7 Stages of Business Sales Funnel
The Sales Funnel is the visualization of your company’s sales process. A method of portraying a buyer’s journey through your sales process from their first engagement with you until they make a purchase. We are going to guide you through the various stages of the Sales Funnel. Keep in mind that each business may have their own unique stages which differ from the standard we are laying out here, but these encompass the normal stages and terminology used to gauge an organizations sales process.
Why do you Need a Sales Funnel?
To begin this discussion, you need to know why it is important to your organization to clearly define and manage your Sales Funnel. We have found through our extensive experience with our business and our clients that implementing a structured Sales Funnel can help your business in several ways, such as:
Proper deployment of your Sales Funnel can lead to significant increases in your Sales Revenue because the Funnel is designed to capture, segment, and manage your buyer’s journey. For instance, if you have a lead that has visited your website through a Google Search using the search “How can I improve my vehicle’s gas mileage?”, then this buyer is in the research stage and they are seeking information about products that you may sell, such as, air filters which may help improve a vehicle’s overall gas mileage. Clearly, they are interested in resolving their gas mileage issue and you may be able to sell them an Air Filter if they find their filter needs to be changed. Furthermore, by clearly defining your Sales Funnel you now have the opportunity to present them other products or services that fall along the lines of their original search. This could lead to upselling and cross-selling opportunities which will improve your sales.
Raising Conversion Rates
Now, that you can see how a Sales Funnel can increase your overall Revenue; let’s explore how it will also improve your conversion rates. As your leads move through the Sales Funnel you will be able to see who is more interested in purchasing and who are just perusing your website or business. With that in mind, those serious about making a purchase such as our example above will continue through your sales process while you remove others from your Funnel. By focusing on more interested prospects you are increasing the likelihood that you will get a sale from the remaining leads in your Sales Pipeline. Continual monitoring and adjustments to your Sales Process will allow you to react to your leads more quickly thus improving your overall conversions and reducing your time wasted on people that are not ready to purchase.
Forecasting Future Sales
We have laid out the direct benefits to your profits. Now, let’s look into how you can improve your overall business strategy by using Business Intelligence from your Sales Funnel. As you generate and move leads through your Sales Pipeline you will begin to accrue information on the performance of your Funnel at every stage. This information can be used to determine the number of sales you expect to get in the future. If you know that you have about 100,000 people visit your website and 10% of those visitors signup for your newsletter, then you have 10,000 subscribers that have gone to the next stage of your Funnel. If 5% of those subscribers take advantage of an offer in your newsletter, then you have 500 paying customers from your newsletter subscription list. You can forecast that within x time period your newsletter will result in 500 sales.
Identifying Lower Performing Products/Services
So, you can improve your sales revenue, conversion rates, and even forecast sales what other benefits do Sales Funnels have for your business? Well, there is always a product/service or two that performs worse than the rest. Why waste your time and money on those? Instead, use your Sales Funnel to identify these and either remove them from your business or place them better in the market. Proper Sales Funnel Management allows you to quickly identify these products/services so that you are able to respond before it is too late.
7 Sales Funnel Stages
According to HubSpot Research, “State of Inbound 2018 Global Report” in 2018 18% of marketers found that identifying leads is the most difficult part of the sales process while 37% found that prospecting is the most difficult. We can see that the biggest difficulty most marketers are having is with the front-end of their Sales Funnel. By developing a comprehensive Digital Strategy you can alleviate some of those difficulties. Combining your Digital Strategy with a clearly defined Sales Funnel will improve your opportunity to capture and convert your leads. In past Blogs, we have shown you why a Digital Strategy is important and how to develop one. Now, we will dive into the basics of a defined Sales Funnel.
Sales Funnel Template provided by FitSmallBusiness.com
Stage 1: Awareness
Also known as the Discovery Stage, people in this phase have learned that they have a problem and a solution exists. At this point, they may or may not know about your company or what you offer. It is your job to create the Brand Awareness necessary to drive leads to your Sales Funnel. During this first stage, you will use your Website, SEO, Social Media Marketing, and PPC Marketing to drive people to your Sales Pipeline. The creation of this Pipeline will direct people to your organization once they have recognized their problem and you begin presenting your solution for them.
Stage 2: Interest
Once becomes aware of a solution, they actively set out to find a specific solution in the Interest Stage. If you have done your job properly they will come to you the solution. You need to craft the right messages, at the right time and deliver them to the right people so they will continue through your Sales Funnel. Here your advertisements will shift from broad Brand Ads to more specific products/services with advertisements and well-designed landing pages. Your goal is to capture the interest of your prospects into your products/service so they will make it to the next stage of your Sales Pipeline.
Stage 3: Evaluation
At this point, your prospect has recognized you have a solution they need; however, they are most likely comparing multiple companies’ products/services. If they have managed to reach this stage, this is where they are starting to form their opinions of the various competitors in your market, so it’s crucial that you ensure you present the best solution that fits them specifically. Here you want to emphasize your competitive advantages. Consider using Case Studies, Blogs, or even eBooks that position you as an industry leader. Also, we suggest that this is a good time to begin offering Free Trials and even special discount deals that will entice your prospects to check out the solutions that you have to offer.
