How to define and setup B2B SaaS marketing and sales funnel stages

Download the B2B SaaS marketing and sales funnel stage template

Every organization needs revenue. Connecting with potential clients is how you gain trust and grow your business to increase your return on investment (ROI). But not every potential client is ready to commit right away. You may have contacts in your pipeline that don’t fit your ideal customer profile (ICP) but aren't ready to communicate with sales so you have to be more strategic to get that information from them. You may have leads that are mislabeled due to poor oversight. To ensure proper communication with potential clients, it’s crucial to implement a SaaS marketing and sales funnel and define your funnel stages (also known as contact lifecycle stages). Not only do correctly defined funnel stages help your sales team, but they help your marketing team to ensure the right information is getting to the right people at the right time.

We’ve seen funnel stages that are all over the place throughout our work with clients. Some define marketing qualified leads (MQLs) as sales qualified leads (SQLs), some define subscribers as leads, and some don’t let sales touch anyone that isn’t an opportunity (SQO). The mis-defining of leads and funnel stages leads to confusion and the inaccurate delivery of content.

It’s also important to note which team owns each part of the funnel. Either sales or marketing will take action and ownership of results depending on the stage. The first half of the funnel is owned by marketing and the second half is typically owned by sales.

To help align your marketing and sales teams, we’ve defined the following lifecycle stages based on our experience.

1. Suspect or prospect

Suspects or prospects are at the tip-top of your funnel. They are at the entry point and always will have the largest number compared to the rest of the funnel. The objective is to build lists and perform outreach (suspects) while driving visitors to your online presence (prospects). This drives brand awareness and is owned by marketing.

At Kalungi, we’ve found that it is important to understand the entry criteria of each funnel/lifecycle stage. For suspects or prospects, this means the lead is a unique visitor to your site that gets cookied (inbound prospects) or is a lead with an email or LinkedIn profile in your database for cold outreach (outbound suspects). 

Suspects or prospects are in your funnel, now what?

It’s crucial to nurture your leads throughout each step of the funnel. Each lifecycle stage requires different content to give each lead the right information they need, at the right time. For suspects or prospects, the next steps include outreach - LinkedIn messaging campaigns - to drive connections (outbound) and retargeting cookied visitors with top-of-funnel blog content to drive awareness and have people “opt-in” to learning more about you.

If these contacts opt-in and express an interest in learning more, they move down the funnel to be subscribers. Exit criteria include the suspect accepting a connection request on LinkedIn, or filling out a form “opting in” to ongoing nurture campaigns and becoming a “contact subscriber."

2. Subscriber

One of the most crucial pieces of entry criteria for becoming a subscriber is that the contact has given us consent to send information to them. Consent could be giving us their email, subscribing to the blog or newsletter, or allowing event coordinators to give their information to participants in an event. The objective is to drive subscribers to become leads who fit your ICP. This stage is owned by marketing.

While nurturing subscribers, your goal is to define whether or not they fit your ICP. To determine the subscriber’s ICP, you need to find out their job title. One way to do this is by delivering gated content with a form that asks for their job title. Once you know the job title, you can assign them a persona and move them down the funnel to become a lead.

3. Lead

Entry criteria for becoming a lead include confirming that the contact fits into your ICP and is assigned a persona. Typically, they’ve filled out a form with their job title or come from ABM (account-based marketing) outbound work - knowing that the contact fits into the ICP is necessary for most if not all ABM outbound work. This stage is owned by marketing.

To nurture leads, top-of-the-funnel (TOFU) and middle-of-the-funnel (MOFU) content works the best. These leads have shown intent but still aren’t quite ready to commit. You need to educate them on their pains and how to solve them. TOFU content includes relevant blog articles, buyers’ guides, and industry survey whitepapers while MOFU content includes relevant eBooks, case studies, and comparison battlecards.

The objective when nurturing leads is to drive demand to have the lead consider your solution. You want your leads to take actions that qualify them for sales development representative (SDR) follow up. Those actions give these leads a leadscore and if they pass the appropriate threshold (that you define), they move down the funnel to become a Marketing Qualified Lead (MQL). 

4. Marketing qualified lead (MQL)

Actions that a lead could take to pass the leadscore and qualify them as an MQL include a high-intent form fill, staying on the website for an extended amount of time, or interacting with multiple downloadable pieces of content. MQLs by definition, fit the ICP, have given us consent to contact them, and have demonstrated intent by requesting a conversation with the SDR or sales team. 

This stage is owned by the SDR who reports to the marketing team (or sometimes to sales, but it’s a very different role vs. the account executive). The objective when interacting with MQLs is to have the SDR do a follow-up to do initial sales-ready qualifications and schedule a meeting.

To move down the funnel, the contact must show up for the SDR call and show interest in talking with a sales executive. During the call, the SDR qualifies the lead by ensuring they’re not a competitor, customer, or both filling out forms.

After this stage is completed, the SDR changes the lifecycle stage to “sales qualified lead” or “sales accepted lead”. This is a critical stage in the journey, as the Marketing/SDR team now hands over responsibility for the ownership of follow-up to the Sales organization.

5. Sales qualified lead (SQL)

This is the first stage of the funnel that is owned by sales. The objective is for an account executive to perform sales opportunity qualification and convert the lead into an opportunity.

The entry criteria for SQLs include an SDR confirming interest, a meeting with an account executive being scheduled, and the contact is represented in the sales pipeline, typically as attached to a deal. 

Because this stage is frequently the handover point between marketing and sales, it's essential that the two teams are clear on what this handoff looks like and that no leads, follow-ups, or important information are being lost in the transfer.

At this stage, the AE will perform the first sales call to do a detailed opportunity qualification. The AE must ask themselves, “Can we win? Do we want to win? Should we pursue this opportunity?” Do they have a high chance of choosing us as their solution? Do we want to be their solution? Will they be easy and pleasant to work with? To move down in the funnel, the Account Exec. determines this is an opportunity that is worth pursuing. Be sure to update your CRM with a forecasted deal amount and close date.

6. Opportunity (or SQO)

Last but not least, is the opportunity stage of the funnel. This lifecycle stage has been qualified by an account executive and is in the deal pipeline with an amount and expected close date. They are owned by the sales team with the objective to win the opportunity and turn them into a paying customer.

Actions to take include developing the opportunity through discovery, solution, demo, proposal, and close stages in the opportunity development process. To exit this stage, a contact must confirm their purchase by signing a PO or binding contract, thus becoming a customer.

Establishing your ideal B2B SaaS marketing and sales funnel stages

Figuring out your funnel stages can be difficult. Not all leads should be touched by sales. Marketing is here to educate your leads, nurture them, and deliver qualified and ready-to-commit leads. Once your funnel (lifecycle) stages are defined and set up correctly, it’ll be much easier for your sales and marketing teams to align. It will alleviate any confusion in your pipeline and ensure the departments are well-oiled machines churning out MQLs and Opportunities like nobody’s business. 

It's also important to note again that each business will need to tweak these marketing and sales stages to fit their own needs! Though we've found the cutoff points we've defined here to be effective for many companies in the B2B SaaS space, they won't work for everyone and should be conformed to fit your own business's needs.

Give the process of defining your stages a great deal of time and consideration. Remember that you can't "you cannot un-eat the fish" or un-qualify the lead—for funnel reports that are accurate now and useful in the future, you'll want to change your funnel stage definitions as little as possible over time. So it's best to get it right in the beginning!