What is a sales funnel? This term refers to a specific marketing model that allows you to organize the implementation of the product in such a way that at each stage of the process an effective control of its results can be organized.
This direction is used by many entrepreneurs. But this topic will be especially interesting to those who are at the initial stage of creating and expanding their own business. How is a sales funnel useful for entrepreneurs? Let's try to figure this out.
A bit of history
The emergence of a sales funnel was facilitated by hierarchical communication models. The goal of any of these marketing strategies has always been to ensure product sales, as well as interacting with customers to make regular purchases in the future.
One of these hierarchical models was proposed in 1898 by US attorney Elias Lewis. In his conception, the author described the psychology of the client. Three decades later, such a model was successfully combined with the AIDA trading model. The abbreviation of this concept is decrypted as follows:
- attention - attention;
- interest - interest;
- desire - desire;
- action - action.
Since the thirties of the last century, the sales funnel has already taken its strong place in marketing strategies, becoming one of the main concepts in this direction. The idea itself was very simple. Anyone who wants to sell something will need to work with a client after going through certain stages of communication with him. They include many processes - from attracting attention to the proposed product to convincing people of the correctness of their choice, which ultimately leads to a purchase. With the passage of each stage, the number of customers decreases.
More than a hundred years have passed since the creation of such a model. However, the principles of sale have not changed. They, as before, include four stages of customer readiness:
- First of all, customer attention is captured. For this, a sales funnel tool such as advertising is used.
- Further, increased interest is provoked. This is particularly influenced by the content of the advertising appeal.
- A potential buyer has a desire to purchase a product. That is, he seeks to take advantage of the existing offer.
- The client begins to act. To do this, he goes to the site, to the store or calls the company.
A client who has gone through all of the above steps is considered already “warmed up”. The manager can only not miss it and close the deal.
Definition of a concept
In English, this term sounds in three variants. This is a sales pipeline, sales funnel or purchase funnel. Such a concept means the path that the average consumer of a service or product follows from the moment when his attention is drawn to the product, to the acquisition stage.
The English-language Wikipedia considers the sales funnel as a marketing model that illustrates the passage of all the stages of a purchase. The first of them introduces the offer, which can be called the first touch, and the last - the preparation of the transaction.
On the other hand, by the sales funnel we mean the number of customers who remain at certain stages of communication with the manager. Such a concept perfectly reflects the entire implementation cycle, which begins with a cold call and ends with a deal.
When passing through each of the stages of this marketing strategy, the number of potential customers will certainly decrease. This explains the fact that the output number of transactions is much different from the number of calls made by the manager.
Need to use
A sales funnel is an ideal marketing tool that allows you to conduct an effective analysis of the work of not only the entire sales department, but also each of its employees. When applying such a model, it becomes clear to the entrepreneur at what stages of his company’s activity the maximum screening of potential buyers occurs. This allows you to identify shortcomings in the work. To fix the problem, you need to pay attention to this stage, which will help correct the situation.
Consider a simple example of a sales funnel. Sometimes it happens that the manager made 100 cold calls, put up 10 commercial offers, and as a result did not conclude a single contract. A similar situation can already be thoroughly analyzed. First of all, out of 100 calls, only 10 offers of cooperation were put up. Why so few? It is possible that it is worth working on the motivation of a potential buyer. Or maybe the whole thing is the dishonesty of the manager, who simply forgot to put up a commercial offer to the client? The field for analysis in this case is very extensive.
We look further. None of the 10 commercial offers put forward to the client received a response. The documents were probably very poorly written. Or maybe the manager just did not fully work with the client?
The given example of a sales funnel considered only three stages of the model. In real life, of course, there are more of them. However, based on the foregoing, it becomes clear the very essence of such a tool, which is necessary for conducting an analysis of sales efficiency. The results obtained will allow timely taking the necessary measures to prevent stagnation in the organization.
Knowledge of this marketing tool allows businessmen and entrepreneurs to achieve a multiple increase in their profits. And at the same time it does not matter where the construction of the sales funnel is carried out. Whether it's online trading or selling a product in a store. Such a model always works great.
