As we enter the new financial year, it’s clear the challenges of COVID-19 will be with us for at least several months more. Fortunately, there are technology solutions that can help small business during this difficult time. They can boost the likelihood of being paid promptly, reduce the compliance burden of tasks such as JobKeeper, Read More…
How can understanding your sales funnel help your business
Mon 24 August 2015 - 9:25 amFeatured | Hot Tips | Marketing | Sales
If you’ve been involved in sales and marketing on any level, you have probably heard of the sales and marketing funnel. A visual way to depict the process your customers take from lead to conversion, your sales and marketing funnel is more than just a pretty picture. If you want to get the most out of your business in terms of sales and profits, understanding how your marketing funnel works could be the key.
What is the sales and marketing funnel?
The sales and marketing funnel is a model that depicts the way that people who encounter a business move through different stages to become customers. The different stages break down the steps required for you to move leads from their first encounter with you to making a purchase.
When discussing the sales and marketing funnel, potential customers are divided into three different types. These are leads, prospects and customers. While customers are fairly self-explanatory, leads and prospects can be more ambiguous. Generally leads are considered to be people who have not had any previous contact with your business, or who only have limited knowledge about your products or services.
Prospects are leads that have been ‘qualified,’ which means they are genuinely interested and have the means to purchase your products or services. In a typical sales funnel, leads pile into the top end, mix around a bit and gradually filter out until you get prospects, which then filter out at the next stage and the remainder become paying customers and drip out the bottom.
The general stages of the sales and marketing funnel model are:
- Leads drop in the top of the funnel. These are generated through your marketing and if your marketing is doing its job you should be getting not only plenty of leads dropping in, but the right kind of leads that fit your target customer profile.
- Leads are qualified. This means that you provide them with more information about your business and determine that they’re actively looking for what you offer and are in the position to purchase. For B2B marketers, this process often involves creating proposals and quotes and building a relationship with the prospect. If too many leads are dropping out at this stage, it could mean that you’re not providing the right information or you’re not targeting the right leads.
- A purchase is made. This is when your lead drips out of the bottom as a paying customer.
Why do you need to understand your sales funnel?
Having an in depth understanding of your sales funnel can help you move people from one stage down to the next more effectively.
Evaluating your sales and marketing funnel is a great way to see where you could be missing out on sales by gaining key insights into any areas that are not performing as well as they could be. When you are evaluating your sales and marketing funnel it is important to pay attention to the number of leads, the amount each customer is worth in the funnel and the time it takes for people to pass through the different stages.
Every business will have a slightly different sales and marketing funnel depending on who they are selling and their individual business model. If you can successfully improve your marketing funnel to make it more efficient and attract more leads that can be processed in less time you will see a big improvement in your sales and help your business move forward and meet its goals.
About the author:
Jo Macdermott is the Chief Marketing Consultant at Next Marketing in Melbourne. She has 15 years of marketing experience, is a Certified Practising Marketer and is a sought after marketing media commentator. Jo specialises in working with small and medium businesses. Follow her on Twitter here