Poorly defined terms foment confusion & dysfunction
About Common Sense - About John & Ed
You've met Ed here on the site.
For many years John and Ed have enjoyed talking about thorny issues around B2B marketing & sales, and recently we've started to record those conversations/debates. We're calling it "Common Sense" based on our shared love of history, and the perspective we hope we bring.
You can follow our musings on Common Sense at:
Ever heard someone talk about their "sales funnel"?
So often we use terms out of habit that not only fail to elucidate our conversations, but actually contribute to misunderstanding. A great example is the loose use of marketing funnel, sales pipeline and hybrids like sales funnel. What do these really mean? Do we need both? Either?
This episode includes:
- What is the marketing funnel - and why John thinks it's most important
- What is the sales pipeline - and why Ed thinks this is the key
- How the two fit together
- Why they both annoy prospects
- How revenue growth teams should view and manage the combination
We dive into each of those and more as part of this conversation about whether marketing funnel and sales pipeline are meaningful or even relevant terms.
Transcript Follows:
Ed Marsh: Hi, I'm Ed. Welcome to Common Sense.
John McTigue: And I'm John. How are you doing Ed?
Ed: I'm good, John. How about yourself?
John: Doing well.
Ed: Ready to argue today?
John: Ah, yeah. We're going to argue about something. We'll figure something out. We thought it'd be fun to take the positions that we do in our lives, often, and argue about sales versus marketing a little bit.
Ed: There you go.
John: So, we're going to talk about that, and talk more specifically about, or argue the point which is more important, the marketing funnel or the sales pipelines. So, why don't you kick us off?
Ed: All right. Simple answer, two words. Sales pipeline. I mean, it's that easy.
John: Well, I'd have to agree that's a simple, straightforward answer, but I have to disagree a little bit there. I think it might be the marketing funnel is primary.
Ed: All right, well, here we go. It's playoff hockey season as we're recording this, so the gloves come off, intensity goes up, and let's see where we end up.
John: No, actually it's basketball season, so we're still on the wrong side of that one, so.
Ed: There you go. I would say, all joking aside, before we can argue this intelligently we need to be really clear what it is that we're talking about. Everyone can visualize the marketing funnel. You've seen representations of it that start wide and come down to this little drip coming out of the bottom. At the top, often, is the total adjustable market, kind of in the cloud above it, and then all the prospects get tossed in and they get sorted through some sort of a qualification, nurturing process, gradually filters them out and prospects fall out the bottom in a small number.
Once they fall out the bottom, though, that's when they finally get plugged into the sales pipeline. We talk about these, we set the context like we're saying which one, but they're different things, and so it probably is both or neither, or we'll see where we end up.
John: Yeah, I agree. I think one of the things is that people get confused about these two terms. In fact, they often call it a sales funnel, so it's kind of a combination of both things.
Ed: Right.
John: But, I agree, they do confuse the two in terms of what exactly it is that's in each one at each time, and how they're being measured, and what the importance is to the overall process. But, I agree. It is sequential.
Ed: Hey, we agreed early. How about that.
John: Yeah, I know. But we'll get back to it a little bit. We'll talk about why each one's important, and how they fit with each other. One of the things that's often missed is where do these terms come from, and mostly they come from us. It's sales, it's marketing, we're looking at customers, we're looking at buyers. We're not necessarily putting ourselves in their shoes, we're talking more about what's in it for us. So, we're talking about where is that prospect in the overall buying process. And, what can we do to win them over. Both sales and marketing do that in different ways.
But, I think that's number one, is that we're not looking at it from the buyer's perspective. They don't really care whether they're a lead, or a SQL or where they are in terms of being qualified. They'd actually resent it if they knew that that's how they were being treated. So that's something that we probably need to think about in terms of being … solving for the customer, so to speak.
I think we can go from there, but why don't you dive in, starting there a little bit.
Ed: I guess the other thing that we've touched on at times in the past has been the difference between sales process and sales methodology. I know we're going to talk about that more in the future, but I think that really ties into this.