Especially relevant is the use of a sales funnel in the modern world. Indeed, today often the supply of goods, as a rule, exceeds their demand. This makes it increasingly difficult for companies to attract customers directly. Conducting a competent analysis of the sales funnel allows you to influence potential customers more subtly and unobtrusively, quickly and quietly adapting to their needs.
Building a general scheme
As you know, the main purpose of marketing is to turn the initial attention of the client into real interest. How to build a sales funnel that allows a potential buyer to reach its bottom with a guarantee, that is, make an acquisition? This is the art of marketing.
In order to understand how to build a sales funnel, you need to familiarize yourself with those factors that directly affect the number of consumers of goods or services. Among them:
- visual demonstration, advertising and other ways to promote the product;
- the ability to find the right audience;
- marketing and pricing policies, including promotions, discounts and other additional benefits.
In other words, the sales funnel of services or goods should be built in such a way that the consumer understands why the purchase of goods in this store is more profitable for him than in any other.
Sales funnel conversion
Consider this very important marketing element. A sales funnel conversion is understood as an indicator of the effectiveness of its particular stage or level, which is expressed as a percentage. This is nothing more than the relation of those actions that were potentially possible to those that were committed in reality.
Consider a specific example. So, the company placed a banner on the street. This advertising tool was seen by 1 thousand people. This step is the first stage of the funnel. After that, potential buyers began to call the company. Of the 1000 who saw the banner, 100 people became interested in products. This is the second stage of the funnel. As you can see, the number of potential buyers has decreased significantly. Of those who called, only 10 people came to the store. This is the third stage of the funnel. Only one person purchased the product. Thus, the funnel came to its last stage.
Consider how the conversion rate came about. At the first stage, this is the ratio of the number of all actually called people to those who saw the advertisement (100 people / 1000 people * 100% = 10%).
In the same way, conversion is calculated at all stages of sales. So, its final indicator is 0.1% (1 buyer / 1000 people who saw the ad * 100%).
Internet marketing tool
Considering the conversion in terms of the sale of goods using a global network, it is necessary to have a concept of such an indicator as CRM. It indicates the effectiveness of advertising, while measured in revenue per 1000 impressions.
If you include a sales funnel in a CRM system, then the following key points will become apparent:
- Stages of implementation where possible customers are screened out as much as possible.
- Consumer groups that need to focus on and focus on.
- Conversion level as a result of combining various parameters.
- Unnecessary processes or links in the sales chain.
- The effectiveness of the entire business.
It is worth noting that a sales funnel is a very effective marketing tool. It works in any case, regardless of the names of the goods offered, whether it be watches, cars, or trips to Turkey. This tool is also used in the sale of real estate, as well as exclusive and expensive goods. Features of sales in this case will consist only in a proportional reduction in the size of the audience at all its stages.
Every businessman should understand that he needs to make the funnel as similar as possible to a pipe. In this case, almost all potential buyers will turn into real customers. The closest approach to these ideal conditions will ensure the high efficiency of the company.
Consider the immediate stages of the sales funnel, the consistent passage of which will allow the business to be more streamlined and profitable.
Work with offers
The first stage is preparatory for the entrepreneur. He should work out his product or service as much as possible, while formulating a unique selling proposition (USP). For example, you will need to describe as broadly as possible the benefits that the buyer will receive when purchasing this product, and how the company differs from its competitors.
It should be borne in mind that UTP, indicating only that the company offers high quality, best products and short lead times, is unlikely to work today. The client needs specifics.
For example, customers can be offered a discount of up to 20% during the week. Or indicate the delivery of goods within an hour after the order is received. And in terms of quality, for example, when detecting dirt on a car, a year of free car wash can be provided.
After preparation and careful study of the offer of goods or services, the entrepreneur can proceed to the direct construction and configuration of a sales funnel.
