Marketing funnel guide – how to build rad & effective sales pipeline
To build an effective sales pipeline one should realise that it is (1) ongoing process of improving every part of it via (2) trial and error method
'Marketing funnel guide – how to build rad & effective sales pipeline'
Marketing funnel guide – how to build rad & effective sales pipeline
Marketing funnel is a marketing model illustrating virtual path of a client from initial customer awareness to a sale. It is a simplified depiction of a tactical scheme representing a perfect customer journey step-by-step.
Such marketing concept can have various names:
- Sales pipeline
- Sales funnel
- Purchase funnel
As a vital part of digital marketing process, you need to be able to detect weak spots in the sales funnel in due time in order for your business to keep moving forward and stay productive. Conducting a consumer journey research and making up a specific operation model based on its results is what you need in order to achieve positive results.
The reality can be quite different and customers can often take a non-linear approach to a bargain — some of them roll back to earlier stages, some even give up and leave. However, a sales funnel is mandatory element of any marketing concept, which allows sales team to locate and treat problematic stages.
In 1989 E. Saint-Elmo Lewis presented the world with the first ever consumer journey model. That model was represented by AIDA scheme — an abbreviation formed after names of each stage a prospective customer goes through:
- Attention. That’s where you grab a potential customer’s attention through any source of information — from articles to advertising materials.
- Interest. A potential customer is interested in the product and wants to know more, starts looking forward to finding additional information about the product.
- Desire. A prospective customer is lit by a desire to own your product, thus a desire to submit to your commercial offer commences. A customer is now involved in the buying process.
- Action. Purchase decision is made. Close the deal. Profit.
The funnel model was first proposed by William W. Townsend in his book “Bond Salesmanship” published in 1924, where the author combined the concept with AIDA.
The sales funnel had the objective to turn a prospective customer into an actual buyer. It helps:
- control sales process;
- analyze each manager’s efficiency;
- evaluate the conversion rate of each separate stage;
- predict and plan sales ahead based on average stats
Funnels According to Business Types
Marketing funnel stages are individual for each business. It must be adjusted over the course of the process in order to succeed, since you can’t build a perfect model right away: test first, then adjust.
Here are the funnel types:
- “From initiation to closed deal” — reflect stages of initial interest, preliminary works and actual sale.
- “Sales only” — reflects on the sales cycle only. Has qualitative or quantitative indicators (e.g.: number of visitors who transitioned to a next stage or an estimated staff efficiency and quality of work at a certain stage.
- “Sales + Service” — also includes stages following the sale: delivery, warranty, installation, etc
- “Cross-sales and additional sales” — after the sales stage the funnel ends with a number of additional purchases like expendable supplies and materials, extended warranty service, etc.
There is no universal sales funnel, thus each type of business requires a specific funnel to operate upon. Funnels vary depending on product specifics, sales pattern, distribution channels and the scale of business.
B2B marketing funnel
This is how a B2B sales funnel may look like:
- Cold calls: informing potential clients
- Presentation: product choice
- Commercial offer: intention to purchase a product/service
- Invoice issue: make a deal
- Payment and shipping: close the deal
- Repeat purchase: additional sales (grow repeat customers/execute post purchase follow-up)
For some small businesses the chain of steps is going to look really primitive: information — visit — payment. An online store is going to require more steps:
- Online ads
- Product selection (evaluation stage/consideration stage)
- Add to shopping cart
This standard funnel may be extended by post-deal stages: ask to leave a review (or a post on social media to raise brand awareness), offer accommodating products and extra services, offer warranty or suggest to extend the one already included. Make clients go back to you eventually.
E-commerce marketing funnel
Let’s take online store as an example and describe basic stages of its sales funnel.
