22 April 2014
The path leading from creating initial awareness of a brand to selling the product or service is paved with challenges and opportunities. A sales funnel helps a business streamline the sales process to deal with the challenges and exploit the opportunities for maximum efficiency and RoI.
The concept of a sales funnel segregates the sales pipeline into various stages which track the conversion of a lead into prospects and the to actual sales.
Usually, at the top of the sales funnel you’ll have a large number of leads from a variety of sources after being targeted by your marketing efforts.
As we move down the funnel, some of the leads are qualified as prospects - those who are interested in your product and service after having been contacted by your firm.
At the narrow end of the funnel, a percentage of these prospects are converted into customers who have purchased your products after going through various sales pipeline stages.
Throughout this process, a firm has two goals:
Maximizing lead generation and brand awareness - to get more and more people ‘into the funnel’
Maximizing the percentage of people who move ‘down the funnel’ to the next stage with the end goal of increasing sales.
While the exact sales process may differ for each business depending on what product or service you’re dealing in, a general rundown of the stages is as follows:
Awareness: This comprises of your offline and online marketing efforts to make potential customers aware of your product.
Education: In the next step, you need to educate your potential customers as to the benefits of your product, how to use it properly and why it is needed.
Evaluation: In this stage, the customer needs to time to think, discuss and evaluate whether or not to purchase the product. Product demos and testimonials make a lot of difference in this phase.
Engagement: The prospect may not be ready to make his purchase decision just yet so a push in the form of a freebie or discount may be required here.
Commitment to Purchase: Here, a prospect agrees to buy the product. But, you don’t want to start the celebrations just yet, because sometimes an agreement to buy the product doesn’t turn into an actual sale. The prospect may walk away to never return even after promising to buy the product!! The goal here is to convert that commitment into sales.
Purchase: Now, you can breathe easy. This was the goal all along after all.
Customer Loyalty: This stage is technically outside the funnel post the actual sales, but it is no less important. You want to maintain a good relationship with your customers through continued communication and good after sales service to ensure that they spread the good word about their purchase and come back for repeat purchases.
Depending on the particular stage of the process, your sales funnel will filter leads into prospects who then become qualified prospects and after getting a commitment they become your customers.
With some extra effort, you can turn these customers into loyal or repeat customers outside the funnel.
By dividing your target audience into leads, prospects etc. you can easily identify where to focus. Your sales and marketing efforts are better directed towards qualified leads who have a better chance of purchasing your product as opposed to the wide number of people who are simply aware of your product but may not be interested for a variety of reasons.
The very purpose of the sales funnel is to filter out the disinterested leads so that you can utilize your time better on the qualified prospects.
Sales funnel metrics help you to easily spot a problem at a particular stage in your sales pipeline and address it accordingly. Whether there is a problem at the initial stage calling for greater marketing efforts to generate awareness or there is a low conversion rate from lead to prospect or prospect to sales highlighting the need for training for your reps or some other tweaks in your sales pitches or business proposals.
A sales funnel makes your sales process more predictable, based on the conversion rates at every stage. So, you can arrive at a good approximation of your return on investment early on in the sales cycle.
The sales funnel is essentially a plan for guiding your leads through their purchase process with the ultimate goal of making a sale. While every business has a unique sales process, here are some general tips to create an effective sales funnel.
Spreading the word about your brand and your products ensures that you get maximum leads into the sales funnel. This you can do by creating a strong online presence and sending out regular newsletters and mailers along with other marketing and advertising efforts.
In the offline world, make sure you’re listed in all major business directories so that your customers can find you.
You need to have set criteria to clearly differentiate between unqualified leads and qualified prospects. This way, you will be able to filter out the disinterested parties and concentrate your efforts on the ones likely to make a purchase.
For this, you must have a clear definition of what your customer needs and how your product can fulfil his or her requirements.
Communication is essential across all the sales pipeline stages as you take your leads through the purchase process. The type of communication at each stage may differ from being general mailers or newsletters at the initial phase to generate awareness and then move on to being more personalized in nature as a lead shows an interest or puts in an inquiry about the product.
Ensure that you are responsive to queries, questions or complaints and that the prospect gets the right kind of information required for him to move on to the next stage of the funnel. However, take a balanced approach and try not to ‘spam’ your prospective customers with an overload of information.
Promotional offers and freebies are a great way to turn leads into prospects and then into customers. Make sure you reward first time purchases by providing value addition to your prospects that differentiate you from your customers.
These small incentives might just provide that extra push a lead needs to move on to the next stage of the sales funnel.
It may be a good idea to segregate your leads according to gender, preferences, past orders or any other criteria depending on the nature of your product or service, so that your marketing communication can be tailored to the nature of the leads. Customize discounts and other offers based on your classifications for a better response.
If you are selling a moderately priced item, then it may work for you to have a lesser number of steps in your sales funnel. Getting a lead to join your mailing list and then pitching for a sale of$50 or $100 shouldn’t be a problem.
But, if you’re pitching a high value item for, say$1000, you may want to add several steps to the funnel that encourages the lead to try a free sample first and then make a smaller investment on a lower cost item thats adds a lot of value, in order to lead them towards the final purchase.
It is very important to track the numbers at every step of the sales process. What is the total number of leads in your funnel? What is the conversion rate at every step of the funnel?
How are your conversion rates changing over time? What is the average time it takes to close a deal or move a lead to the next stage of the funnel?
These metrics help you to identify which stage of the funnel you need to focus on, where the problems lie and also the impact of your marketing campaigns.
Tracking these numbers manually is virtually impossible but there are several cost effective sales pipeline management software available to measure and monitor these.
Having an effective sales funnel can help you control, monitor and increase your sales provided you’re willing to invest the time and effort required in categorizing and analyzing metrics.
But, always remember that the process isn’t over once the lead moves out of the funnel as a customer. Try and secure repeat purchases through high quality offerings, great service and consistent communication. By doing this, you can ensure that your customers ‘re-enter the sales funnel’ or recommend you to others.
