Leaky Sales Funnel: Approach to identify and fix leakages

Managing a robust sales funnel is important for the success of any sales organization. Creating a consistent sales SOP, promoting a professional culture, and deploying a modern sales CRM & automation tool and aided through constant evaluation and adjustment to the needs of the businesses.

What is a sales funnel?

The sales funnel visually represents in a step-wise manner the sales journey of any potential customer of your business till the time he becomes a converted customer. It is one of the most critical aspects of your sales process and most sales leaders track the sales funnel to assess lead stage-wise conversion, and revenue projections and even impact the business bottom line. Using the sales funnel, sales leaders can get enough cues on sales process health as well as team performance.

Sales Funnel = Business Projection + Sales Audit

Sales Pipeline is the heart of any sales organization
Sales Pipeline is the heart of any sales organization

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What is a sales funnel leakage?

No business realistically expects all of its prospects to convert. There are genuine reasons why all of your leads do not move right across the funnel to the purchase state. Deferring their purchase, budget constraints, and specification mismatch are some common reasons why in spite of best efforts you may not be able to convert a prospect. Then there are some unexplained reasons why you lost on an opportunity or a lead did not move beyond a particular stage. This set of potential customers that were lost for often insuperable reasons during any stage of the funnel is referred to as Sales Funnel Leakage. Understanding the reasons for holes in the funnel is a very important step to driving revenue and profits.

What causes leakages in the sales funnel?

Sales funnel leakage can occur due to multiple reasons. Let's try to understand some of the most common reasons why some leads drop during the sales journey.

  • Wrong Customer Groups Targeted: Marketing teams sometimes go on overdrive while aiming for aggressive targets. Expansion of the targeted customer groups enabling a wider base outreach is pretty common. However, this yields a lot of dead-on-arrival leads if not done the right way. These leads are non-starters from the word go and get stuck at the top of the funnel.
Targeting incorrect customer segments lead to everyone dissatisfied
Targeting incorrect customer segments leads to everyone dissatisfied 
  • Missing Task Automation: Salespeople are human. It's only practical that while managing hundreds to thousands of leads or deals they miss out on lead follow-ups, attempting DNR calls, or carrying out other activities. The lack of a robust automated solution only exacerbates this issue apart where it is not humanely possible to keep track of tasks manually.
  • Unclear Value Proposition: Businesses who are unclear about their value proposition face significant challenges at every stage of their sales funnel. It impacts everyone involved, the sales teams, prospects, and the overall business creating an uncertain environment. Poor value propositions bring down conversions significantly, ending up making the funnel even messy with high leads inflow in TOFU and reduced MOFU and BOFU (the downstream funnel).
Unclear value proposition is waste of efficiency
An unclear value proposition is a waste of efficiency

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  • Ineffective Sales Processes: Effective sales processes make a very strong sales organization. Teams are able to manage their work efficiently, saving time and preventing missing out on important tasks. The lack of a good sales process brings the onus on salespeople to keep track of the pipeline, manage a healthy sales funnel and prevent lead leakages. This also leads to leakage at every stage of the sales pipeline, adding to the woes of managers in managing a patchy sales funnel.
  • Pressure to meet targets: It's not always the lack of systems and processes which results in a messy sales funnel. At times improper practices adopted by team members and aided by poor organizational culture lead to an unhealthy sales funnel. Many salespeople in their zest to meet quarterly targets, show a healthy sales forecast through deals that never actually were serious prospects. If most salespeople start using such tactics to inflate sales forecasts, businesses may end up suffering immensely. It is important that sales leaders discourage such actions and cultivate a culture of professionalism and ethics.
Salespeople use various tactics to meet sales targets
Salespeople use various tactics to meet sales targets

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  • Shoddy Transitions: A lot of leakages in the sales funnel are avoidable just by having clear communications and coordination between cross-functional teams. Marketing teams generate warm leads for sales teams to work on, and any lags between leads being generated and customers being reached out will result in lower interest levels among customers and poor conversions. At times SDRs and BDRs generate qualified leads which get lost in the translation by the time AEs pick them up and enough time has transpired to reduce conversion chances. Effective scrutiny and handover processes by sales leaders can plug these simple loopholes.

How to Identify a leaky sales funnel?

Some leaks can be quickly identified by a cursory glance, while others may require considerable deep-dive and analysis. You can use the following quick checks to identify possible leakages in your sales funnel.

Leaky sales funnel should be immediately identified
A leaky sales funnel should be immediately identified
  1. Insufficient opportunity pipeline for sales teams to meet targets
  2. Low deal closure to lead conversion
  3. #High volume of aging leads
  4. #High First Response Time (FRT)
  5. The sharp drop in conversion at the opportunity stage
  6. High #disqualified or #unresponsive leads

Managing a robust sales funnel is important for the success of any sales organization. Creating a consistent sales SOP, promoting a professional culture in the team, and deploying a modern sales CRM and automation tool. But the more essential work is constant evaluation and adjustment to the needs of the business. By constantly tracking important metrics and analyzing the sales funnel, team management can maintain a healthy sales pipeline and correct any structural issues.