- Views to clicks
|SEO||Change a set of keywords|
|Context advertising||Increase CTR|
|Targeted advertising||Find target audience|
- Clicks to leads
|Special offers||Special offer countdown timer|
|Discounts||Discounts for specific products|
|Reviews||Loyalty program for those, who leave reviews|
|Lead-magnet (free product sample)||Free product sample in exchange for contact info|
|Guarantees||Quality certificates, official warranty|
|Delivery & payment||Delivery and courier service, various payment methods|
- Leads to sales
|Salesman motivation||A well developed motivation system,tied to results|
|Sales scripts||A detailed sales scenario|
|Voice modules (premade answers on customers’ questions)||Well established system of complaints response, live support and FAQ|
|Website workflow optimization||Minimize page load time, decrease purchase stages, analyze usability|
- Repeat sales
|Retargeting — context ads and social networks ad campaigns||Special offers for those who visited your website before|
|Remarketing — through social networks and context ad systems||Present customer with related products suggestions|
|Newsletters and push-notifications||Use accumulated customer database for repeat sales|
|Client support — tech support and service backup||Suggest extra services and accessories|
A sales funnel is a basic marketing tool. It allows you to control sales, track managers’ efficiency and make all the right adjustments. Couple it with a CRM-system and you get yourself a great solution to increase growth of both — number of clients and profit volume.
SaaS marketing funnel
In context of online services (like SaaS, PaaS etc) I’d say marketing funnel consists of
- User aquisition
- Onboarding process
- and (final step) everything else that follows to build up relationships, up sell, and increase Lifetime Value in general
Though funnels are different, they all follow certain rules, regardless of the type of business.
- If you use several customer acquisition channels, create an individual funnel for each one. This is important because a consumer journey is different in each individual case, but the body of a each funnel stays the same.
- Funnel stages can match business processes and can also unify several of those. E.g.: invoice issue by accounting and management can be merged.
- Strictly define the borderlines of each stage. It is going to make a consumer’s buying journey clearer.
- You can only place the same action into different stages of funnel, when your goal changes: say, you go from a cold call to a specific commercial offer on a certain product.
- Consider that a customer is capable of traversing the funnel in a non-linear way — back and forth.
- Use CRM-systems to automate funnel workflow.
- Trying to develop a “perfect” funnel. Just start with the one that works and keep gradually improving it as you gain more and more experience.
- Highlighting irrelevant stages. Only track those actions, that are meaningful.
- Getting stuck on a stage. There’s no need to get fixated strictly on potential opportunities — it is important to lead the client through all the stages.
- Returning a lead to the start. If a decision maker changed, end the deal and start a new one. Otherwise, be prepared for some conversion stats errors.
Lead generation – filling the top of the funnel
Lead generation is a process of establishing a constant flow of potential buyers acquisition.
The phenomenon of lead generation is related to applied marketing tactics. Its purpose is to find potential consumers by studying a specific target audience. It develops methods of attracting customers through advertising in search engines and the use of topical websites.
Leads are people who become interested in purchasing products or leave a request, or just leave their contacts after visiting your website. They are still not buyers, but already an interested party.
Lead generation is used for websites that are not engaged in direct sales. Special resources are used to collect user contacts and transfer them to suppliers, which is a perfect example of inbound marketing. Merch by Amazon can be another example of inbound marketing: artists can sell merch with their design through Amazon. Artists provide design and implement a lot of content marketing techniques to promote the merch (like t-shirts) and eventually drive traffic to Amazon. Usually, companies try to negotiate the subject of cost per lead beforehand. Every business needs leads, because only specific buyers bring specific profit.
Here is our monstrous guide on lead generation (beware the rabbit hole)
Important parameters and characteristics of the marketing funnel
Each lead-generation channel has its own set of indicators. Sales management becomes impossible without their analysis.
The following distinctive features are typical for lead-generation channels:
- The quality of leads in each channel. The quality is better monitored through further lead conversion. The generation can differ from channel to chanel;
- Cost per lead: divide the total budget by the number of generated leads;
- Conversion to the first-touch leads;
- The number of “first touches” over a certain period;
- Channel budget.
Why do we need to analyze the characteristics at the stage of lead generation?
- To work out all the “touch points”;
- To measure overall performance;
- To correctly use only what is related to direct marketing. It is necessary to avoid using tools with performance difficult to calculate.
Improvement of indicators and consequences
There are many steps that lead to an increase in lead generation.
- The use of advertising: so that potential buyers display their interest as quickly as possible;
- Competent and complete study of proposals by all indicators;
- Elaboration of each “touch point”;
- Gathering contact info from the maximum number of leads possible;
- High-quality study of touch points for a specific target audience;
- Thorough segmentation of a specific target audience;
- Increase the number of channels;
- Eliminate channels that do not generate direct response.
