Tag: Sales Funnel

B2B Revenue and the (Ir)relevance of the Funnel

Originally published in Forbes Business Development Council Traditionally, one of the core concepts of sales and marketing is the sales funnel through which companies are supposed to move prospects from awareness through consideration to engagement, and finally to purchase. Here are three examples where this breaks How does funnel make sense if 67% of the sales cycle is completed on digital channels before contacting the company?  Opportunities from existing customers in the case of cross-sell & upsell start at the bottom of the funnel.  In case of ‘booked’ revenue, typical opportunities don’t get created most of the time, so funnel is not even in the picture here.    Is the B2B Sales Funnel relevant anymore?   One of the main issues with the sales funnel, especially in the B2B industry, is that the customer journey is no longer linear. Prospects no longer enter at just the top of the funnel. Customers come in at any stage and often jump stages or move back & forth between them. Since customer acquisition has changed within the B2B sphere, the sales funnel is a bit outdated.  What happens in a conventional sales funnel? Marketing generates a bunch of leads and passes the qualified ones to sales who then attempt to win the deals. Several B2B companies offer not only many solutions, but solutions that involve long-term engagements with their customers. For such organizations, winning the deal is only the beginning. In certain cases, Key Accounts are further identified which are given additional attention.  In order to bypass the inconsistencies that the ‘sales funnel’ approach brings, a shift in perspective might be necessary. What if B2B sales and marketing are seen from the perspective of distinct revenue streams? The 4 streams of revenue for a B2B Company There are four primary sources of revenue for any B2B company. New revenue – Opportunities from new customers Renewal revenue – Renewal opportunities from existing customers Booked revenue – Revenue contribution from existing contracts for a multi-year engagement. This is different from renewal revenue in the sense that product/services have to be delivered to realize the revenue. Opportunities rarely get created in the CRM for this stream of revenue. Cross-sell/ Upsell revenue – Cross-sell and Upsell opportunities from existing customers.  The approach to each of these revenue streams is different. Depending on which of the four sources contribute to the most revenue in your organization, the approach changes. The major revenue streams will determine the sales and marketing strategy, and corresponding sales and marketing tech stacks.  Which revenue stream is dominant in your industry?    Industries/ Revenue Streams New Revenue  Renewal Revenue Booked Revenue Cross/Up Sell Revenue Mid to Large Business Services  5-10% 5-10% 60-70% 10-20% Mid to Large B2B SaaS companies 15-25% 65-70% 5-10% 15-25% Mid to Large Manufacturing/Industrial 20-30% 5-10% 60-70% 10-20% Small companies / Early stage solutions 30-50% 30-50% 10-20% 10-20%   Depending on the industry and size of an organization, its dominant revenue stream varies.  For Mid to Large Business Services such as IT, Professional, Staffing, Marketing, Outsourcing, the dominant source of revenue is ‘Booked Revenue’ For Mid to Large B2B SaaS companies, ‘Renewal Revenue’ should be prioritized  For Mid to Large Manufacturing/Industrial, ‘Booked Revenue’ is the most dominant source  For Small companies – Early stage, commoditized or undifferentiated products/solutions- ‘New Revenue’ and ‘Booked Revenue’ dominate revenue streams.    A point to note in all these different types of industries, cross-selling and upselling are often the second leading source of revenue. This stream is also the biggest contributor for the account growth.   Revenue streams should shape your sales and marketing approaches.   Depending on which revenue stream is most dominant in the industry, the sales and marketing approaches should change. Each type of revenue stream requires different teams and different aspects of sales and marketing to be prioritized. This does not mean that there is no overlap between the sources of revenue or the sales and marketing approaches they require. However, it does imply that optimizing and streamlining them can help your ROI.   Winning the CFOs approval: How to Present RoI of a Key Account Management Software   What should companies seek in a revenue platform?   An ideal revenue platform enables a business to efficiently and effectively manage its revenue streams. Such a platform should have several key features that make it the go-to solution for businesses looking to optimize their revenue streams.  1. New Revenue Platform If you are looking to increase revenue from ‘New Revenue’ sources, it’s necessary to have a specialized tool that can help convert more deals by finding more leads with the aid of prospecting tools. Sales Tools for New Revenue A perfect sales tool for optimizing new revenue streams should ideally have Sales automation for repetitive tasks Visual sales pipeline management to track deals, manage sales stages, and monitor progress. Customer relationship management with a centralized database  Sales forecasting with insights for revenue forecasting and trend analysis. Gong is a great example of this – it uses AI to analyze sales conversations and give you data-driven advice on how to close deals faster. Such a platform captures and analyzes data from customer interactions to help sales teams make data-driven decisions. In case of large deal sizes, a platform like DemandFarm’s Opportunity Planner makes large deal management easier. Such a platform provides a systematic and collaborative approach to planning and closing large, complex enterprise deals. This is done by integrating proven sales methodologies with strong stakeholder management to enable faster deal closures.  Marketing Tools for New Revenue A perfect marketing tool for optimizing new revenue streams should have features including: Lead generation capabilities through various channels Marketing automation for repetitive tasks Customer segmentation to create targeted campaigns Analytics and reporting to track campaign performance, analyze trends, and identify opportunities for optimization. A tool such as HubSpot is an all-in-one marketing, sales, and customer service platform that helps businesses to grow and manage their customer relationships. Such a marketing tool enables businesses to create and track