The End of the Sales Funnel?

No more sales funnel

The End of the Sales Funnel?

I recently read an interesting article on the Harvard Business Review web site. Its claim is that the way that customers buy products has changed and the old metaphor of a sales funnel is no longer relevant. I am not sure that I agree with this as, in my 25+ years experience in business, customers still seem to follow more or less the same process when they buy something – even if the way that they get to know about their future purchases has changed dramatically.

The problem is that with the emergence of better educated customers (thanks to internet and social media), companies have to rethink how they market their products. Because many of the new marketing methods are lower in cost – Facebook instead of Direct Mail, it is easier for smaller and more nimble companies to “punch above their weight”.

Here are some thoughts about how customers make decisions and what you could do to get more from your marketing budget.

Customer’s Buying Process

Customers follow a process that starts with them figuring out that they need something. They then progress through defining their requirements, selecting potential suppliers and finally placing an order. Although this appears to be a linear process, it is iterative. As customers learn more about what is available and what they need, they will often change their requirements, budget and timescales for the purchase.

The classic marketing approach using telesales and direct mail to shout “buy my product” has only ever been effective for customers that were about to purchase – and actually want the product that is being promoted. There must still be a place in the world for “old school” marketing – if there was not, companies would stop spamming or making unsolicited phone calls because the costs would outweigh the benefits. However, with “good” conversion rates of a few percent it seems to be an incredibly wasteful process.

Relationship Marketing

Smart marketeers have always shunned this approach and tried to stay in touch with the customer throughout their purchasing process. This has given them the maximum chance to influence the customers buying decisions as they develop. It is why free seminars and event sponsorship have always been an important part of the marketing mix. Less widely understood, it is also why great after sales support is vital.

Measuring what percentage of direct marketing turned into orders has always been easier than judging the effectiveness of a free seminar. As a result, marketing tended to focus more on how many leads were generated and what the conversion rate was. This perpetuated the myth of the leaky sales funnel with opportunities pouring into the top and orders trickling out of the bottom.

The reality is that there is a phase of education and information gathering, which can go on for some time, followed by the customer placing their order. This process is less like a leaky funnel and more like a pipeline of orders flowing from a reservoir of customers, potential customers and people who have no intention to buy your product – ever.

The New Marketing

If the buying process has not changed, what is new is the way that the internet has allowed customers to do more of the information gathering themselves. Whereas in the past, you could be pretty sure who had come to your seminar or who had called your company to request a data sheet, you have less idea now who has looked at your web site and downloaded all manner of information. The emergence of social media has added to the rich source of information that for customers that will include a mix of good and bad experiences as well as unstructured and probably unfair reviews and comparisons.

Things to do Today

Of course the question is what to do about all of this. Here some ideas that I have picked up over the last few years that have helped me a lot

  • Make information about your product or service as easily accessible as possible. Aside from the product information think about how easy it is for potential customers to get access to FAQs and support forums. Because they know that they will need excellent support, many technology customers will spent as much time here before they purchase a product as they do reading data sheets.
  • What about social media? You probably cannot use Twitter as a replacement for direct mail but it is a great way to alert customers to new features or white papers. Selecting the right streams is also important. If you are working in high tech capital equipment, is Facebook right or would a specialist LinkedIn group be better? There are some great tools around such as HootSuite that will help you manage and track your social presence better
  • Listen to your customers. It is now easier than ever to find out what your customers are thinking. For companies working through distribution or retail this is an opportunity to get closer to the customer than ever before. Read customer reviews and ask for feedback using tools like SurveyMonkey. If you put all that feedback together it is easy to get amazing insights for product improvements and enhancements.
  • Make it easier for the customer to get started with your product. There is nothing worse than a badly packaged product with no manuals. Try watching someone unpack your product and look out for opportunities to make it easier. There are so many unboxing videos on YouTube that your product is under tighter scrutiny than ever before.
  • Read as much as you can about the new rules of marketing. There is lots of great stuff out there but my favourite is “Sticky Marketing” by Grant Leboff.


Customers have not really changed the way that they buy products, they just changed how they get product information. The fact that they get a lot of this information for themselves just makes the whole buying process seem to run faster than it used to. It is vital to understand how customers use the internet and social media to get information about products as if you are not present in those channels and your competitors are, growing your business will be tough.

What is truly surprising in industry today is how much marketing is still focussed on direct mail and lead generation when that only impacts a tiny piece of the customers buying process. What do you think? Feel free to post a reply below.

About Sam

Sam Luke is a director at Xyrho Ltd. He uses his 25 plus years sales, marketing and general management experience to help small and medium businesses improve their financial and customer performance.