#gxmxp Series

Sales and Marketing Funnel

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.

Trust your Data, Not your Feelings

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

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:

  1. Creating predictability in your sales process; and
  2. Managing your own expectations about what is real and what is not.

This approach is nothing new. Every professional sales organization in the world puts a tremendous amount of effort into defining the sales process.

Sales process = single source of truth for acquiring revenue + achieving market milestones. Click to Tweet

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.

Labels Don’t Matter

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.

Defining Your Funnel 

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: 

  • Stage: What is the name of each stage? As we’ve said, this is just a label so don’t overcomplicate it. You can use names from the resources above, or you can create your own. The most important thing here is that everyone understands the meaning of each one. In the future, you will be using these pipeline stages frequently in everyday conversation so make sure the names are short and clear.
  • Lead/Opportunity: Define which stages are “leads” and which stages are opportunities. As you build your pipeline stages, roughly the first half should be leads and second half should be opportunities. The most basic difference between the two is that leads are active conversations with individuals. An opportunity is when you’ve gotten the attention of a business and you are formally exploring the specifics of working together. Another way to think about the difference is that a lead is someone you intend to talk to or have had an initial conversation with while an opportunity has expressed interest in continuing the conversation formally. In this column, you’ll just say whether this is a lead stage or an opportunity stage.
  • Requirements/Meanings/Triggers: This is where you’ll do most of the work for this exercise. Think clearly about the sales process being a two-way conversation. What actions have to take place from your side and what are the actions that the other person needs to initiate in order to move to the next sales funnel stage? It could be digital activation, like someone coming to your website and downloading a piece of content or someone opening up a cold email. Maybe they finally scheduled a demo or gave you enough information to create a proposal. Whatever it is, just know that each stage should be escalating in direct contact. Each stage should have very clear action items that must be achieved in order to graduate to the next stage. These requirements are vital for the integrity of your single source of truth. If you can’t clearly define the triggers and requirements for each stage then you are leaving your entire pipeline up to subjective inputs and “happy ears.”

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:

  • Monthly website visitors
  • Truck fleet size
  • Number of product SKUs
  • Funding Status (1. Has funding. Needs Funding. In process)
  • Number of retail locations
  • Current technology solution

Here’s what to include for each column on this table:

  • Field Name: This just a label. Again, you can call this whatever you want as long as everybody on your team understands what it means.
  • Field Type: Think about how to structure data. Having everything in general notes form makes it difficult to capture insights and in turn makes it more likely that data will fall through the cracks. Likewise, you want to make it easy on yourself to use the data at some point in the future even if you’re not sure how to use it quite yet. If you’re sitting on a pipeline full of notes, you’ll be that much more inclined not to mine for data when the time comes to do so. As you’re thinking about the details you want to capture, consider how to actually digest that information. In this field, put what’s going to be the form factor of that information. And if it makes sense, actually fill in that data. If it’s a drop-down with multiple options, put those options here. Maybe it’s a number, a date, or the technology. 
  • What Is It: Simply define what you’re looking for how to acquire it. 

Process and Behaviors First; Technology Second

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).

Technology automates current workflows it does not create or instigate them. Click to Tweet

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:

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