Sales Funnels
Sales Funnels: This topic may be known by some, but to those of you that have never heard of this term or know very little about, it is going to help you expand you knowledge on the business and sales cycle. Remember, the objective here is for you to start learning a little bit more in order to increase your worth. The more you know, the more potential you have to teach others and be of value. Keep that in mind.
Ok, so what is a Sales Funnel ?
A sales funnel is a systematic way in which a business moves a potential prospect through the pre-defined sales process in order to achieve a sale.
If you look around you, everything is a Sales Funnel. From your local grocery store, to shopping centers and malls, and online stores. Sales Funnels are everywhere! Without a sales funnel, a business would miss out of opportunities to create sales that otherwise would not be possible do to this systematic approach to “leading” the prospect or customer through a sequence of steps or events until they purchase.
Below is a picture of what a typical sales funnel looks like.
As you can see, a sales funnel is called a “funnel” due to the dynamics of the sales process. Starting from a large entrance or opening and ending down to a very small exit. Now let’s look at how this sales funnel translates to a real world example. Let’s use your favorite electronics (ABC Electronics) store to help us understand this process better.
1. CAMPAIGN : Looking at the funnel starting from the top you see the widest opening or entry point into the sales funnel. This typically starts by a business creating Advertisements to entice and create as much interest to potential customers to come in. Using ABC Electronics as an example, you can imaging them sending a promotional coupon directly to your mail box at home. Keep in mind that just like you, hundreds or even thousand of other people will be receiving this Ad. ABC Electronics is casting a wide net over an area of people they believe will respond to their Ad. Let’s assume the offer was for 25%OFF their 60″ Flat Screen TV. Do they have your attention? I think so.
2. LEADS – From those hundreds or thousands of people , not all people will respond to the Ad due to different circumstances. Perhaps, there is no interest in the product offered or simply the prospect does not have the money. This causes only a fraction of group that was advertised to respond and actually come in for the product advertised. in this case for the 25%OFF their flat screen TV. For those that have become interested in the offer and come into the store, they now officially become a lead. A person that has raised their hand and showed an interest in the product or service offered or advertised.
3. OPPORTUNITIES: Now that you are in the store as lead (remember, you have not bought yet, but you are interested), this creates an opportunity for the salesmen on the floor to make sale. You have an interest in a product, they have an interest in selling, there is opportunity for BOTH. Keep in mind that at this point of the “funnel” many will not purchase (again)for various reasons. They don’t qualify for financing, they decided the product is not what they want amongst many other reasons.
NOTICE: How the lower you are in the funnel, the less people you will find, but the the highest quality prospect also exists at the bottom
4. SALES: Assuming that we have a qualified buyer who is willing and able to purchase the product, a sale will be made via the exchange of money.
5. CLIENTS/CUSTOMERS: Depending on the industry that you are in, after the sale is made you would have attained a new customer or client. Professional services will acquire a client where as retail sales will acquire a customer. Since you bought from ABC Electronics, you are now their customer. However, ABC Electronics will have to treat you with the utmost respect and provide excellent customer service in order to RETAIN.
6. RETENTION: The final piece of the funnel is retention. What a business does to make sure to keep that client or customer happy is paramount. Having a great customer/ client experience will generate referrals and future business at no additional marketing costs. Just imagine, that when you bought your 60″ TV from ABC Electronics starting with the sale, they treated you like gold. They helped you install the TV at home and delivered it to you at a very convenient fee. You’re happy and now you tell your friends about your experience. And the sales cycles resumes.
Every time you go purchase something look at it as a sales funnel. When you go to the grocery store think about how everything is positioned inside the store. Think of your flow through the store up until check out. Notice how you have small items like chocolates, candy, magazines, and individual drinks? These are all placed with a purpose. To increase the transaction size or dollar amount before you leave the store.
Do you recall the last time you purchased something online? Do you remember going through a funnel? let me refresh your memory. You went to a specific site to purchase product X, you find a great deal on it, and click “checkout”, but rather than going straight to inputting your CC information you get a window with “related products”, all trying to sell you more in an effort ton increase transaction size via a systematic way of leading you through the sales process. It happens all the time, everywhere you go.
So now that you know what a sales funnel is, are you starting to get ideas? If you have a business or thought of having one, can you see how a sales funnel can help you increase sales?
Now remember, sales funnels have a lot of moving parts and need to be designed with a purpose in mind, to make the sale. You need to know your prospect and know how to lead them to the sale. This involves certain skills that I will be teaching you in up coming posts.
BUSINESS IDEA: Imagine if you knew how to design sales funnels, could you help local businesses increase their sales?
To your success,
Isaac Tobelen, Small Business Owner & Entrepreneur