After a while it always happens that there are too many lead generation channels. They become too complicated from a technical perspective and require more and more time to work with. Outsourcing some channels is one of the solutions in this case. You can use special affiliate schemes that also can make the work easier.
Such solutions can be beneficial in several situations:
- When contact databases are resold;
- When you partner with non-competitors. Lead contacts are given out in exchange for small cash rewards;
- When you organize partnership schemes using exclusive technology;
- When you set up advertising campaigns through search engines.
You can choose numerous ways to solve problems and get more profit:
On local goals and clusters
For those who think funnel-wise, business is divided into clusters. Each cluster has its own separate goal. It is different from the goals that the business has globally. For example, contextual advertising is created not to sell products, but to sell transitions to the website. Work efficiency is greatly enhanced through the use of such narrow clusters.
Each funnel has levels and each level has its own rules of operation. Manipulating all levels correctly, makes work more efficient.
Level one: views to clicks
For example, we use the Internet to attract customers. Direct, SEO-optimization and contextual advertising — that’s what we start working with when the funnel level responsible for clicks generation on the website is established. The number of clicks is increased by the following actions:
- Increase in CTR;
- Change in keyword phrases of your ads;
- Bid Management.
Thus, more clicks go to the lower level in the funnel.
Level two: clicks to leads
Here we deal with elements that make more visitors turn into buyers. They make the website an easy-sell. These include: countdown counters, promotions, warranties and reviews.
Level three: leads to sales
In this case, it is important to pay attention to the motivation of people who work with at this level.
The following indicators become of a significance:
- System of remuneration of labour
- Speech modules;
It is necessary to carefully work out the general system of motivation along with payment at all levels of business. Every employee should have an extra incentive, including top management. Limited time offers and promotional offers are especially useful to arrange.
Level four: repeat sales
It’s good if there is tech support, but it is best to track not only the moment of purchase, but also the first time of its use. Buyers should not have any questions or complaints.
How to optimise marketing funnel
- Remember that every customer must go through all the stages of the funnel.
- Find the “bottleneck” (the problematic place where you lose the largest number of clients) and adjust the situation accordingly.
- Expand the area of the funnel: work to increase the number of consumers at each stage.
- Search for the most conversions-rich groups of people, sales channels and products, and then direct the efforts of managers to these areas.
- Track conversions. The increase in incoming flow doesn’t guarantee a proportional sales growth, so always improve the conversion of each stage.
Another important tip is to expand the top of the funnel to increase coverage. You’ll need:
- A unique selling proposition: what kind of product do you offer; what benefits will the client receive; what is the advantage of buying from you?
- To choose the target audience precisely. What is the portrait of your buyer? What are their needs? Where can they find your product? Where can you find members of your target audience?
There is a special bottleneck method. It allows you to find problems that arise during the consumer journey.
Test questions are:
- Are there too many consumers going in at one stage?
- Do you pay attention to data on the transition of users from one stage to another?
- Do you evaluate the effectiveness of the transfer of counterparties by stages?
- How well the business processes aimed at eliminating problematic points are worked out?
- Is the work of managers evaluated?
- Is there a system to analyze the transfer of a counterparty from one stage to another?
- Are the most effective sales channels identified?
- Do programs to increase touch points with consumers work?
- Do you classify leads according to the portrait of the target audience?
Growth points (solutions):
- Sales channels [expand the borders of the funnel and increase its bandwidth: as many leads as possible should go into each stage]
- Touch points
- Product quality
- Lead classification [calculate the most convertible target groups, products, sales channels and direct the efforts of managers and marketers into them]
- After the funnel has been launched, it must be regularly assessed and adjusted. Consider the conversion correctly. An increase in incoming flow not always does contribute to sales growth. Therefore, don’t overlook and improve the conversion of each stage of the funnel. Start by correcting the most problematic stage. This is the stage where you lose the most customers.
What to analyze:
- Conversion by stages and periods.
- Key performance indicators for managers.
- The duration of the whole deal and each stage.
- The bandwidth of the funnel.
- The average receipt of the transaction.
