Why the Funnel is Flawed for B2B Manufacturers

Episode 77

March 31, 2020

The inbound marketing sales funnel suggests there’s an unlimited amount of traffic and leads, but how does that strategy scale when you’re a manufacturer with a limited number of prospects? On The Kula Ring, Carman Pirie and Jeff W. White discuss why the funnel doesn’t work in a B2B context and how manufacturers can shift to a more human-centered approach that focuses on a small number of target accounts using a blend of campaign tactics including inbound and account-based marketing strategies.

Why the Funnel is Flawed for B2B Manufacturers Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White. 

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers, brought to you by Kula Partners. My name is Jeff White, and joining me today is Carman Pirie. Carman, how are you doing, sir? 

Carman Pirie: I’m doing well. I wonder if the listeners wonder if there’s gonna be, like at some point, you’re gonna introduce somebody else that would be more interesting. I mean, maybe they hold out hope for that. 

Jeff White: One of these days he’s finally going to change it. 

Carman Pirie: Exactly. Look, it’s another one of our… I guess we’re just gonna kind of stick to having ourselves on the show versus bringing on a guest, and so for folks who may have tuned in last week, we’re recording these shows and releasing them during the period of COVID-19 isolation, quarantine, whatever you want to call it. Just because we don’t think it’s a really great idea to be asking guests to promote these shows, but at the same time, we still want to keep this content going and get it out there, so I hope folks enjoy it and not having guests doesn’t make it too lackluster for our listeners. 

Jeff White: I think we still have a fair amount to talk about, and I mean this, normally we record these things sitting in the same room, so it’s just a way for you and I to talk.

Carman Pirie: There you go. There you go. Well, look. Let’s just jump into it. 

Jeff White: Yeah, so today I want to talk to you about something that you’ve been championing here at Kula, and with our clients, and also as you’ve been guesting on other podcasts, as well, and that’s this notion that really especially in B2B, the funnel as we think of it, as it pertains to… from an inbound marketing perspective and all of that, and we’ve heard others talk about this, too. It really doesn’t make sense in a lot of B2B context, and I wonder if you could kind of take our listeners through that somewhat, and we’ll dive in a little deeper. 

Carman Pirie: Yeah. I’ll do my best, and I’ve gotta say, like normally this is done with the benefit of some sort of visual aid, so people with some theater of the mind, they can imagine a funnel and hopefully we can get there. So-

Jeff White: We could add a graphic below the listening thing. I mean, we do have that technology. 

Carman Pirie: That’s a whole internet thing. 

Jeff White: As a web company, we can probably figure this out. 

Carman Pirie: The trouble… Look, for the most part, the funnel becomes more and more flawed the smaller somebody’s total addressable market is. That’s the basic rule, if there were one, and so as we look at the funnel, let’s just kind of talk, take it from the top. Typical inbound marketing funnel starts with visitors at the top coming to the site, being driven to the site in a variety of ways, and they’re converted into marketing-qualified leads, MQLs. At some point, those MQLs, in a typical scenario or a traditional… Can I say traditional inbound marketing? I don’t know, but anyway, so in a traditional sense, there’s usually a BANT qualification, so budget, authority, need and timeline. And if they have that, then that makes an MQL a sales-qualified lead, an SQL. And then of course, Mr. or Mrs. Amazing Salesperson swoops in and converts them into being a customer at the bottom of the funnel. 

So, this is something that most marketers would be pretty, pretty familiar with, and I always… The thing that I like to start off with is to say, “Let’s look at the math of the funnel.” If it’s operating in what is considered a best practice, if you will, or it’s really a top performing inbound funnel, and look, I’m happy for any inbound agencies or what have you that might be listening to comment or call me up and tell me I’m wrong here, but we know that if we looked at the percentages of conversion coming down that funnel, the best that most people get in an inbound scenario, if they can get to a 4% visitor to MQL, they’re pretty happy. 

So, 4% make it to an MQL, about 25% of those MQLs making it to an SQL would represent pretty damn solid performance. And then we’re going to give our salespeople the benefit of the doubt and we’re gonna say that they close half of the business, half of the deals that they’re engaged in, so if you folks are following me, I’m talking about a 4% visitor to MQL, 25% MQL to SQL, and then 50% SQL to customer. That’s the math. 