So, sales process maps to the pipeline. That is the way that the sales team thinks about how they move a project through. Whether you use BANT or some other kinds of system, making sure that they're following a consistent process so that they end up with a replicable revenue growth process.
But, as you laid out those descriptions, it seems that really we're still circling around the same argument or debate that we've had a couple times, about marketing and sales silos. It feels almost like those different terms and those different perspectives continue to derive from those silos. You think that's … is that fair?
John: I do. It's particularly true when they have different goals, they have different processes, they have different metrics that matter to them. Like sales is going to be much more interested in appointments and closer rates and revenues, marketing's going to be more interested in leads and conversion rates and website traffic and things like that.
Those things are not equivalent. They're not even remotely equivalent. So, there's going to be some misunderstanding about which is more important, and what matters a lot is how management treats these things, understands the relative merits of each one of those types of metrics. And, how you really look at a bigger picture than that. Overall customer satisfaction and retention and things like that, so. We'll talk about that a lot more in the future, too, but I think that's where a lot of it gets sideways.
Ed: Sure. So, you know going back to pipeline, and why I say the bottom line is a pipeline is more important, you can't make payroll with a marketing funnel. Sales pipeline is simple. Businesses have to close deals, and that means sales people have to actually move projects from interest or need to revenue. That requires a process and discipline and rigor, and CRM and other things that we've talked about before, as well.
So, pipeline is really a management tool that provides the structure for the sales reps to follow. It's a framework that then allows management to forecast and coach and other things that we've talked about. It's focused on really the most important part of the revenue growth process. Even the area where the CRM, that you're such a passionate advocate for, plays the most important role, it's really the nexus of revenue growth.
But, based on where we started, I'm guessing you're getting ready to tell me that that's naïve. So, tell me why the marketing funnel is actually more important.
John: I don't think it's naïve, I just think it's part of the picture. If you don't have good quality leads to work with as a sales team, where are you. It's impossible … well, it's not impossible, you could go back to the old fashioned way where sales does all the prospecting and all the cold calling, and that's proven to be highly inefficient. Most customers don't want to be treated that way, period. They don't want [crosstalk 00:07:38] courted that way, they don't want to go through that process where the sales rep's going through BANT all the time, and asking him a hundred questions and not solving their problems.
So, the upshot of it is that marketing really has a new role, and that is finding qualified leads so that they take that burden off the sales team, to have to identify and qualify leads in the first place. If they can do that, the whole sales process becomes far more efficient. And if they're working together, even better. Using the same CRM data, using the same tools, marketing automation and so on, they can become far more efficient, and they can become far more successful. Because they're chasing after fewer bad opportunities, wouldn't you agree?
Ed: Sure, oh yeah, I think so. Absolutely. Without marketing doing their job, the funnel would be empty, that's clear. And, as you say, prospecting is getting much harder.
But, we kind of end up at this same impasse that so often happens, where you've got marketing opposed to, or versus, sales, instead of better alignment and better collaboration. The solution that it seems like most companies embrace is to kind of allow the two silos to coexist, without figuring out how to get them to intermix, or to overlap, no matter how much we talk about alignment.
As we're talking, it's clear that the right answer is not either or, you need both. And, probably the graphical representations that we traditionally use for these contribute to the fallacy that it's kind of an either or thing. It also, I think, obviously reinforces the point that we've talked about frequently, that the bifurcation of these functions, of marketing and sales, contributes to dysfunction. It doesn't just limit success, it actually creates dysfunction between the two from the buyer's perspective, and the experience that they would think they want to have.
So, are there other ways to fill the funnel? Some sales people still prospect. As you said, it's inefficient. ABM is really about filling the funnel. I'm a big fan of buyer-intent data, I think it provides incredible insight. Basically, the who's who of the people that are actively considering what you're selling, and that's kind of the holy grail for sales. But, nothing is a layup. Even with buyer-intent data, sales people still have to go through their sales process, so what's the best answer.
John: Well, I think the best way to think about it is, right now in my neighborhood they're building a lot of houses. And you don't see houses that are just being built by carpenters. You got roofers, you got electricians, you got plumbers, you got the interior people, and they all work together. It's really kind of an elegant dance. They know exactly when to come in, and what to do, and they work together. The house gets built, and it's a beautiful thing at the end of the day. Why can't-
Ed: So, who's going to be-
John: Sales and marketing do that?
