It’s time to define each step of your marketing and sales process so that you can measure your go-to-market efforts and collect data that will inform your hypotheses going forward.
The goal is to develop a structure, process and common language around your marketing and sales pipelines. Operating your pipeline using objective data will help you test, iterate and get to the truth faster.
Setting the parameters for how you are going to measure the success of your go-to-market efforts is critical for getting to the truth in a capital efficient manner. Every business is constantly evaluating how to adjust people and/or processes to help the business grow.
This part of #gxmxp is where you create the process. Once that process is in place you can objectively determine in the future if your process or your people need adjusting.
We’re going to outline the stages of your sales funnel from identifying a potential new customer all the way to closing the deal.
This is important because what gets measured gets done. Your entire team needs to understand how to keep customers moving through each stage of your sales funnel.
Many startup founders are guilty of having what is commonly known as “happy ears.” Happy ears is when you confuse surface level interest for real business opportunity.
Happy Ears usually plays out like this: You begin a conversation with a potential customer and share your pitch deck, talk about your product and after 30 minutes the person says, “This is interesting. Can you send me more information and I’ll share it with the team?”
At this point you think, “Great!” and the deal is as good as done. You add it to your list of interested conversations and share with your investors another logo that is “in your pipeline.”
But then a few months and unreturned emails go by without hearing from the person you spoke with. Several interested conversations turn into several ice cold dead ends and you’re left panicking about your once robust pipeline. What went wrong?
While there is a lot to unpack here, the short answer is sales process. In 99% of sales scenarios, there are many more steps that need to be taken between initial interest and a closed deal.
Knowing what these stages are serves two purposes:
This approach is nothing new. Every professional sales organization in the world puts a tremendous amount of effort into defining the sales process.
It helps your whole team understand how much revenue you’re in a position to win (or not). It defines what you’re doing well, where you are successful and where people or processes are creating friction.
It’s difficult to know what’s working and what’s not working if you’re operating your pipeline based on your feelings. You need to use objective data instead.
Before we get into the exercise, know that you shouldn’t get caught up in labels when filling out the CRM Documentation. We’re going to put together a series of stages, and those stages are going to have names.
Don’t get stuck on what you’re going to name the stages. You could name every stage in your pipeline after a different animal or color. It really doesn’t matter.
What matters is that you accurately define the requirements for each stage and the triggers that are required for a potential customer to move from one stage to the next.
If everybody understands the meanings correctly, nobody will be transitioned to the next stage without checking the boxes in the previous one.
Understanding the underlying definitions behind the label of each stage of your sales funnel is what will enable you to make data-driven decisions about fundraising, market outreach, and your path to revenue.
There are two parts to defining your sales and marketing funnel: The first and most important is the pipeline itself and the second is the customization of fields to capture data that is specific to your business, industry and sales process.
When it comes to sales funnels, most people think you should have two. The first one is the marketing funnel that takes total strangers and converts them into leads. The other is the sales funnel that converts leads and conversations into opportunities and closed business.
Our advice is to keep it simple early on and build and maintain one pipeline. Once you start doing a ton of marketing outreach and have thousands of leads, then it would make sense to specialize roles as well as pipelines.
You should only have a short list of customers that match your Initial Customer Profile to reach out to so it’s best not to over engineer something for a scale and magnitude that you haven’t reached yet.
In every sales funnel, there are several stages that must be taken between a first conversation and closed deal that you need to map out, label and most importantly define, and that’s what we’re going to do here.
Funnel stages are not a novel concept so you don’t have to reinvent the funnel here. We’ve included three of our favorite resources at the end of this post to help you familiarize yourself with best practices in sales pipeline development.
Before we get started, scroll over to the Resources/Downloads section of this site and download and open the CRM Documentation doc.
For the first part of this exercise, you’ll fill out your sales funnel stages. Here’s what to put in each column:
The second part of the CRM Documentation doc is about customizing your tools to start getting useful data that will help you make decisions. This is where you’ll set up and personalize your “experiment.”
You’ll decide what pieces of information you need to look for and how you’re going to capture and measure it. Standard data points are lead source, company size, city, etc.
Where you should challenge yourself is on identifying those metrics that are specific to your business and your customer to prove (or disprove) your market hypothesis.
Some examples are:
Here’s what to include for each column on this table:
Resist the temptation to start with a CRM before defining your sales and marketing funnel. Selecting your CRM is ultimately about finding a product that enables workflow automation that most closely mirrors your sales and marketing funnel today and the near future. Don’t forget, when you buy a CRM, it starts out empty.
Make sure you and your team first have a habit of collecting and recording relevant data points up-and-down the sales and marketing funnel. The quality of output from any CRM is GIGO (garbage in, garbage out).
A CRM is part of your sales and marketing tech stack. Next up on #gxmxp, we’ll cover CRM in more detail, as well as other elements of your sales and marketing tech stack and show you how to implement each tool in the context of your new sales and marketing funnel.
To further familiarize yourself with sales pipeline development best practices, check out these three favorite resources: