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How CRM Works in the Sales Funnel

Updated Nov 21, 2023

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Your business depends on customers and the relationships you build with them. You must understand how your marketing messages reach and impact customers and prospects to raise and maintain brand awareness. 

Communication and responsiveness are crucial for effective relationship building and lead nurturing. A customer relationship management (CRM) funnel is an excellent solution for tracking, managing and communicating with leads and customers. We’ll explain how your business can use a CRM funnel to develop and manage leads, add qualified prospects to your customer base, and grow your business.

What is a CRM funnel?

A CRM funnel is a software-based methodology for tracking and communicating with current and potential customers. It helps you manage customer relationships by tracking sales history, conversations, promotions and more. A CRM funnel also makes it easier to identify potential customers and pinpoint those with no interest in your offerings so you can focus your efforts efficiently.

CRM funnels are similar to sales funnels, which are designed to generate sales leads and turn them into customers. Sales funnels also track and manage leads and help you determine the steps that will move them to the next funnel stage. 

A CRM funnel can mirror a sales funnel to capture data on leads as they move closer to becoming paying customers.

FYIDid you know

A CRM funnel is a valuable tool whether you have a brick-and-mortar store or sell online.

What are the four stages of a CRM funnel?

A CRM funnel has four stages that mirror the stages of a traditional sales funnel.

Awareness

The first stage of the CRM funnel is awareness – when a lead develops awareness of your business and its products or services. Awareness may occur in various ways; leads may learn about you from your email marketing efforts, online and offline marketing campaigns, business blog posts, or social media business activities. They may also gain awareness through traditional media channels or word-of-mouth advertising

For example, a prospect might become aware of your company’s offerings when searching online for a solution to their problem or when a friend tells them how much they like your product.

Interest

Interest is the second stage of the CRM funnel. The prospect shows interest in your products or services when they contact you through your website or follow you on social media. They might also provide their email address in exchange for a webinar or e-book.

Decision

Decision is the third stage of the CRM funnel. The prospect is ready to decide if they will purchase your product or use your services. They evaluate their options by comparing your pricing and features against competitors’ offerings. Your sales team might reach out to the prospect to determine if they are ready to buy and offer an incentive, like an online coupon or free shipping.

Action

Action is the final stage of the CRM funnel. Either the prospect decides to become a customer and moves forward to complete the purchase of your product or service, or they reject your offering and do not become a customer.

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Even if the prospect completes a sale and becomes a customer, your work isn’t finished. Your new goal is to focus on customer retention strategies to ensure future purchases.

What are the benefits of a CRM funnel? 

A CRM funnel brings numerous benefits to the sales cycle, including the following: 

  • A CRM funnel improves services and support. A CRM funnel can help your business deliver its services in a way that better meets your customers’ needs. Since the CRM software contains information on prospects’ and customers’ unique issues, you gain insights that inform interactions and raise the level of your customer service.
  • A CRM funnel provides invaluable customer insights. Your CRM software houses data that can help you better understand customer and prospect behavior. You can use a CRM funnel to introduce products or services when customers need them or when prospects are more open to learning about them. Accurate insights help you identify your most profitable customers and avoid spending time on consumers who are less likely to buy your products or services.
  • A CRM funnel can boost sales. A CRM funnel can help your company improve sales by effectively utilizing the information stored on current and potential customers.

How does a CRM funnel automate each sales stage? 

CRM software provides marketing automation tools to automate vital functions at each stage of the CRM funnel.

1. The CRM funnel can automate the awareness stage.

CRM software provides valuable tools to automate prospecting during the awareness stage of the CRM funnel. 

  • Automated social media tracking: Many businesses use multiple social media platforms to generate leads. A CRM’s must-have integrations include social media integrations that automatically track all prospect interactions, allowing you to listen to and engage with prospects while building relationships.
  • Automated interaction recording: CRMs can also automatically record and store live chat, email and phone call interactions; this information can help you sift through customer questions, feedback and complaints to learn what’s important to your audience. Your customer support team can feed this information into the CRM software, and your sales team can use this data to identify upsell opportunities or ask for referrals.
  • Automated audience segmentation: CRM customer segmentation tools make it easy to categorize prospects and customers by demographics, region, profitability potential and more. With carefully delineated segmentation, you can create targeted marketing campaigns and custom communications for specific customer segments.

2. The CRM funnel can automate the interest stage. 

CRM software provides valuable tools to automate the process of qualifying leads

  • Automated lead scoring tools: Your CRM can automate the lead scoring process to help you rank prospects according to their potential value and likelihood of becoming customers. You will set your lead scoring criteria. For example, you could rank leads according to their contact information, company data, lead source or other factors. The CRM uses your selected variables to assign numerical scores to leads. You can filter scores from highest to lowest and focus on the leads at the top of the list.
  • Automated follow-up systems: After the scoring process, some leads will be designated as unqualified. Your CRM software will provide insights about why these leads aren’t promising. For example, a lead might not have the budget for your product or service or might not need it at this time. Or you might have reached the wrong contact at the company. Depending on the reason, your CRM can schedule follow-up efforts or remove the lead from the list entirely. 
  • Automated lead interaction monitoring: Your CRM software can automatically monitor lead interactions to determine interaction frequency and record why someone contacted your team and what questions they asked. Your CRM software can also monitor your email marketing campaigns to record all correspondence and analyze email open rates, replies and more. Monitoring lead communications helps you identify valuable information, including a company’s key decision-makers, the prospect’s budget, and the value of your product or service to the prospect.

