Why does everyone make such a fuss over sales funnel and pipeline stages?
Well, whether you know it or not, your company’s sales process is the road that every prospect walks down to become a customer, and sales funnel stages are what pave that road.
Even a complete lack of a process is a process of sorts, and the process has an immense impact on prospects’ buying behavior — for good or for ill. The stages you use must be well matched to your prospects’ buying process. If your stages are misaligned, your sales team’s activities will be mistimed and have a negative effect on your prospects’ decision-making process as a result.
It’s important to have both the right number of stages in your sales process and the right type of stages. Take a moment to read this post and learn how to determine the right number of stages for your sales process. Then read on to learn more about creating the right sales funnel stages for your ideal buyer.
Defining Sales Funnel and Pipeline Stages
The sales process exists to organize the activity of the sales team, match it to the needs of your prospects at each stage of their buying journey, and enable your reps to measure opportunity progress and their own performance.
Your sales funnel stages act as both mile markers and building blocks — they allow you to structure and measure the sales process.
You have to consider the two key points that delineate each sales stage — the entrance criteria and the exit criteria — in order to create effective sales stages.
The sales funnel stages have to be well defined and marked by concrete, measurable activities to be effective. Otherwise, one stage blurs into another, and the sales process will no longer be a useful tool for measuring conversions.
In short, a sales stage is simply a status marker that shows the level of engagement a prospect has had with your sales team. These stages are the cornerstones of a reliable sales process and, by extension, an indispensable foundation for every sales team.
What Are The Right Sales Funnel Stages For You?
Although some companies require more nuance to account for a more sophisticated buying process, these are the 5 basic stages that every sales team needs to track:
1. Qualification – The first stage of the sales process is for opportunities that are only engaged with your company at a high level. This stage should be very broad, with loose entrance criteria (e.g. took a phone call with an outbound sales rep or downloaded marketing collateral).
2. Discovery – The next stage should include opportunities where the decision maker is interested in finding out more about your product, but isn’t actively looking to buy or may not be the best fit for your company. Sales reps should spend a lot of time vetting opportunities at this stage.
3. Evaluation – The third stage is a bucket for opportunities that are actively looking to address a business pain, and considering your company’s solution as one of their options. Reps have to prove out the value of your solution at this stage, and handle the objections and concerns of prospects.
4. Buying Process – The penultimate stage in the sales process is for opportunities that have committed to purchasing your solution. This stage involves finalizing contract terms, providing a proof-of-concept, and addressing any lingering reservations that prospects may have about your product.
5. Deal – The final stop in the sales process is for Closed-Won deals, and only Closed-Won deals. No opportunity should enter this stage unless you have a signed contract back from your prospect.
These 5 sales funnel stages are effective because they match the buyer’s journey that every prospect takes on the way to becoming a customer, regardless of what they are buying.
They allow your reps to structure their activities to provide value to prospects as they move from simply having a business pain that they don’t know how to solve, to educating themselves about solutions provided by your company and your competitors, to actively evaluating and purchasing a solution.
This is a key differentiator in a selling environment where reps have to be knowledgeable, quick to react, and capable of juggling many opportunities at once without letting any fall through the cracks.
What Does All This Have to Do With a Funnel?
When you visualize your sales stages by looking at how many opportunities progress from one stage to the next, they should form a funnel shape.
A healthy sales process begins with a large pipeline of opportunities, and disqualifies the majority of opportunities as they move through the process, so that a smaller and smaller percentage of opportunities make it further down the funnel. Only the companies that have been thoroughly vetted and stand to benefit the most from your service should become customers.
Give Me The Condensed Version (TL; DR)…
Every B2B company should implement a sales process with 3-5 sales funnel stages matched to their prospects’ buying process and delineated by clear entrance and exit criteria.
These stages enable sales reps to effectively measure the progress of sales opportunities and identify areas for improvement in their performance. Not sure what shape your sales process is in?
Download our free funnel app for Salesforce, and get full stage-to-stage conversion rates and a visualization of your funnel in just a few minutes.