reality?