Understanding the sales funnel

If you look at all the major functions and disciplines of a business, from marketing to operations to customer support, the one area that has the biggest impact on the financial health of a business is the sales department.

For many businesses, the lifeblood of their business is the sales function and their ability to close new deals. Regardless of the industry sector and size of the business, it is important that companies understand the true value of a sales funnel.

When launching a Digital Agency, it is important that you have a strong sales funnel in place to make sure you have the best possible chance of success as well as scaling a long term business.

The sales funnel
Think of a sales funnel as a traditional funnel which is wide at the top and gradually narrows towards the bottom. This is in fact an accurate representation of the sales process as most businesses load potential contacts, leads or prospects into the top of the funnel.

Next, through their sales processes which could include telephone calls, emails, text messages and meetings, the business eventually takes a lead through to the bottom of the funnel and converts into a paying client.

So as you can see, the typical sales funnel has many steps and at each stage, potential clients drop off the funnel until a business is left with a group of prospects that are ready to be converted into actual clients or customers. If a business does not have a sales funnel, it is missing the opportunity to standardise its sales process and actually convert the maximum number of clients it possibly can.

Does every business need a sales funnel?
The short answer to this is yes, absolutely. Every business needs some form of a sales funnel for a number of reasons. For example, think about some of your favourite brands or companies that you interact with. They all have a sales funnel in place to ensure they convert you from a prospect into a paying customer.

A simple example could be Apple who traditionally are experts in ensuring their customers get tied into their ecosystem. They do this by having a strong sales funnel that focuses on enticing customers to purchase a multitude of equipment and gadgets to go with their main purchase. For instance, Apple recently launched the iPad Pro and have built a campaign around utilising the Apple Pencil with this device which has led to additional revenue for the company.

Another example of a strong sales funnel comes from companies like Amazon who recommend and highlight products that other customers bought when you are browsing specific items. Businesses understand that having a strong sales funnel can substantially increase revenue as products or services can be up sold or cross sold at the time of payment.

What are the benefits of a sales funnel?
As we have seen so far, there are a number of benefits of having a sales funnel in place. Firstly, it allows any organisation to standardise their sales process which means they can be consistent with their customer interactions.

By following a set process, every business can better forecast and predict their sales activity by clearly understanding where their prospects are in the sales cycle. It also helps to increase conversion rates as the leads at the bottom of the sales funnel have often been nurtured and are ready to commit to a purchase.

Sales funnels also increase the overall amount of revenue a business generates. By having the opportunity to up sell or cross sell products/services, a business can maximise the lifetime value of each customer. This is important for many businesses who need strong revenue streams in order to invest in their infrastructure and ultimately grow.

How do you put a sales funnel together?
Developing and implementing a sales funnel is time consuming initially. However, when done correctly the positives far outweigh the time investment. When you are creating a sales funnel you need to identify the various stages in your sales process and also how you will nurture as well as overcome the main challenges that your prospects are facing.

For example, here at iOB Business we ensure that every Partner that launches a Digital Agency with us understands the various elements of a typical sales funnel and why stages have been configured in a particular way. It is important that anyone that is part of the sales team recognises the various steps in the sales funnel and focuses on taking a lead to the next stage of the process.

Sales funnels can be as long or as short as you want but ideally they need to give you multiple chances to close a client but also maximise the revenue extracted from each customer. When our Partners offer digital solutions to local businesses, their sales funnel includes around 4 or 5 steps from initial contact right the way through to the prospect making a decision. This is covered in a lot of detail during our initial 2 day training programme.

Should you focus on the top of the funnel or the bottom of the funnel activities?
Whilst many businesses choose to select either the top or the bottom of the funnel activities and place more emphasis there, our advice is to focus on your entire sales funnel. Of course, it is important to dedicate time, resources and budget to the top of the funnel activities as this ensures you are building a strong pipeline of leads that you can move through your sales funnel.

However, you should place just as much focus on the bottom of the funnel because ultimately this is where your efforts will have a direct impact as prospects will either convert or decline at this stage. By analysing all parts of your sales funnel, from top to bottom, you will be well placed to modify and adapt your sales funnel over time to ensure it is as effective as it can be.

Can you modify your sales funnel?
The most successful companies are always modifying their sales funnel and measuring their results. With more and more data available through integrated customer relationship management (CRM) systems, businesses can now modify their sales processes based on numerical data.

You should constantly look at a range of metrics such as total lead numbers, number of prospects qualified, meetings booked, clients converted, average order values etc to better understand your current sales funnel.

Armed with this data, it is time to make small modifications to see whether it has an overall positive or negative effect on your conversion rates or key performance indicators. Like with most parts of a business, the sales funnel is a living, breathing entity that needs attention to ensure it is working in the right way.

Summary
As we have seen throughout this blog, there are a number of areas that you need to consider when it comes to the sales funnel. The actual sales funnel and its effectiveness will have a direct correlation on the success of any business.

Here at iOB Business, we ensure that each Partner that launches a Digital Agency with us understands and recognises the importance of the sales funnel. A well thought out and optimised sales funnel can go a long way to helping every business grow.

To find out more about how you can launch your own Digital Agency and provide technology solutions to local businesses, please contact a member of our team.

Until next time, take care.