Setting up your first B2B sales funnel

As someone who’s been in the trenches of operating a start-up and has witnessed the journey of various portfolio companies, I’ve gathered a ton of insights that I believe can benefit early-stage founders, especially those making a B2B company. This article aims to shed light on the nuances of B2B sales pipelines, drawing from real-world experiences and practices that have proven effective. Also, I will provide examples from my operating experience in Metrilo (acquired by SendInBlue), BitTitan (acquired by Idera), and a bunch of other Launchub portfolio companies.

Who will find this useful?

If you’re at the helm of an early-stage B2B start-up, just getting your product out in the market, and starting to see the first leads trickle in, this is for you. You’re probably at a stage where you’re seeking predictability in your Go-To-Market (GTM) motion, having possibly raised an early funding round. Your company might still be in the phase of founder-led sales, and maybe you’ve just brought on board your first sales rep or Business Development Representative (BDR).

This piece is particularly relevant for those founders practicing sales-facilitated product-led growth (PLG) targeting enterprises or mid-market (freemium, trial or reverse trial mechanics); or operating in a heavy enterprise context (proof of concepts, etc).

In terms of stage, if you’re an early-stage B2B founder with increasing pipeline velocity, approaching early Product-Market Fit (PMF), and making around 5k-40k in Monthly Recurring Revenue (MRR), you’ll find this valuable. Additionally, Revenue Operations teams in scale-ups and first-timer sales directors in a B2B sales organization will also find actionable insights here.

Understanding the B2B Sales Pipeline

The typical B2B sales pipeline can be visualized as a journey starting with leads, who are individuals or entities showing general interest in the product. This interest can be expressed in various ways, such as filling out a contact form, signing up for a free trial, or engaging with the company’s content. The main goal in managing leads is to nurture them through the sales funnel until they convert into paying customers. Leads, in general, are the responsibility of the Marketing and Demand Gen teams in an organization.

The next step of the sales funnel is the Marketing Qualified Leads (MQLs). MQLs are leads that have been evaluated and deemed more likely to become a customer compared to other leads. This qualification is based on specific criteria and actions that align with the company’s target market and buyer personas. MQLs are typically identified through a framework that evaluates various factors like engagement level, Company information (number of employees, size, industry), and specific behaviors that indicate a strong potential for sales conversion from the ideal user of the business.

It is the responsibility of the marketing team to bring higher-quality MQLs, which later can become paying customers.

Once the MQLs are put in place, the Pre-sales team starts to qualify them and convert them to Sales Qualified Leads (SQLs). The SQLs are prospective customers who have been evaluated and vetted by both the marketing and sales teams as ready for the next stage in the sales process. SQLs are distinguished from other leads (like MQLs) by their closer alignment with the company’s ideal customer profile and their demonstrated intent to purchase. The pre-sales qualification process is done by Business Development representatives (BDRs), by calling or messaging the MQLs. As an outcome, MQLs become SQLs, once a meeting (or online demo) with the Closing team is scheduled.

Back in the days, in Metrilo we put a lot of effort into defining our sales pipeline precisely. For the context, Metrilo is a Marketing Cloud for e-commerce stores that combines e-commerce Analytics, together with a simple CRM and email marketing tool, all-in-one place. The business was scaled up to a couple of million of ARR and acquired by Brevo (SendinBlue).

Below are the definitions of the leads when we figured out the different steps of the funnel:

• Leads — Blog subscribers, eBook downloads, Webinar registrations, Event registrations
• MQLs — eCom stores that created a trial to Metrilo, integrated, and have more than 200 customers in their database, and also provided a valid phone number.
• SQLs — Users with very strong buying intent — demo scheduled through the phone of the pre-sales team (or email), positive support interaction over chat. Demo/meeting scheduled for the Account Executive team.

Why it is so important to have distinct steps?

Even though in the early days of a B2B start-up, the responsibilities are mixed in the team, it is important to have a clear distinction in the different steps of the funnel. It ensures accountability among different teams and team members and promotes specialization, allowing each team to excel in their specific roles. This is especially crucial for the sales teams.

These distinct steps also aid in setting appropriate KPIs for each team, to measure progress and foster team alignment.

How to use the funnel to forecast more accurately?

Utilizing the funnel for forecasting is another critical aspect.By knowing what are the different conversion rates in between steps, the funnel helps you to reverse engineer how many leads/MQLs/SQLs you will need to have through the course of the year in order to hit your yearly targets.

It also allows you to determine if and when you need to gas on the pedal and generate leads at the top of the funnel to meet your targets, or when you need to slow down. These steps act as leading indicators for achieving your monthly, quarterly, or yearly goals, and also to manage your business better.

Moreover, when fundraising, having a well-defined sales funnel is invaluable as it offers potential investors a clearer understanding of your sales process.

How to track the funnel in the early days?

In the early stages, don’t shy away from counting the different steps of the funnel manually. Setting up the right reporting in the CRM might be challenging, so counting the leads (and how they progress through the pipeline) might be easier and also give you a good understanding of the pipeline and your clients.

Below you can see a screenshot of the table we used in Metrilo to measure our funnel management efforts:

Template of the funnel

It is crucial to keep in mind the monthly attribution of the leads. In Metrilo we attributed the different steps of the funnel on a monthly (cohort basis). Even if we closed a client between 14–30 days after they registered on the website, we attribute the closed projects to the month in which the project was actually created as a trial. For example, if a lead registers for a trial in April 2018, and we close the deal in May, this number will be attributed to April 2018.

At a later stage, when the number of leads increases, you can put in the effort and set up your reports in the CRM system.

How to set the process in your CRM

Here, what I saw working very well when we started scaling the team, is to create and maintain two separate pipelines: one for the Lead/MQL and another for the Sales Qualified Leads (SQLs).

The First pipeline will be the responsibility of the pre-sales team (BDRs, SDRs), who will work on converting the leads and MQLs into SQLs and flipping those to the closers of the sales team. Here is an example of the different stages in this pipeline:

• Untouched
• Touched (Emailed, Called, the end goal is to schedule a demo for the AE/Founder)
• Touched Qualified ⇒ pass it to the Account Executive
• Touched Unqualified (Back to nurturing)
• Lost

The second pipeline will be relevant to the Account Executives/the selling Founders, with the goal of working with the most qualified leads and maximizing their efficiency.

• Opportunity (Sales accepted Demo scheduled from the BDR team)
• Best case (First interaction made, Demo scheduled, ongoing discussions)
• Closing
• Closed Won
• Closed Lost

This clear separation of the two pipelines would help in monitoring and managing each phase effectively.

In short, setting up a good B2B sales pipeline is key for scaling a SaaS business successfully. It helps organize the sales process, track progress, align the teams, set clear goals, and forecast better. This makes teams more effective and helps the business grow steadily. It’s also useful for showing investors how your sales work.

If you need help or want to learn more about setting up a sales pipeline, you can email me at petar@launchub.com for advice and guidance.

Additional resources on the topic

As additional resources, I can recommend the following literature:

• David Skok’s blog — https://www.forentrepreneurs.com/
• Aaron Ross’ Predictable revenue
• Sandler Sales Methodology — https://www.sandler.com/