Contrary to popular belief, what goes into your sales funnel are suspects, not prospects. Whether gotten from your marketing or sales efforts, digital (say website) or ‘analog’ (say billboard, call, or print) it doesn’t matter. You still have to separate the wheat from the chaff (meaning, qualify them). But first, what is a sales funnel, how do you create a sales funnel, and what are the benefits of a sales funnel?
Definition of a sales funnel
So what is a sales funnel? Without getting textbook about it, a sales funnel comprises a tool to help you measure the success in conversion of your marketing and selling efforts. And when I say a tool, I mean a diagram in the shape of a funnel. Yes, I know, there are entire CRM systems that can do this but that’s for the few companies that can afford them. For you that cannot, or doesn’t need to, you only need to design or draw the shape of a funnel (wide at the shop and tapering all the way down) and, taraa, your tool (creation) is ready. The objective at the top of the sales funnel is to capture the number of leads from your prospecting efforts; such efforts come from creating awareness following marketing or sales efforts. Building a sales funnel is that simple. Using it is where the work begins.
Create a funnel
You see, this diagrammatic representation, on a white board or manila paper, is intended to help you visualize the sales process. Not all that enter the wide brim at the top will come out through the narrow exit. Indeed, just like a funnel, some things are too wide to pass through its neck and must be removed to ensure a continued smooth flow. In sales these are suspects; leads that reached out to us having seen our advert or whom we approached, but turns out they can’t afford our products or services; or can, but don’t have a need for. And so, through engagement (asking insightful questions), we qualify those that do from those that don’t; and then focus our attention on the former.
Importance of and steps in it
Now then. After you create your sales funnel, the engagements that lead to qualification, pitching and closing the sale, are the stages or elements in the sales funnel. Depending on the sales process in your industry, these could be four, five or even seven. The wording you use for each step is also dependent on your industry or personal choice; but, it largely borrows from the steps in, and proper sequence of, the sales cycle. For instance, some may call the steps, creating awareness (prospecting) fostering interest (interviewing), pitching your offer (demonstrating and validating), consideration (negotiating) and decision making (closing).
Irrespective of the wording, recording leakage at every stage is what makes the sales funnel work. It is these leakages that sometimes have people refer to a sales funnel as sales pipeline; strictly speaking it is not but for now that’s semantics. When you create your sales funnel and understand it, it means you correctly interpret what it tells you. This is what will make you confidently state that, “On average, every month we get 100 leads (suspects). Of these, 40 qualify as prospects and 20 end up buying. We tend to lose most at the closing stage and we are working on tightening this through sales training.” Just like hips, numbers don’t lie.
Sales cycle vs. Sales funnel
So why bother creating a sales funnel when a sales cycle serves just as well? What is the difference? Well, first, the shape of the sales funnel is quite a powerful visual representation of churn, conversion, which selling is. Secondly, the purpose of the cycle (circle) is to show that selling is a continual activity. The cycle does not quite capture churn as does the sales funnel conversion rate benchmarks. The benchmarks could include what the typical industry percentages are. For instance, what those selling land, or moving services, convert, could be 30%; and we (in one of these industries) are doing 20.
The advantage of sales funnel or pipeline is that you are able to measure seepage at every step; and ultimately, of the many that are called from your marketing efforts, determining which few of the engaged qualified leads are chosen; and what you should do to increase this churn. A cycle doesn’t quite capture this. Used correctly, a sales funnel is very effective and its benefits huge. To unlock them however, your job is to continually optimize churn in it, as the funnel helps in boosting conversion rates. For instance, measuring using key metrics, like conversion rate of, say creating awareness to fostering interest or pitching to consideration. Admittedly, neither cycle nor funnel captures the customer journey-in any case, that’s a separate tool altogether.
Read: Exploit sales pipeline management system
Why bother having it?
Creating and understanding your sales funnel is an indispensable tool in selling. So, If you are still asking, ‘Why do I need a sales funnel?’, then you epitomize the least favourite part of the sales funnel for most businesses or sales people. Using it.
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