A study by HBR shows that companies who create an easy buying process are 62% more likely to win a high-quality sale. However, it’s easier said than done.
The only way you can simplify the buying process for your prospects is to improve your sales process and the first step in doing that is building your sales funnel.
By putting your potential customers at the center, the sales funnel allows your team to understand the problems your potential customers are looking to solve, identify the gaps in your selling process, and improve the buying experience based on their requirements.
A sales funnel is a visual representation of the journey your prospects go through before becoming your customers. It’s often confused with the marketing funnel, which showcases the buyer’s journey whereas a sales funnel represents your selling process.
Just like an actual funnel, a sales funnel is the widest at the top and becomes narrower with every stage which indicates only the most qualified leads move on to the next stage while the ones that are not a fit for your business drop out.
A sales funnel makes it easy for your sales team to visualize your sales process. It helps you understand which stages you’re losing your prospects in, so you can optimize it to improve your conversion rates. Without a sales funnel, your sales team would never have those insights and it’d be hard to convert your leads into customers.
This stat from a Salesforce study puts into perspective the importance of a sales funnel — 79% of marketing leads are never converted into sales. The same study pointed out that 68% of companies had never attempted to measure their sales funnel.
If the majority of your marketing leads don’t convert into sales, you should build a sales funnel to identify the gaps in your selling process.
The AIDA model developed by Elmo Lewis has been used since the late 19th century for optimizing the sales process. It divides the sales funnel into four stages:
The linear approach of the AIDA model is not suitable in the modern sales process, as it does not take into account the multiple channels at play and the post-purchase cycle.
You can however still use it as the base for building a successful sales funnel strategy. Here’s how you can tweak it for modern-day sales:
In this stage, potential customers realize they have a problem and are looking to educate themselves about it. In short, this is the stage where your potential customers do a Google search. Capture their attention by giving them valuable information about how your brand solves their problem. The awareness stage is where your potential customers turn into a lead.
The consideration stage is where your potential customers want to hear from your sales team. They want to know how your business solves their pain points, how it’s different from your competition, and the unique value proposition you provide them.
The decision stage is where your potential customers have evaluated all the possible solutions and are ready to make an informed decision. Here’s how it’s different from the AIDA model, where your sales funnel doesn’t end after you close a lead. It also focuses on how you can wow your customers to become your brand advocates.
We understand that the sales funnel for different businesses will vary. Therefore, we’ve created a 5-step plan that any business can put into use for creating a customized sales funnel that converts your leads into customers.
The first step in building your sales funnel is the most critical one. Before you get started on building your sales funnel, develop a deeper understanding of your target audience. If you get this wrong, you’d be designing your sales funnel for the audience who isn’t interested in buying your product/service.
Here are a few questions you should ask while defining your target audience:
Here’s an article from HubSpot that will help you build buyer personas like a pro!
Creating your lead generation strategy becomes fairly straightforward when you know your audience inside out. A viable lead generation strategy for a travel agency whose target audience is active on social media would be to offer a downloadable content piece that educates them on nearby weekend getaways.
By doing this, they are attracting qualified leads whom they can nurture based on their pain point, which in this case is finding the perfect spot for a weekend getaway.
Focus on building the best lead magnet based on your target audience and build your lead generation strategy around it. Here are 24 examples of successful lead generation strategies
Remember: Audience-channel fit is key in creating a successful lead generation strategy..
Once you start generating leads, the next step in your sales funnel is to educate and nurture them on how your brand can solve their problems. Why, you ask?
Companies that excel at lead nurturing generate 50% more sales leads at a 33% lower cost per lead!
The best way to nurture your leads is through email campaigns. You can use different content formats across different stages in your sales funnel to nurture your leads.
1. Awareness stage: Create blogs, whitepapers, ebooks, infographics, ads that educate your potential customers on their challenges. The main goal of the content in this stage is to convert your potential customers into leads.
2. Consideration stage: Engage your prospects with content that informs them on how your product/service stands out from the competition by creating competitor comparison pages, customer case studies, or how-to videos.
3. Decision stage: In this stage, focus on creating content that speaks to the reservation your potential customers have and nudges them to make a purchase like feature comparisons, product demo, free consultation/free trial, or coupons.
Looking for inspiration to build your own lead nurturing strategy? Here are 19 lead nurturing examples from different industries to get you started.
Whether your customers purchase from you offline or online a poor customer experience on the final step can make you lose out on a sale.
For an offline experience, the drop-off point could be too much paperwork, longer client onboarding cycle, which delays the customer from trying out your product/service.
When making the purchase online, the drop-off point could be increased page load time, asking for too much information, or payment gateway failure.
The point is whether you’re selling offline or online — make it easy for customers to purchase from you. The reason why Amazon had success while chartering into the then-unknown E-Commerce market was because of their ‘1-click ordering’ experience.
Check out this list of 15 high-converting landing pages to make sure your purchase experience is on point.
The other thing you should focus on is driving repeat purchases. This is the step most businesses don’t implement while building their sales funnel. Contrary to popular belief, the sales process doesn’t end when you close a single purchase. To scale your business it’s important that your sales funnel is optimized for repeat purchases.
Similar to the lead nurturing strategy, businesses should have a customer-growth strategy that focuses on driving adoption, retention, upsell, and last but not least — customer advocacy. By turning your customers into brand advocates you’re driving high-quality referrals in your sales funnel that is sure to increase your bottom line. This funnel can be owned by the customer success teams/account managers with support from sales and marketing.
Building a successful sales funnel is an iterative process.
Build your sales funnel ⇾ identify the leaks ⇾ fix them ⇾ repeat!
Every optimization cycle will help you understand the gaps in your selling process, why your prospects aren’t interested in buying, how you can make the experience better for your prospects, how you can make the current customers happy, and more. Use these insights to improve your sales funnel continuously till you’re delivering a sales experience that wows your customer.
Here are some important sales pipeline metrics to assess your funnel quality:
1. MQL to SQL conversion rate: This is the metric for you to track the lead quality in your funnel. If your MQL to SQL conversion rate is low, it’s time to get your marketing and sales teams aligned.
2. Deal closure rate: How many SQLs does your team convert into clients? This is the metric to answer that question for you.
3. Customer lifetime value (LTV): LTV is used to determine how much revenue a customer brings to your business during their time with you. Recurring purchases build the customer’s lifetime value.
4. Customer acquisition cost (CAC): As a business, you should always know your CAC. It’s the cost you incur in marketing and sales to convert a customer. The lower your CAC the better.
5. LTV to CAC ratio: LTV to CAC ratio helps you measure the efficiency of your customer acquisition process and whether your acquisition cost is optimal or not. 1:1 ratio signifies your making as much as you’re spending. Identify the benchmark for your industry and work towards achieving the optimal LTV to CAC ratio.
6. Customer referrals: The thing about referrals is that only happy customers make them. Use this metric to track your customer satisfaction along with your NPS survey. Building a successful customer referral loop can set your business up for success.
7. Average sales cycle: It’s important for you to know exactly how much time your sales team spends on converting a lead into a customer. If they’re spending 4 weeks to close a $100 deal it probably isn’t worth it and you need to rethink your sales process.
That wraps up our article on how to build the best sales funnel for your business! Now that you know what goes into building a successful sales funnel, it’s time to put it into practice.
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