3.6 Sales stages and the sales funnel

The sales hourglass, the sales cylinder, the sales wheel, the sales flywheel and the sales loop – these are all genuine alternative models to the ‘traditional’ sales funnel. Most are born from misconceptions on the purpose and value of the sales funnel – solutions to a problem that exists mostly within the misunderstandings of the creators. These models purport to improve upon the sales funnel by better representing the stages that customers go through as they purchase, but this is not the intent of the funnel model. The sales funnel is not meant to represent the stages of a journey: it is simply a framework for understanding a pipeline of opportunities. At the top of the funnel, a large number of generally unqualified contacts exist. As contacts are qualified into leads and opportunities the number at each stage decreases until at the lower stages there are only a small number of well-matured opportunities that are likely to close. The funnel model exists because a large number at the top reducing to a smaller number at the bottom naturally creates the shape of a funnel. The ‘inverted triangle’ model would be just as accurate, but neither has the simple ring to it of ‘funnel’ nor really represents that there is an active process of funnelling leads towards an outcome.

Sales leaders define the different stages of the funnel and give them useful names – names that are meant to imply the likely activities that are going on at that stage. These names might include Discovery, Business Case and Solution Review. Each stage will likely have additional definitions that go alongside it to help sales teams qualify to the right stage before entering or progressing. The labels that are applied to each stage are useful indicators of what a customer may be doing at that stage, but they are not, as is often misunderstood, a description of the buyer’s journey. So let’s stop inventing better models without a real reason, please?

To be an effective tool, sales funnels require clear definitions against which opportunities can be classified. Sales stages are used to calculate weighted pipeline for forecasting, and when sales data is accurately classified it can be analysed to identify bottlenecks, issues or opportunities. Predictable revenue and new business is foundational to business planning and reporting to investors and the Board, so consistently and effectively utilised and governed sales stages are business-critical.

Depending upon your business model, your sales function may be primarily digital or may be primarily field sales led; they may spend significant time sourcing opportunities themselves or may spend most effort working on marketing sourced leads; they may lead on all opportunities or may delegate some to partners or direct channels depending upon size; and they may limit themselves to a target account list or may work with any organisation. All of these factors can impact how sales stages are defined. Similarly, the sales methodology – the philosophy and general tactics used for each step in the process – can impact sales stage definition. A Sales methodology connects the goals of each stage of the funnel to the actions a Salesperson should take to move a customer to the next stage and either is tailored to, or itself tailors the sales stages to its needs. Some examples of Sales methodologies are:

• Challenger Sale: Challenger-focused sales reps use the approach of Teach-Tailor-Take Control. They draw customers into their world view by teaching them how to look at their business (or un-teaching them the wrong way they’ve looked at their business to date); they tailor solutions to their problems they’ve built consensus against; and they take control of the sales with agreed next actions

• Trigger-based or signal-based selling: Data trends among prospects are analysed to identify signs of a business challenge, which informs the development of a solution for those customers. Increasing use of customer behavioural data has made this type of selling more popular to some organisations and sales processes.

• Value-based selling: this approach groups a number of methodologies such as SPIN selling and NEAT Selling, all of which lean on the use of value-first engagements. An emphasis on keeping solutions simple allows sales reps to build trust and become advisors to their customers. This trusted advisor position then builds long-term value for the customer.

Regardless of the sales process or methodology, enterprise Sales organisations will leverage clearly defined stages for evaluating pipeline volume, progress and performance. Reps will add opportunities at the first stage and when they are trackable within the sales system Sales Operations and Sales Leadership will be able to benchmark and manage performance. Sales processes and methodologies will be accompanied by enablement resources, templates and communication frameworks that sales teams are expected to leverage and frequently are measured against. Sales stages may look something like the below:

Stage #	Stage Description	Activities to complete	Milestones required to progress
0	Lead	Conversation / meeting with prospect Qualify lead	Opportunity created
1	Opportunity	Identify high-level business and technical problems Identify business and technical influencers	Opportunity qualified through RFP / meeting or conference call
2	Discovery	Identify our unique solution strengths Identify existing suppliers and competition Assess current relationship status	Sponsor identified Sales planning document completed
3	Issue Agreed	Agree business issues to solve with Sponsor Agree priority to solve this issue with Sponsor Identify and technical / security / legal requirements that must be reviewed	NDA agreed Business issue documented with Sponsor
4	Solution Presented	Solution, implementation plan and enablement strategy agreed ROI analysis completed Solution presented	Business case reviewed and business value agreed with Sponsor Timeframe agreed
5	Validation Started	Meeting with Decision Makers completed Executive Briefings Proof of concept	Business case reviewed with Decision Makers
6	Validation Completed	Understand signature / approval process	Written confirmation of validation
7	Deal Pending	Order documents / contracts submitted	Confirmation that all docs are in the signature / approval process
8	Closed Won	Receive all required documentation
	Closed Lost	Document loss reasons, next contract review date and competitor
	Closed No Decision	Document loss reasons and plan re-engagement