Is the Sales Funnel DEAD?
Sales Funnel Vs. Sales Fly-Wheel
In 1898, Elias St. Elmo Lewis developed a model that mapped the customer's journey from being attracted to a brand/company to becoming a customer. This is often referred to as AIDA-model (Attention-Interest-Desire-Action). This was the base on which future work on Marketing and Sales was built upon. Over the years, various advertisers and marketers presented their own version of this model. All these models were (and still are) great in their own ways. We all know them as the Sales Funnel!
For over a century, companies have used and trusted this Sales Funnel to successfully drive their Sales & Marketing efforts. And it worked really well.
Then Something happened in the 1960s, computer hardware technology was progressing rapidly. However, computing still took a lot of time — and the cost of a mainframe was prohibitive to many organizations.
Over the next 20–30 years, hardware and computing became less expensive and more portable. That’s when businesses shifted toward individual “ownership”: personal computers and on-premise software installed on that machine as part of a purchased license.
From 1994 to 1999, the internet took a big step forward. And things started to change for the IT industry.
Still, the Sales funnel was doing wonders for all the Hardware and Software companies.
So What Changed?
In 1999, Salesforce launched its Customer Relationship Management (CRM) platform as the first SaaS solution built from scratch to achieve record growth. It proved to be a good investment because the dot-com bust in 2001 — followed less than a decade later by the Great Recession — landed a significant hit to on-premise software.
This is what I believe is the birth of the Sales Fly-wheel. The biggest difference was the business model. Most of the SaaS companies today work on a subscription-based business model. This means, if they have to be profitable or have steady revenue, they need to sell their product every year, or every 6 months, or every quarter, or worst every month to the same customer! And the customers will only pay for the next billing cycle if they see the value in the product or in other words, they are successful on the platform. And that's where Customer Success Departments started to get traction.
So now the entire revenue generation works in a cyclic way. Marketing would attract the customers, Sales will get them in and Service or Customer Success will make sure the customers are successful on the platform so that they renew on time or upgrade.
The big question is, "Is it true for every industry? Or is this concept only true for the SaaS companies?"
Well if you ask me, it's true for every industry. And the most logical reason for this is the change in customer behaviour. The customers today are very well informed and are already educated about the products, the features, the competitors and the prices. So if the customers do not see the value in the product or service, they are well equipped to switch. For some products, the repeat buying cycle is longer than others, but it's still there. Unless you want to sell something to the customers and forget about them…
Conclusion:
Sales Funnel is not dead! It's just changed! And now we have a new and improved concept to drive the next 100 years of business. The quicker you adapt to this change, the better!
— Let me know what do you think…
