What exactly is a sales funnel?
Sales funnels are an important part of your marketing strategy and their use will even improve your business mentality, but what exactly are they? Imagine a real sales funnel, wide at the top and thin at the bottom. Now imagine that all your potential customers fall on the top of the funnel. These could be visitors to your website, for example. Some of these customers will go down the funnel and others will leave the funnel never to be seen again.
Those who stay will form the next layer at the bottom of the funnel as it becomes thinner. They could be those who request more information from you, or join a mailing list, etc. These are the ones who give you hints. Some of these prospects may buy a product from you and move further down into your hopper, others leave the hopper without buying anything. The further down the funnel people go, the more valuable they become to you, but they also become increasingly rare.
The further they go down the funnel, the more they buy and the bigger fans of you and your company they become. Only a small percentage will make it to the thin end of the funnel, but these few will generate a large portion of your income, so treat them well and try to keep them in your sales funnel.
Why do you need a sales funnel?
Funnels are a great way to imagine your customers going through your sales process, first becoming leads, then actual customers, and finally, enthusiastic fans. However, the true power of your sales funnel becomes clearer when you start adding some numbers. By adding conversion rates to each level of your sales funnel, you can see exactly how well you’re moving customers from each level of the funnel to the next.
Conversion rates are the percentage of those who move from the level of the sales funnel above to each level of the sales funnel. The higher the number, the better. You can also add the average amount that each customer spends at each level. From this, you can calculate how much money you are willing to spend to move each customer to the next level.
For example, if customers give you an average profit of $10 on one level, but $50 on the next level, it’s profitable to spend up to $39 to move each customer to the next level; further spending is simply not worth it. I don’t want to make this a mathematical exercise, but adding conversion rates and numbers to your funnel can be extremely useful and will complement your business mentality by helping you focus more on what is important in your sales process.
Creating a sales funnel is not difficult
My final word on funnels is that they are not so complicated. It’s much easier to draw one than to explain how it works, so grab a pen and paper and start sketching your own.
The sooner you make a sales funnel, the sooner you can imagine how your customers will behave and, more importantly, you can deduct some of the guesswork from your marketing costs.
For further details on this article and great resources, please visit https://www.nimble.com/blog/lead-and-sales-funnel-optimization/.