When you back that out-

Jeff White: Let’s not forget, either, the idea that 25% of the people converting on your site are going to also be sales ready is pretty unlikely. You know, for most businesses. 

Carman Pirie: Yeah, yeah, but in this thought experiment, we’re going to have rose-colored glasses for a minute, right? 

Jeff White: Perfect.

Carman Pirie: So, for 100 customers, if we worked back up the funnel, that means that we need to get 100 closed-won deals, we need to get 20,000 somewhat decent prospects to find the site. So, 20,000 visits get me 100 customers. Follow me?

Jeff White: Yep. Sounds easy. 

Carman Pirie: Well, what I like to imagine is what’s happening here, because in this situation, if you have 100 customers, that means you have 200 SQLs, and 800 MQLs, so that means that only one out of every four leads that the organization’s getting is actually decent by a salesperson standard. And then beyond that, the marketing team could be sitting there saying like, “Man, we’re striping it. We’re operating at best practice here. We’re operating at a 4% visitor to MQL.” And both of those statements would be true. The salespeople could quite legitimately say, “You know, our marketing efforts, only one out of every four leads is decent.” And they would be right. And the marketers would also be right. 

But what’s not right is that for most B2B businesses, they don’t have 20,000 potential customers that they can send into an inbound funnel every month, or every two months or whatever, to get those 100 customers down at the bottom. Now, they may not need 100 customers in a couple of months. If they only need 100 customers over the course of a year, or 50 customers over the course of the year, and they want to back out that math, chances are those organizations do not have a total addressable market even remotely approaching what they need to drive from the visitor level perspective. 

So, you said before that that’s kind of unlikely, like the notion of getting a 25% MQL to SQL. Chances are that’s not what reality is, and we’ve been at this game quite a while, and I’d say you’re quite right. What’s a more likely scenario that we’ve often seen with people that we speak to and they tell us about the performance that they’re experiencing in an inbound scenario, very often what you see is more like a visitor-to-MQL rate of something like 2.5%, and then you see that MQL to SQL is, instead of 25, it’s probably more like 10%. 

Jeff White: Yeah. 

Carman Pirie: And they probably only close about 25% of the deals, and I think that’s being quite generous for an awful lot of sales organizations, but we like to be nice to salespeople on this show. 

Jeff White: As people who also do a fair amount of sales. 

Carman Pirie: Yeah. No, it’s very self serving. 

Jeff White: Yeah. 

Carman Pirie: But in that scenario even, if we’re talking about that 2.5% visitor to MQL, 10% MQL to SQL, then 25% SQL to customer, that means for every 100 closed-won customers, I need to get 160,000 visitors to the site, and that’s where it really breaks down, doesn’t it?

Jeff White: Oh, certainly, because I mean, let alone driving those kinds of numbers from organic or even paid sources being difficult, having, especially in a B2B environment, having that many potential people who could potentially buy from you, or even find it interesting to land on your site, is just… is very unlikely. Just hugely. There’s a big disconnect. 

Carman Pirie: I mean, sure, for the ABBs or GEs of the world or whatever, they could deal in these sorts of numbers, but at the same time, they’re looking for many more customers than that, too. So, even in their scenarios, it doesn’t really, truly work and scale in the way that the inbound gospel, as it’s generally preached, would have you believe. 

Jeff White: And I think to give some credence to the inbound discipline or doctrine, there are businesses that can attract that kind of level of traffic, and get those kinds of conversions, but they’re generally not B2B. They probably have an unlimited addressable market. They probably can sell to anyone, and most likely to consumers. 

Carman Pirie: Yeah, absolutely. I mean, think about even if we go way back in the history of Kula, way before we were focused on working exclusive with manufacturers, so we’re gonna go way back in the time machine now, but we used to do inbound marketing work for orthodontists at one point, and man did those funnels ever work. 

Jeff White: Yeah. 

Carman Pirie: Right? I mean, you had in any given market what is fundamentally an unlimited amount of… and no, it’s not unlimited. Yes, it’s limited by geography, but from the amount of clients that a particular clinic can intake, fundamentally the market is unlimited. People are searching for information around products like Invisalign, they’re searching for information on braces in general, and other things around orthodontics, and you can answer those questions, convert those answers into leads, largely because an orthodontist is a kind of quasi-medical profession, carries so much trust with visitors anyway when they land at the site, so the conversion rates tend to be pretty high. And that funnel, man, we’ve watched it generate millions and millions of dollars in orthodontic sales, and it just doesn’t work if you happen to be a flexible packaging manufacturer, as an example. 

Jeff White: With 10 possible customers. 

Carman Pirie: Yeah, and chances are they have more than that, but yeah, it’s not unlimited, for sure, and it’s certainly somewhere south of 10,000, and in some cases may even be south of 6,000, you know?

Jeff White: Yeah. 

Carman Pirie: And in those cases, you’ve got to kind of flip this funnel on its head and approach your marketing in a different way. 

Jeff White: So, let’s talk about that. You know, I mean obviously your inbound content and conversion on your site is always going to provide some kind of assist, and it’s always good to have that content at the ready and available for sales to send to prospective customers and things like that, but how do you choose to market when you know that you can’t just keep adding to the top of your funnel in order to get those customers? 

Carman Pirie: Well, I mean you’re quite right, that content’s important and to the extent that your site is serving as a destination for thought leadership and for authoritative information on the products you make, having points of conversion on that site is a really solid way to start driving some decent leads. So, we’re not gonna dunk on inbound too hard, but you can’t stop there. 

I like to talk about this prospect pyramid, this notion of flipping the funnel on its head and talking about it through the lens of a pyramid, where you start at a very, very fine point at the top of that pyramid. I should note that this pyramid all happens under a bit of a halo, if you will. Of course, your public relations or any kind of general marketing communications, brand communications that you might be executing to create a bit of air cover, if you will, for the more blocking and tackling work of getting prospects in the door. 

So, beyond that halo, if we work down, we think about this pyramid, and often I talk about there’s five layers to it. So, I guess Jeff I could just take you down through these layers and we can talk about each one, potentially. 

Kula's Prospect Pyramid for Account-Based Marketing

Jeff White: Let’s do that. 

Carman Pirie: So, at the very top is target, like everything’s going to start at that very fine point at the top of the pyramid where we identify who our ideal customer profile, what that ICP looks like, who are the buying committees that we typically encounter in those ideal fit customer organizations, and what are the personas that make up that committee, typically? From that foundation, we then need to know how do we identify the processes for how we actually get customer names, prospect names, and URLs, so company names and URLs to start formulating a target account list. It sounds very basic, but for many marketing and sales organizations, they just don’t know how to do it. They don’t have the capacity to do it yet, so they need to build that. And then to conclude on that targeting segment, once you know how you’re going to identify what is an ideal fit customer, who are the buyers within that you typically encounter, and how do I create a list of people that I actually want to go out and sell to, once we’ve done that, then the last kind of checkbox, if you will, is we need to figure out a way that we can advertise into those accounts without requiring it to be always kind of a push, always a one-to-one kind of email or phone call kind of outbound sales type of conversation. But how do we surround those accounts in a more holistic way? 

Jeff White: Let’s quickly kind of delve into what it actually takes to create that ICP, like what kind of information are we looking for when we’re crafting that?

Carman Pirie: The ICP is really about firmographic data, so the industries that you typically sell into, that’s where you will start, and then you will go into what are the typical revenue size, or employee count, and often you’re extrapolating back from there. We’re working with a prospect right now who sells into large manufacturing organizations with a focus on selling into the engineering departments of those organizations, and this prospect is only interested in organizations that have 100, 200 engineers. Well, to have 100 or 200 engineers on staff, you can imagine how many actual total staff that they need to have. 

And that often gives you a pretty good insight of the type of revenue or scale that those types of companies would be, so those are the main points I would think about industries and subcategories there, and then employee count and revenue count. 

And then of course, when you go into those buying group personas, think through who are the lead researchers, who’s the decision maker, who are the people that can impact the decision along the way? We know these buying committees are continuing to increase in size. And it’s helpful at that target phase of your work to build out that buyer’s journey in a way that maps each member of that buying committee against the phases that the account is going through in their purchase decision. And in doing that, and we use a tool, folks, called Smaply, to assist with that journey mapping, and when you do that, you can just kind of step back from it a bit and you can really see at different stages in that buyer’s journey what types of things you ought to be talking about, and to whom, and when, and that really provides the foundation for this type of approach. 

Jeff White: Yeah, I find those documents to be really helpful in just illustrating exactly who is getting involved, at what point in that sales process, what’s happening before you even know about a prospect being interested in your company. I mean, that’s one of the things that’s most interesting about this entire notion of account-based selling and account-based marketing is that there’s a whole host of things that before a prospect is even on your radar, a specific prospect, there are a whole host of research and other things that prospect is doing in order to get ready to make a purchase from you. 

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Carman Pirie: Yeah, and we know that increasingly there’s increased anonymity in that process, as well. People are wanting to stay unknown for longer. They’re less willing to do form fills and whatnot in those early stages of research. Or at least they’re less likely to do truthful form fills, often. They’ll fill out a form if they need to get the content, but they might not give you their actual information, so every marketer’s dealt with that. 

Jeff White: I think what that really speaks to, the desire for anonymity, is probably the importance of starting to look at ungating certain resources on your site. You will get better penetration, potentially, if you have a guide that is designed to support someone in the very early portions of their purchase cycle, if you do not require them to sign up to get it. Maybe start considering only putting your very late stage guides under a conversion form, potentially. These are all different levers that people can pull in order to kind of better leverage the sorts of buyers that are engaging in these B2B processes. 

Carman Pirie: Yeah. It’s funny. I tend to probably err on the side of saying gate more content than not. I know that flies a bit in the face of what a lot of people tend to think in this day and age, there is a lot of movement towards people saying, “Look, ungate content. Put up chat clients and things of that nature to do contact capture in a more natural way as somebody’s discovering your content.” And I think there’s some usefulness to that. 

One of the things I think people can try right out of the gate if they’re beginning to work at this account-based advertising level is that the content they’re promoting in an awareness phase, and in an account-based advertising approach, make that content that you’re driving to ungated. Even if it’s gated on your site normally, ungate it for that campaign, and then begin to see to what extent do you see any kind of engagement differences there. 

Jeff White: Exactly.

Carman Pirie: The next layer down on the pyramid I call lead, and that’s where you start looking at the marketing mix that your organization is putting out, and say, “What elements are we doing that demonstrate industry leadership and span multiple verticals that we sell into?” Now, I suppose in some ways, just for some self-reference criteria, The Kula Ring podcast is like that for Kula Partners. We try to bring the stories of manufacturing marketers to other manufacturing marketers, and in doing so, we really do not distinguish between different verticals within manufacturing. It kind of applies to any aspect of manufacturing that we would typically sell or service into, and even many that we don’t. 

So, I think on that leadership tier of this work, think about the content that performs the bit of the backbone of your marketing efforts, that is not specifically targeted to any one segment that you serve. 

And the next layer down is I think when people can really begin to imagine the segmentation of an account-based approach. We talk about campaign as the third tier down, and that’s where I’m talking about kind of really two primary things. One is the segmentation of your target account list into various campaign tiers. Typically, you have tier one, tier two, and tier three. We can talk about that a little bit. And then customize campaign playbooks that surround various marketing initiatives that happen throughout the year. For instance, what is the standard thing that we do when it’s come time to do a product launch? What do we do around trade shows? What do we do around deployment of a new service? 

These are all things that as a marketing organization, you can develop an account-based approach to executing on these tactics and initiatives. Doesn’t mean that they’re always exactly the same. The creative obviously can be very different and various aspects of these campaigns can be very different, but the fundamental kind of playbook and approach as a marketing organization that you employ can be honed and perfected over time. 

Those ABM campaign tiers we were talking about, I’m really speaking there about taking your target account list and divvying it up. Often in tier three, you’re talking about the smaller value accounts that you in some ways are lumping into one bigger bucket often. Often, those accounts, they’re not of a significant lifetime value enough that warrants you creating bespoke content that speaks directly to them. 

Tier two is when we’re often applying some additional level of segmentation that allows us to speak to people in a more cohesive way, so we may at that point say we’re gonna divvy up our tier two target accounts based upon industry, so we’re going to have industry XYZ, or have electronics manufacturers, flexible packaging manufacturers, and industrial equipment manufacturers as three different verticals that we’re going to target, and we’re going to create campaigns and content around each one of those categories or segments, and campaign into those accounts in that way. 

And then of course in tier one is when we’re looking at those one-to-one opportunities, where we know that the lifetime value of those accounts is likely to be incredibly high. These are the top accounts that our sales organization wants to land, and we can develop one-to-one account-based campaigns that speak to those accounts directly potentially, and name them in the creative, speak to pain points that are researched that are specific to those organizations. 

So, that’s what I tend to be thinking about in that campaign tier in the middle of the pyramid. We’ve started with targeting, we know who we’re going to reach out to. We’ve created our overall industry leadership, and now we’re starting to extend down into how do we actually get out in front of our target account list in a segmented, targeted way? 

Jeff White: Exactly, and you’re talking primarily here about using account-based advertising tools to do this. 

Carman Pirie: Well, yes, and I think that you obviously can follow those up or compliment them with other things. So, we know for instance for tier one campaigns, you can often combine direct mail as an example with account-based advertising. You can, even if you want to go a little further afield than what most people think of when they think of this kind of stuff, if you know that the headquarters that you’re targeting in a tier one, that there’s a big billboard outside of their office, you could buy that billboard. You could combine that with a direct mail initiative, and then also have account-based advertising happening. And then sequence out the messaging for your sales organizations once you actually start to get some engagement. So, you can really think full pipeline as you tend to approach this. 

Jeff White: I think that’s what’s really interesting because in a lot of cases, inbound marketing tends to get a bit formulaic. You’ve got the social media content that supports your thought leadership content, that leads to your downloadable guides and all of that, whereas in this kind of situation, especially when you’re talking with tier one, one-to-one type messaging, advertising, marketing, and selling, you really want to kind of pull the covers off a little bit and really get creative about exactly how you can reach those accounts. And I think that’s where the deep research needs to come into play, so that you fully understand exactly what options are available to you. 

Carman Pirie: Well, it’s interesting just as you said that, because it tells me that in some ways, it starts from: What’s your mindset going in? If you’re going in thinking man, these are the 50 key accounts that my organization has, and they’re the same 50 key accounts we’re gonna have probably next year, or at least in some ways, we can’t… If their total addressable market is small, as you look at those key opportunities, you can’t squander them, can you? Whereas if you have this notion or you have this mindset that the top of the funnel is just unlimited, well then, why not apply a formulaic approach to the funnel and just see what comes out of the bottom? 

You see what I mean? 

Jeff White: Oh, 100%. 

Carman Pirie: It’s kind of like it drives the attitude in some ways, doesn’t it? 

Jeff White: Yeah, yeah, it really does, and it just points to how important it is to truly understand that ICP, so that you know exactly what’s available to you as an option. So, I believe there’s one more layer? Maybe two more layers to the pyramid?

Carman Pirie: There are always two more layers to almost everything, but there’s two more layers to this. Yeah, so I’ll go really quick, so the next layer down I call engage and sell, where I say, “Okay, we’ve started to campaign into these accounts. We’re starting to get some level of engagement. Now what do we build in from a point of view of either intent-guided marketing, so as people are leaning in and demonstrating a level of intent around certain aspects of what we sell? How do we then change how what we’re promoting to them aligns with what they’re spiking on intent for?” Beyond that, you can use those same buying intent data to drive intent-guided selling, so we know that people are beginning to engage in our account-based advertising efforts. And we know that they’re spiking an intent for what we sell, so now we’re going to then trigger our outbound sales or inside sales folks or what have you, to begin to reach out to them in a way that is not only aware of what they’re spiking on from an intent perspective, but it’s customized to it. 

And then beyond that, in the engage and sell tier, we’re also talking about digital sales and sales enablement, so coming further down that pipeline now, we have an engaged prospect, and we’re looking to sell to them in smarter ways. 

The last, but certainly not least, kind of in some ways the foundation of this pyramid is cross sell and retain, and I suppose that recognizes the value of each account, like we just talked about. We’re not talking about it as though the top is unlimited, but rather that every account counts. And that’s certainly true in the bottom of the pyramid, when we’re talking about cross sell and retain. What are we doing to not only land accounts, but expand them? Increase our share of wallet, increase the lifetime value of a customer. In so many large B2B organizations, that first deal is just the tip of an iceberg, and there are a lot of other organizations, sub-organizations, divisions, other offices, branches, et cetera, that can also buy what it is you sell, and organizations, sales organizations often struggle with how to kind of get the tentacles, if you will, throughout a prospect organization and really kind of establish that relationship with a customer such that you increase share of wallet to that extent. 

I think account-based advertising approaches can help with that, because you can market to those organizations, those existing customers, in a way that is very informed by what you know to be their pain points and what you know to be the products that they already take advantage of from you, and find ways to market the other services and products that you sell to other divisions, and get a bit of the polarity of that sale reversing, so the salesperson doesn’t always feel like they’re being the missionary into the customer organization, but rather they get those customers asking them for questions, asking them questions, asking them for assistance, asking them for… Geez, about that cool new product that you’re launching next month, I’d like to know more about that. That type of flipping of the polarity in the sales process is often key to maximizing a cross-sell opportunity. 

Jeff White: And I think that’s really the nut of this entirely is the idea of getting on the radar of others in the organization, and providing different ways into that using referral sources from the people that you do sell into already, providing that air cover with account-based advertising to those other divisions. There’s just so many different things that you can do there in order to expand those accounts, and especially as we see with so many of the manufacturers that we talk to that just are growing through merger and acquisition, the opportunity to sell into their other divisions just keeps getting larger, and potentially more difficult, too, as they get more spread out and have people within the organization that simply don’t know each other and don’t talk. 

Carman Pirie: Yeah, we’ve seen M&A activity happening at such a pace that frankly there’s no salesperson on the planet that could keep up with all the different things that they could sell. You know, if you’re doing two, three serious acquisitions a year, and they are all multiproduct line, multiservice line, like… Man, the salesperson would have to be Mensa level. And I mean you just can’t depend on that, you know? 

And that’s where I think marketing has often felt a little… Marketing didn’t really have a club in their bag about how they could help, right? I think account-based advertising gives them that club in the bag that they wouldn’t have had otherwise to say, “Okay, M&A, we got this acquisition that closes in July. In our first two months of communication to the customers for that organization, as we begin to introduce them to the company that just bought the company that they’ve been doing business with for the last X number of years, this is how marketing can take control and actually design how they’re going to message into those accounts, and bring them into the broader family and introduce them to the broader opportunities for more cross-sell, more LQV across the group.” Yeah, it’s just something that before, marketing just couldn’t touch, and in an account-based approach, not only can they impact it, they can impact it in such an incredibly focused way. 

Jeff White: I think that’s probably a good place to stop there. Thanks, Carman, for taking us through this. Obviously, we’ll include a graphic of the prospect pyramid on the podcast page that this is going up with, and yeah, I think it was really interesting to kind of walk through that and get your ideas about why the funnel is flawed out to our audience. 

Carman Pirie: It’s been fun to chat about it. I mean, it’s funny that I think we talk about this stuff a lot more on the podcasts we guest on than on our own, so it’s always good to get a chance to banter about it here, too. 

Jeff White: Indeed. Well, have a great day. 

Carman Pirie: You too. 

Announcer: Thanks for listening to The Kula Ring, with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing. That’s K-U-L-Apartners.com/thekularing

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Jeff W. White



Carman Pirie


The Kula Ring is a podcast for manufacturing marketers who care about evolving their strategy to gain a competitive edge.

Listen to conversations with North America’s top manufacturing marketing executives and get actionable advice for success in a rapidly transforming industry.

About Kula

Kula Partners is an agency that specializes in maximizing revenue potential for B2B manufacturers.

Our clients sell within complex, technical environments and we help them take a more targeted, account-focused approach to drive revenue growth within niche markets.


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