Stage 4: Decision
Now you have captured their Interest in your product/service, and now it’s a matter of deciding which solution you presented will best fit their needs. This is where your lead expresses direct Interest in your company over others in the market. This stage is a fragile one because even though you have captured their Interest they may still bail if they do not find your terms and conditions amicable. Your job here is to be sure that you are putting the customer needs first and ensuring that your solution and conditions meet their needs.
Stage 5: Purchase
The prospect has converted into a customer/client of your company! Once your customer finalizes the deal and hands over the funds, Stage 5 is considered complete and it is time for your company’s operations to take over to ensure they deliver the right solution in a timely manner. It is also important that your company handles the customer with the utmost care by emphasizing quality customer service and efficient solution delivery.
Focusing on selling without follow-through isn’t a sustainable business model for most businesses, especially considering it costs around five times more to sell to a new client than an existing one. According to the Harvard Business Review “The Value of Keeping the Right Customers”, increasing customer retention rates by 5% increases profits by 25% to 95%. This is why it is so important to be sure that you are delivering the best possible solution with quality customer service. The final two stages of the Sales Funnel will help your company to retain these customers and increase the value of your Sales Pipeline through customer retention and customer advocacy.
Stage 6: Reevaluation
For a B2C business, you will be focusing on trying to gain your customers business again by selling them ongoing services and new or add-on products. For B2B businesses you will be trying to solidify your relationship with your business partners by improving your Agreements and customer services. Regardless, you need to focus on how to resell your products or services to customers who already know your company. Recurring revenue is great for your bottom line and profit margins! This means you’ll want to develop and perfect Subscriptions or month over month agreements. Selling to a familiar face is less challenging than someone who has no experience with you because you will not have to spend as much time explaining who you are, what you do or how your company can provide solutions.
However, it’s still important to remind customers why you are still the better choice, as you never know if your competition is trying to lure them away from you. It’s also a good opportunity for upselling or highlighting new products and services you’ve added since their last purchase. A great way to keep your company top of mind is to deliver newsletters, announcements, coupons, and other value-added resources. This is also your opportunity to create customer advocates. If you have proven your worth to them then they will gladly speak highly of your company which will ultimately result in great customer testimonies and referrals which will reduce your cost of customer acquisition and improve your overall Brand Awareness.
Stage 7: Repurchase
At this point, you are not trying to just get them to advocate for your business; instead, your goal is to get them to continue being your customer. All your hard work of re-marketing and providing high-quality customer service is coming to fruition. They might renew a contract, renegotiate terms, or switch to a different plan that meets their changing needs. Re-negotiating new deals is vital to the growth and prosperity of your business. Having a solid core customer base will expand your company’s ability to increase profits.
How do you Build a Sales Funnel?
The first consideration when building a successful Sales Funnel is to understand your Ideal Customer. According to Entrepreneur’s Blog, “Determining Your Ideal Customer“, “Most entrepreneurs aren’t clear about their ideal customer. For this reason, they waste a lot of time and money trying to sell their product to people who aren’t good potential customers.” We understand this can be tricky for startups, as you might not always recognize what your target audience looks like. On the other hand, you do know the reasons you are in business and may have an idea of who will be interested in the products/services you are offering. We want to help you create an effective Sales Funnel which begins with your Ideal Customer and target audience so answer the following questions:
1) Who am I selling to?
Consider a variety of demographics and psychographics, like age, job title, gender, location, etc., then craft your Buyer Personas to help establish the sales process. The Buyer Persona is a carefully crafted profile which represents your Ideal Customer or targeted audience. These Buyer Personas will provide the foundation for the development of your Digital Strategy based on specific audience segments.
3) What are the barriers to the purchase decision?
Is someone other than the decision-maker responsible for the initial product/service research? Do budget constraints exist? Is there a projected timeline for delivery of your product/service?
6) How does my Ideal Customer like to communicate?
As you develop your Buyer Personas you need to understand their preferred channels of communication so that you can direct your content where they are. Do they prefer you to call their office or mobile number? Do they check email frequently? Are they on social media? You may encounter a variety of preferences, so prepare your Digital Strategy to address each one.
2) What problem(s) does my company solve?
Why would someone be interested in the solutions your company provides? What value do you provide your Ideal Customer?
4) What does my Ideal Customer need to know to make a decision?
What research would you conduct when purchasing your products/services? What questions do you think they will ask of you? Answering these questions up front will improve the confidence your Ideal Customer will have in your company.
5) How long will it take for them to make a purchase decision?
Some sales cycles are longer than others. You don’t want to give up too early, nor do you want to chase them for months if they aren’t interested in what you have to offer. You need to determine what the average sales cycle is for your business model and anticipate spending this amount of time with your prospects.
Start with the End in Mind
Think of what you want to get out of your Sales Funnel. From there, craft a Sales Pipeline that will help you meet your end goal. If you sell a variety of products and services to a variety of customers, then you should develop a separate Sales Funnel for each Ideal Customer and each product/service type that you are offering. While the Stages we have laid out are a good guideline for a basic Sales Funnel you need to develop one which is unique to your business.
To wrap up, a sales funnel is simply a tool designed to follow the decision-making path your Ideal Customer takes to discover your company and decide if you can meet their needs. Effective Sales Funnel Development and Management are vital to the growth of your organization. By properly using the tools available you will gain invaluable insights into how you can focus on profitable deals while ignoring those that are merely sucking up your time and resources.