Explaining The Sales Funnel
- Tara Hornor
- March 12, 2012
Simply put, the sales funnel is a way of looking at the way a business sells its product. It isn’t so much a radical new idea or extreme marketing technique—instead, it’s a tool that allows a business to maximize its selling potential by analyzing the entire sales process, from the first contact with customers to the final sale.
Imagine a funnel: wide at the top, narrow at the bottom. As you progress down through the sales funnel and closer to the final sale at the bottom, prospective buyers will drop out, narrowing the funnel. Remember that this isn’t a bad thing; it’s simply the process of transforming potential buyers into committed clients. Analyzing the flow of prospective customers from one stage to the next can help you identify your weakest steps—helping you make your business plan stronger than ever.
Breaking it Down, Step 1: Identify Your Market
The very top of the sales funnel is the first stage: identifying a wide prospective market. This is as simple as sitting down, examining your product or service, and drawing up a list of the potential clients you think you can reach. Who would benefit from what your business offers? Be specific in order to come up with an exact number of prospective customers. For example, your number might include all women aged 18-24 who use the Internet daily and live in the greater Portland metropolitan area.
Step Two: Research and Strategize
Now that your sights are lined up on the target market, the next stage in the sales funnel is research. Find out more about your prospective clientele: their needs, their current buying patterns, their opinions on or loyalties to existing brands. Armed with this information, set up a comprehensive marketing plan that is tailored to fit your market. Plan both your sales pitch and the vehicles you will use to deliver it to your prospective audience. Here, the sales funnel has already narrowed, as your sales strategy likely will not allow you to reach everyone on the original target market.
Step Three: Making First Contact
This is your introduction to your prospective clients—an introduction that will hopefully be the beginning of a long communication process. It’s your job to introduce yourself in a way that is tailored to reach your audience and establishes the framework for a future relationship. The first contact step might be sending out mailers or posting an online advertisement. The goal here is response: you want to engage your prospects in communication. Of course, some prospects will not engage in communication and will drop out of the sales funnel.
Step Four: Sell Yourself
Now that the prospective clients have responded to the initial contact and expressed interest in a future relationship, it’s time for you to do what you do best: sell yourself. Show your customers that you have a product designed especially for their needs or wants. Remember that this isn’t a one-sided conversation. Engage in dialogue with your prospects; respond to their questions and show them that you have made every effort to cater to their preferences.
Step Five: Negotiate
On rare occasion, prospective customers will be immediately won over by your sales pitch, jumping to the end of the sales funnel. But if they don’t, never fear: raising concerns and asking questions shows that they’re interested in making your service or product work for them. Your job here is not only to respond to the prospects’ objections, but also to actively seek out and address these objections. Successful conflict resolution will earn you many loyal customers.
Step Six: Close the Sale
You’ve researched, planned, and negotiated, and now you’ve reached the bottom of the funnel: the actual transaction. If you’ve done your job well, the prospect has just become a customer. In this step, your customer makes the payment, and it’s your job to ensure a prompt delivery of goods or services that meets the promised standards. Ensuring that this step goes smoothly will also ensure loyal customers in the future.
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