COO & Co-Founder, DemandFarm
Aren’t we all familiar with the Sales Funnel?
It has defined the shape (literally) of marketing and sales, over the years. But I argue that for B2B companies, it is not a sales funnel, but an HourGlass or a damru. (Wikipedia says Damru is a small two-headed drum, used in Hinduism and an instrument used by Lord Shiva)
Traditional B2B Sales Funnel
What happens in a conventional sales funnel? Marketing generates thousands of leads and passes on the qualified leads to the sales team, who in turn win the deals. So far so good. But some B2B companies offer many solutions and long-term engagements with their customers. For these companies winning the first deal is just the beginning. It is consciously followed by identification of Key Accounts that are then, Farmed and Mined for more revenues i.e. LAND and EXPAND.
Enter the Hourglass
I was looking for a visual aid that could give me a good representation of this reality. The Traditional B2B sales funnel never gave me a good representation of this process. Thus, I extended the funnel by adding an inverted funnel at its bottom, shaping it as an ‘Hourglass.’ Images are a powerful means to drive home a point- in this case, Key Account Management as a critical component of revenue generation for B2B companies. Please refer to the diagram below.
For most B2B companies, the bottom half of the ‘Hourglass’ generates 80%+ of the revenue in a given year. The most commonly used nomenclature is ‘Hunting’ & ‘Farming’. Hunting is to acquire new customers while Farming is to grow the business from existing customers. I have noticed that in recent years, companies have recognized that Hunting & Farming teams need to operate separately. Because inherently, hunting and farming skills are quite different.
A good hunter is a flamboyant sales guy who connects with many people and ensures entry into an account. Whereas, a Farmer is a more intellectual and consultative type. He has a great knowledge of both customer business processes and how the solution fits into the concerned business’s reality. So a good hunter is invariably not so good at farming. The reverse is also true – a good farmer is uncomfortable in hunting. In a nutshell, a Hunter sells, while a Farmer helps a customer buy.
Filling the Hourglass
The hourglass concept can be further extended to include not just all the marketing and sales functions, but also tools and technologies that are impacting these functions.
The ‘Hourglass’ also helps in organizing various functions in a B2B company. As you can see in the above diagram it is easy to define various roles of Marketing, Inside Sales, Sales and, Account Management in the revenue lifecycle.
If I extend this further to sales and marketing technologies, we get the above. So, above the narrow neck, we have technologies and tools in Marketing automation, Inside Sales, Lead qualification and, Sales Process Automation. Key Account Management Software settles down below the neck.
What is your view of ‘Hourglass’ as the right way of looking at the revenue pipeline for B2B companies? I look forward to your views.