Let me ask you three questions. (Be honest with the answers.)
1. Do you know how many customers you’ll onboard in this quarter?
2. How much revenue will you generate from those customers?
3. Are you sure of your answers?
To grow your business to the next level, your answer must be “Yes” for each of the above questions.
While these questions might appear hard, it’s simple to answer them. All you need is a disciplined tracking of your sales funnel.
What is a Sales Funnel System?
Here is the simplest explanation of a sales funnel:
The path your prospects take on their way to buy your products or services.
A sales funnel records which stage of the buying journey your leads are in and how many of them are in each stage. It narrows visitors and prospects and turns the ones that reach the bottom of the funnel into customers.
Armed with sales funnel reports, you can predict sales numbers more accurately and also take quick action to improve them.
Another popular term for sales funnel is the sales pipeline.
5 Important Statistics About Sales Funnels
1. 96% of your visitors are not ready to buy anything yet. So if you let them go, you’re losing out on prospective future revenue. (source)
2. Nurtured leads (leads which your team has meaningfully engaged consistently with) make 47% larger purchases than non-nurtured leads. (source)
3. While it takes at least five attempts to close a sale, 44% of salespeople give up after an attempt. (source)
4. 30-50% of sales are won by the first vendor who responds to a customer’s request. So responding quickly to your prospects is important. (source)
5. 63% of consumers need to hear a company’s claims 3-5 times before they actually believe them. (source)
The Stages of a Sales Funnel
All your prospects go through a sales funnel. Some of them never leave the top of a sales funnel, while others reach the very end.
Most prospects go through four stages in a sales funnel. The stages of a sales funnel are:
It’s easy to remember these using the AIDA acronym. Let’s understand each of these stages of a sales funnels in more detail.
Stage 1: Awareness
This is when your business or brand first becomes visible to the prospect. He might come across it on a Google search, at an exhibition, on social media, or even get informed about it by a peer.
Sometimes, the right place right time situation turns prospects to customers in this stage itself. But that’s a rare case (as rare as 4% according to research). The remaining 96% of prospects move to the next stage after becoming aware of your business and what it offers.
Stage 2: Interest
Customers in this stage of the sales funnel are researching and comparing their options to make a buying decision. They want to know how a product or service will address their pain points.
In the earlier days, when customers had less information, salespeople could go for the kill and close the sale in this stage. But now the tables have turned. Customers have a lot of options and knowledge about the options. They want education to help them move to the next step and the assurance that you have their best interest in mind.
Stage 3: Decision
This is when the customer is ready to buy. He has understood how the product will solve his problem and is now looking for the best option.
The most common criteria that buyers use to choose a product at this stage is price. This could mean one of two things.
One, the customer is not entirely convinced how the product will solve the problem and wants to buy the cheapest product so that if the decision doesn’t work, he feels that he didn’t waste a lot of money. Two, all the products appear the same to the customers.
If you have done a good job at educating your customers and establishing your expertise in the previous stage, the customer won’t mind paying a higher price for your product.
Stage 4: Action
In this stage, the customer takes action over his decision. He buys your product or service and becomes a part of your business ecosystem.
However, a clever business team will not let the customer be the only person to act. It will also take proactive action on the following:
1. Delivering a superior experience to the customer through the buying process.
2. Making itself available for post-purchase support.
3. Following up with the customer to collect feedback.
4. Planning how to upsell and cross-sell to the customer.
5. Collecting referrals from a satisfied customer in order to increase sales.
Related: How Enjay Uses a Sales Funnel
Where You Can Build a Sales Funnel
Regardless of the size of your business – whether you’re a one- or one hundred-person organization – a sales funnel exists. The question is, will you choose to ignore this important lead generation strategy? Or will you choose to use it to improve your lead conversion ratio?
If your answer was the second, here are the avenues where you can build a sales funnel.
Your website is like an online showroom for your business. It’s where people prospects become aware and interested in what you offer and could choose to buy what you sell.
Even if you don’t sell through your website, you can encourage visitors to share their details for you to connect with them. Then you can use these details to nurture leads and turn them into customers.
2. CRM Software
CRM software is the most effective sales funnel tool. It lets you store customer information, enter notes about what the customer has been offered and what you could pitch, and map out customer potential accordingly.
You can also use a CRM tool to send automated emails and WhatsApp messages to prospects to inform them about promotional offers and stay on top of their minds.
3. Educational Content
Like I mentioned before, customers today want to be educated, not sold to. Thus, you can create content in the form of webinars and tutorials that help them improve their lives.
In return, you can collect details which let you check whether the prospect is a qualified lead, enter those details in a CRM, and get your marketing and sales team to begin nurturing the lead.
Sales Funnel Report – Tracking the Performance of Your Sales Funnel
Merely deploying a sales funnel and waiting for results is like expecting a car to drive itself. You have to change the gear, step on the accelerator, and give the steering wheel and pedals inputs according to the road condition. (I’m not talking about self-driving cars yet.)
Similarly, you have to take action to track the performance of your sales funnel and improve it. This is where a sales funnel report is important.
A report gives you data on the performance of the funnel. Using it, you can generate insights to get answers to the following:
1. Conversion Ratio
This is the ratio of leads that get converted into customers. You can use this data to analyze how many of your leads are moving ahead in the funnel, which in turn reflects on how qualified your leads are.
The conversion ratio can be split into two parts. Lead Conversion Ratio, which is the ratio of leads that get converted into Deals (qualified leads). The second part is the deal conversion ratio, which is the ratio of deals converted to Sales. (Deals Closed Won).
If the lead conversion ratio is low, it could mean that either lead are not relevant or your qualification is not correct. Accordingly, you can take action to improve the quality of your leads.
2. Current State of Sales Funnel
Which stage of the funnel is your prospects in? And for how long? Are they in the stage for longer than they should be? What can you and the sales team do to guide your prospects into the next stage?
This metric shows you how many opportunities are in each stage. Use this knowledge with an understanding of your average sales cycle, and you can identify which prospects your sales team should prioritize.
3. Individual Performance
Not all your salespeople perform at the same level. Like that, not all your marketing campaigns deliver equal results.
A sales funnel report helps you break the performance of your teams and campaigns down at an individual level. You can check whether they’re adhering to the process and thus hold each individual accountable. You can also reward top performers, find areas of opportunity for the bottom performers, and train them to improve their skills.
For any business, a sales funnel is an important tool which enables it to track whether its growing or not. It offers data-driven insights which leaders can use to keep their business on the path to achieve their goals.
A sales funnel present in every organization, whether people know it or not. It’s best to make use of this funnel to boost business growth.