What Is a Sales Funnel and Why Is It Important for Your Success?
The term 'sales funnel' is an important concept for all types of businesses. Your sales funnel is what leads customers to purchase your products or services. As they pass through the funnel, they transform from random prospects to qualified leads and, finally, to buyers.
As the funnel narrows and prospects get to your sales team, they are already primed to make a purchase.
The Sales Funnel Explained
The sales funnel is a sieve that leads prospective customers through your sales process. It casts its net wide and then gradually weeds out unqualified prospects that are not likely to buy your product.
As the term 'funnel' suggests, it's wide at the top (the entry point) and narrow at the bottom (the point of purchase). At the top, a sales funnel attracts casual website visitors through a special offer that lures them in. You then use marketing techniques to offer them other deals. This gives you a chance to gather information about your prospects and further qualify them.
Why Businesses Use Sales Funnels
Sales funnels are important for a number of reasons. First, they make the sales process more efficient. Since only qualified buyers get to the end of the funnel, your sales team doesn't waste time dealing with uninterested prospects who are just kicking tires.
A good sales funnel helps to make your sales process more predictable. Sales are never fully predictable, but when your sales process is organised in a standard, systemised way, you can arrive at a good estimate of your ROI.
Finally, a sales funnel helps you track different metrics at different points of the process. It's organised into clear steps so that when there's a problem within your funnel, you can troubleshoot and tweak accordingly.
An Example of a Sales Funnel
Here's an example of a sales funnel in action. Imagine that you own a business that sells supplies and information about rooftop gardening. You create a blog about green roofing that includes a form on the sidebar where visitors can sign up for your list and receive a free eBook on the topic.
Once a visitor downloads the book, you begin marketing to them through emails, offering them exclusive content, helpful tips, and special offers. The offers gradually increase in price, leading them to your main product, a comprehensive collection of rooftop gardening tips with a fairly high price tag.
At first, visitors read your blog for information about rooftop gardening. At that point they may just be considering the feasibility of starting their own garden. Those who sign up for your list are truly interested, and the ones that jump on the email offers are seriously looking for a way to start a rooftop garden. The people in this segment of your list are the most likely to buy your kit, and therefore you begin marketing the kit to them.
Drive Them Away
An important concept to remember about the sales funnel is that you don't need to appeal to everyone. You only need to focus on those who are truly interested in your product. When you lose subscribers, this is a good thing (as long as it's not too many) because you don't waste your time with those who will never buy. That's the magic of the sales funnel in action.
The Key Components of an Effective Sales Funnel
For a sales funnel to work, a few key elements must be in place. First, you need to consider the offers you make. These offers should gradually increase in size and ticket price, as you weed out those who aren't interested in buying your product.
Second, you must decide the ways in which you will keep in touch with your prospects and further qualify them. Through your offers and communications, you should be able to get your prospect list down to only the serious buyers.
By the time you get to the end of your funnel, you should have a list of loyal customers who you can sell to again and again, assuming you nurture that relationship.
Types of Offers
There are a variety of different ways to go about making your offers. The most common include:
An opt-in giveaway is a freebie usually offered in exchange for the person's name and email address. This is the entry point to your sales funnel. The potential customer wants the free product, so they 'opt-in' by giving you their name and email address. You can then begin marketing directly to them through email.
Front-end offers are paid offers that work just like freebies, but can actually be more effective. The key is that even though you charge for your offer, you keep the price very low. Charging for the product helps weed out the folks who just want a freebie and aren’t interested in ever opening up their wallets at all. If they’re willing to spend even just a dollar on a small product, you know that they have the potential to be serious buyers in the future.
Subscription products are low-priced but more profitable for you because you charge a monthly fee to subscribers. It is much tougher to get people to pay for a subscription though, so the content you're offering has to be really unique and valuable. But if these clients are willing to pay this monthly fee, they'll be much more likely to buy your high-ticket items.
One-time offers are great because they allude to a level of urgency. These are offers telling the visitor that once they click away, the offer expires. In other words, they have to sign up and/or buy immediately or they will lose their one and only chance.
The way a sales funnel works is that the front-end offers are low-priced (or free) and low commitment. In contrast, your back-end offers gradually increase in price. These pricier back-end offers are what really qualify your prospects and tell you who your serious buyers are.
Keeping in Touch
It's important to keep in touch with your prospects. They shouldn't only be hearing from you when you're trying to sell them something. The follow-up emails you send to subscribers on your list should always offer them helpful content. The purpose of these emails is to stay on their radar and build a relationship with them.
The first step in doing this is the 'thank you' page. This is a small detail, but it's extremely important. After signing up for your list or purchasing the initial front-end product from you, redirect your customers to a page that simply thanks them for signing up and/or making a purchase.
You can also use this opportunity to make them another offer. You can use this opportunity to present a one-time offer or an upsell. Either strategy will help you to further qualify prospects. You know you have a serious buyer if they immediately take you up on that second offer.
Sales Funnels and SEO
Remember the shape of the funnel – wide at the entry-point and gradually narrowing toward the main target purchase. Because you want to cast your net wide, the landing page where you make your initial offer should be search engine optimized in order to direct as much traffic as possible to your website.