Cold contacts
This term refers to the audience of potential buyers. Cold contacts are most often mentioned when it comes to network marketing. However, it is quite correct to tie this term to trade in general.
The number of cold contacts ultimately affects the amount of profit. Indeed, with an increase in the audience of potential buyers, the probability of transactions increases.
Getting cold contacts is a whole science. So, those who attract customers in direct sales should pay special attention to the following points:
- communication style of sellers;
- speech literacy;
- dating methods;
- facial expressions and gestures.
Those techniques that are used in real communication can be transferred to the Internet. For someone who is able to build relationships in real life, it will be much easier on the network. Of course, affixed emoticons will never replace a person’s smile, but in the Internet communication the general style of building presentations, negotiating, etc. will certainly affect. To get the desired result, it should be easy and friendly.
Interest in the offer
This is the third stage of the sales funnel. It is necessary to increase conversion. To increase interest in the proposal, entrepreneurs use various types of advertising.
Work with objections
This tool is successfully used in any of the existing trade sectors. The seller must decide in advance with those objections that he can hear from the client, and already have ready-made answers to them. Its main task is to neutralize all doubts and fears of a person who has come to the store in order to convince him to buy a service or product. It is recommended to do this unobtrusively and gently. And only in rare cases are the most productive aggressive methods.
In modern marketing, persuasion uses indirect techniques. As a result, the buyer who made the purchase believes that the acquisition was his conscious choice. In fact, it was the result of a difficult psycho-emotional process, which was under the direction of the seller.
Transaction
The final stage of the conversion in the sales funnel is the moment when the buyer got into it and reached the bottom. The result of this process is the conclusion of the transaction. Their number is the main indicator of the effectiveness of marketing policies.
Analysis of the results
At the sixth stage of the sales funnel, the percentage of the number of purchases to the number of proposals received is determined. The higher its value, the more productive can be considered the work of a store, website or seller.
It is advisable to conduct an analysis at each stage of the funnel. Ideally, the value of the obtained indicators should not have any sharp jumps. At the output, it is necessary to determine the overall indicator, indicating the amount of conversion of the funnel.
Increase work efficiency
Conducted conversion analysis will make it possible to increase this indicator. In other words, the entrepreneur will need to interest real buyers. For this, a variety of methods can be applied. For example, in e-commerce, this is :
- free delivery of purchased goods;
- communication with an online consultant;
- adding the right product to the basket;
- personalization of the client (clarification of his personal data and treatment with their use);
- Providing support when concluding a transaction through a call or chat.
Using software
Managers can use an automated sales funnel. For this, special programs are used in which employees indicate data relating to each transaction. Due to this, all stages of sales can be viewed automatically.
The formation of such a sales funnel occurs at any time. Its basis is the information that was entered into the software by managers. Moreover, such an automatic sales funnel allows you to immediately control each of the stages of product sales.
But it’s not necessary to purchase specially created software. To control the effectiveness of the marketing service, you can create a sales funnel in Excel. These standard tables will allow you to generate the most time-consuming and lengthy reports in a short period of time.
Learning topics
There is a lot of literature on improving sales efficiency. So, invites its readers to get acquainted with the sales funnel Maria Solodar. This is a well-known blogger and speaker of major conferences on marketing issues, as well as the head of an agency that creates and implements a car funnel in the activities of leading Runet companies.
The book by Maria Solodar “Sales funnel on the Internet” was the first Russian-language publication to cover the creation, optimization, and automation of this marketing tool on the Global Network. Its author offers a system on the basis of which long-term relationships with customers can be built. At the same time, there is the prospect of multiple transactions.
The result of building such a sales funnel on the Internet will be an increase in the average check amount, an increase in the number of transactions, an increase in conversion and a decrease in advertising costs.
Maria Solodar conveys to her reader the vast experience in the creation of auto funnels, which she gained during their work for thousands of companies, online stores, as well as for real estate organizations, medical services, etc. In the book you can find step-by-step instructions for creating and further automating the funnel, the implementation of which will open up great opportunities for the entrepreneur to make sales over the Internet.