Ed: Who's going to be the GC, somebody from sales or somebody from marketing?
John: Well, somebody's got to pick one. So, really, the CEO needs to step in and say all right, guys, we're going to rethink the way we do this, and we're going to have a team and we're going to have a team lead. Maybe that team lead changes from now and then, but we're going to have a very well designed process that's open and transparent and we're going to have an SLA, and we're going to agree to work together. It's not about fighting anymore, it's not about finger pointing. We're going to measure the right things, and we're going to all solve for the customer. It's pretty simple concept, and it's not that easy to achieve, but that's where we need to be, in my opinion.
Ed: Every time we talk, that same thing seems to come up. Solving for the buyer, understanding the buyer perspective. Being empathetic, and not building a process to satisfy yourself internally.
What you're saying is dictate from the top that they need to work together, maybe even append them or fuse them. But, I guess the question is if you end up sandwiching transactions in between these warring departments, what happens? I love the way you describe it, it sounds simple, it's common sensical, we've talked about it before. It's kind of a perfect outcome for this debate, but I don't know of anybody that actually does it. As much as we talk about it, and as clearly as we paint the picture, there's so much inertia to overcome. I mean, if you're the VP of sales, you've got a big staff and a big budget, you don't want to give that up. And, if you're the VP of marketing your reason, when you come into the company in the morning, the reason you're there is to create leads. How do you fit those together? I don't know the best solve for it, do you?
John: Well, I agree it's rare. You see it more and more from startups in the technology sector, because they're bred that way. They're entrepreneurial by definition, and they don't have a rule book that they're playing from, so.
And, they're making it work. I would think at least some CEOs would look at that and say look, these guys are growing at a thousand percent a year, and they're not growing headcount, they're just doing it the right way, and they're doing sales and marketing in a natural way that consumers are going for.
So, at some point you have to look at your own performance and say look, guys, we got to do something about this, because we're going downhill and shareholders are not happy about this. That's what it's going to take. It surprises me that it hasn't happened faster. But, it has happened in a lot of industries that we've talked about. But it's going to take a while for manufacturing to really come to the party, I think.
Ed: Because in many cases they're not going downhill, their rate of acceleration uphill is stalling. And so it doesn't feel like an acute problem, yet.
John: Right. They have momentum from years of business, and relationships that they build over 50 years that haven't gone away yet. But when they do, then they're going to really feel it, I think.
Ed: Right, and their accustomed to growing at a rate of 10 or 15 percent a year and being happy with it, as opposed to tech companies with investors that expect them to grow asymptotically.
John: Yeah, and don't forget that people who are under 30 years of age now don't know anything but the customer continuum that we call it. They don't know any other way of being treated than outstanding customer service that's all online. So, ten years from now, they're going to be in their 40s, and they're going to be taking over companies. So, you're not going to be able to stick with the old game plan for very long.
Ed: Right. Yeah, I think a great opportunity for competition in very traditional industries, as companies get new leadership that kind of takes them in a different direction.
So, I guess where we're ending up is that marketing funnel and sales pipeline really are distinct, they're uniquely important, and they're most effective when they're integrated as part of a big picture analytical management continuum, is that what you're hearing or what you're thinking as well?
John: Yeah, and I think that the new way of thinking about it as a continuous loop. So, you're going around again, after a sale, and your customer service people and marketing people are working to make sure they're happy and successful, which leads to more sales, which leads to more opportunities going around and around, and around. That's the way to grow revenue, in my opinion.
Ed: And it sounds like common sense to me.
John: Yeah, sounds like common sense.
Ed: So, thanks to everyone for joining us. Next time, we're going to tackle ABM, or Account Based Marketing. We're going to discuss whether it's some kind of marketing voodoo, or if it's a real, honest to goodness approach that has value.
So, hope to see you then, and in the meantime, I'm Ed.
John: And I'm John, and together we're Common Sense.
