What is a Sales Funnel?
A sales funnel is a diagram that leads customers through when they are purchasing a product. Sales funnels can also help you understand your audience’s purchase behavior. Therefore, understanding the sales funnel will help you find a split where customers drop out and never buy the product. In other words, not every customer will get to the end of the sales funnel. The basic steps between these layers include first, making the customer aware of the product. Second, the customer’s interested in the product. Third, getting the customer to desire the product. Finally, the action needed for the customer to successfully complete the purchase.
Instructions for using the Sales Funnel Tool
One can use this to see where the sales process may be lacking which causes customers to lose interest and fall out of the funnel. The further through the sales process the fewer customers you will have. However, knowing what you’re looking at and how to manage your pipeline will help you lose fewer customers and sell more efficiently.
- Outline your sales process, if B2B sales follow ANPOC (Approach, Needs assessment,
Present, Overcome objections, Close)
- See how many customers are lost between stages
- Use that data to find out why customers are being lost
- Try to fix the issue; look at your sales process, be sure reps are following the correct
steps, and be sure you are using the correct KPI’s to drive success
Why you need a pipeline with your sales funnel
Most people look at a sales funnel and just see steps to take to weed out the people who say no. There is much more to a sales funnel, and the funnel is only half the picture! In addition, to have a sales funnel that helps drive success, you need to have a pipeline and understand the difference between them.
The funnel shows how with each process potential customers can be lost.
Let’s say you have 1000 customers, 250 of them leave after the initial approach. 50 of them leave after the second contact,
350 are left after the third contact. Finally, 100 are left after the fourth contact
Some may look at this and think, well those people weren’t really interested, or they were never going to buy. A 25% win rate is pretty good, we close one in four of every person that we pitch.
When they should be looking at this and think, what about my initial approach, and my third point of contact is making me lose 25% and 35% of leads? A study by Gartner states: companies can increase the win rate by 18% by having a clearly defined sales process. So if this is all you have you are missing out on so many deals.
This is where the pipeline comes in, a pipeline is the steps that you take through your sales process. This can include simple things like, introduce yourself and the company, but can also have complicated things like, overcome objections. Let’s say that the four steps in your pipeline are as follows:
- Pitch your product
- Overcome objections
- Ask questions
Then you would be losing 25% as you pitch your product and 35% when you asked questions. This gives you the information that you need to fix your sales funnel, refine your sales process, and start selling more deals!
In conclusion, I would suggest your sales and marketing team create one of these diagrams of a sales funnel to understand your audience purchase behavior. Also, to understand each step of the funnel a customer would take and understand what they need to get to the end with fine-tuning their audience purchase decisions. Therefore, your team needs to understand the niche of the products/services that your company sells. The company should know the awareness and interests of your customers to understand the funnel decisions and how to target their potential customers. It does take time and a lot of decisions in creating a sales funnel. Sales funnel helps your team scratch the surface of customers narrow down the broad decisions of your potential customer.
Having trouble bringing in business? Checkout 21 ways to bring in the business
For an additional example/explanation about sales funnels download this template.
By: Nicholas Capener