3. The CRM funnel can automate the decision process.

CRM software provides valuable tools to automate the process of helping customers decide whether or not to do business with you. 

  • Automated pitch personalization: The CRM contains massive data about customers and prospects who’ve reached the decision stage. Before making an offer or discussing pricing, review the customer’s data in the CRM, including their customer profile and recorded calls, to uncover valuable insights that can personalize the experience. For example, you could address the lead’s previously noted concerns from an email exchange during a phone call. This will show you understand the prospect’s issues and pain points and that you care about addressing their needs.
  • Automated reminders and follow-ups: Use CRM software to improve efficiency by setting reminders to perform tasks on specific dates and times. You can set follow-up tasks and reminders to contact specific leads and assign tasks to sales reps. Stay organized by checking off completed tasks, setting deadlines to submit quotes and adjusting deadlines when prospects don’t respond by a given time.
  • Automated sales rep monitoring: You can use CRM software to track sales rep activities. Publish activity reports to monitor quotes, missed opportunities, prospect calls and emails, appointments, notes, prospect visits, and more. Sort activities by group, review email and call outcomes, and determine which sales reps are (or aren’t) moving deals to the next stage in the funnel.

4. The CRM funnel can automate the action stage. 

CRM software provides valuable tools to automate the process of closing the deal

  • Automate deal progress reports: Use your CRM’s sales forecasting report to track the progress of deals in the sales pipeline. Evaluate each deal’s estimated close date and probability of closing. If a deal isn’t likely to close, you can determine the reasons and identify possible solutions to help close the deal.
  • Automate a sales funnel analysis: CRM metrics can help you evaluate the effectiveness of your sales funnel. Determine where deals are getting stuck or being canceled. Use the CRM’s stage duration analysis feature to determine the time a deal spends at each funnel stage. Look at historical data on successful and failed deals to calculate the likelihood of closing a deal. Publish reports to identify which sales reps close deals at lower rates.
  • Automate an analysis of your sales process: After winning or losing deals, use CRM metrics to uncover valuable insights into your results. For example, you can determine your win rate, average sales cycle length, lead conversion rate and more. Determine successful activities and methods that yielded poor results.
  • Automate an analysis of why deals fail: When deals are lost, record the customer’s data and the reason you lost the deal so you can follow up later. This analysis will help you identify ways to overcome those challenges in the future. You can also gain insights into new ways to approach the lead in the future. Your CRM can remove leads with low or no opportunities for closing, saving you the time and money of pursuing uninterested prospects. 
Did You Know?Did you know

Using a CRM solution for lead management helps you prevent viable leads from slipping through the cracks and remove leads that are unlikely to buy.

What is the best CRM software?

The best CRM software can automate the customer management process, store information about prospects and customers, and help you analyze data, run reports, and contact prospects and customers with personalized approaches. A few top solutions to consider include the following: 

  • Pipedrive: Pipedrive is a sales-focused CRM platform with automation capabilities to help streamline digital communications. Read our in-depth Pipedrive review to learn how the platform can help you visualize sales pipelines.
  • monday Sales CRM: monday Sales CRM is an excellent project management platform. Read our detailed monday Sales CRM review to learn about its sales-focused features and helpful templates.
  • HubSpot: HubSpot is a popular CRM platform with comprehensive customer engagement and support tools. Our HubSpot review explains how the platform’s 1,000-plus integrations can provide increased functionality for digital marketers and sales teams.
  • Salesforce: Salesforce is a particularly powerful CRM with affordable options for businesses of all sizes. Our Salesforce CRM review details the platform’s unique AI-powered tools that can automate sales tasks and deliver customized insights. 

The right CRM software can positively impact your marketing results

Choosing and using the right CRM software for your business needs can impact your bottom line by helping to reduce costs, create efficiencies and improve your ability to target customers and prospects effectively. Implement the best CRM for your company to create a CRM funnel that helps your marketing and sales teams identify promising leads and turn them into customers.

Linda Pophal contributed to this article.

David Gargaro
Contributing Writer at businessnewsdaily.com
David Gargaro is a content writer and copy editor with more than 20 years of experience in multiple industries, including publishing, advertising, marketing, finance, and small business. He has written on B2B-focused topics covering business technology, sales, marketing, and insurance. David has a Bachelor of Arts degree in English and Actuarial Science from the University of Toronto. He served as the managing editor of a small publishing company, and self-published a book called How to Run Your Company… Into the Ground.
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