- The number of incoming and finalized contacts.
All this can be calculated automatically using the marketing funnels in CRM.
Method 1: Lead Qualifications
This factor can seriously affect funnel conversion: if managers do not communicate with your target audience, then regardless of their skills and product, there will be no result.
To understand who your client is and create a customer portrait, do an ABC XYZ analysis. Do not hesitate to check everyone for compliance with these parameters right at the funnel entry point.
Next, determine how much of the total volume of purchases of a specific product a customer buys from you, and how much from competitors. Ask yourself a question: what should you do to get the customer fully switch to your service? Correct the business proposal accordingly and watch the sales grow.
Method 2: angled optimization
You need to build a sales funnel and analyze the journey of each potential buyer, to understand where the weaknesses of the sales department are and make a clear plan for its development. It is important to configure CRM to have automatically generated reports.
If you decide to take the development of the sales department seriously, start by building a funnel. Identify stages, such as a cold call, presentation, commercial offer, invoicing, payment.
However, this will not be enough for complete control over the business process. The funnel shows the big picture, but this data is not enough to answer this question: “What specific efforts will lead to an increase in sales?”. Therefore, the head of the sales department should be able to work with it in several planes of view.
- New customers. This angle gives an insight into how are the sales going with new customers. You can easily track the conversion between stages, measure their length, and see problematic areas. You should work on difficult stages with your managers to increase sales.
- Current customers. This funnel allows you to do the same as the previous one, but it can also help you control the second, third and next purchases.
- Sales channels. Learn which channels are most effective and bring you the largest number of potential customers: cold calls, email lists (email marketing), outdoor advertising, conferences, webinars, etc.
- Products. Analyze which products are sell better/worse. Which set of products is popular, which is usually bought with a particular product. Such monitoring will tell you which product is sold with a higher conversion. This is a helpful information. You will be able to increase your efficiency by building an optimal product line.
- Target audience. See who your target customers are: gender, age, marital status, activity, etc. Perhaps it will be much more effective to focus on a specific niche and not waste resources on less profitable ones.
- Region. Explore where your sales do better and why. Put more effort in this direction, and review your marketing strategy in regions where your product does not sell as good.
- Staff. This is important to do in order to understand at what stages your employees lack knowledge, experience, and skills. It will help create a training program for managers in accordance to identified problems, improve lead management and make your marketing team more effective.
Method 3: apply proportional expansion.
Say there were 200 visitors, 4 calls and only one bought the product. It is enough to increase the number of visitors to 2000: there will be 400 calls and 10 sales.
You need to work with traffic on the first level of your funnel to improve the result.
There are different methods to solve the problem:
- affiliate links;
- banners and contextual advertising;
- cold call scripts.
The amount of money at output end of the funnel increases with a proportional expansion of the upper level (if the funnel has a positive conversion).
Method 4: Stretching
Imagine someone trying to turn the funnel into a pipe. In this case, the efficiency increases at each level — not just at the top. Suppose a conversion for a website should not be 1%, but 3%. Well, this also applies to other levels.
Method 5: Key Level
This method is considered to be the easiest, the most accessible to assimilate and with the right actions, its results will be surprisingly good.
The description of the method of operation will be as follows: first you find the level of the funnel, where conversion stay at its maximum. Make sure that as many people as possible reach this level.
Method 6: Bottle Neck
The bottleneck method allows you to competently interact with the “narrow”, problematic stages of the sales funnel. In order to find out if you have problems with conversion from stage to stage, pay attention to the following important points:
- Whether too many leads accumulate at one of the stages of the sales funnel?
- Have programs been launched to improve customer contact points?
- Does the consolidated collection of data on transitions from stage to stage function?
- Whether the efficiency of the transfer of counterparties from stage to stage in the context of sellers is evaluated?
- Whether business processes are fully developed to address the difficulties of individual stages?
- Whether the work of employees is evaluated by skill model through development sheets?
- Whether the system of trainings on “the narrow stages of the sales funnel” is organized?
- Whether the analysis system is configured to transfer a potential buyer from stage to stage?
- Whether lead qualifications are made according to the portrait of the target audience?
- Have the most effective sales channels been identified?
The four frequent errors
Error #1: creating extra stages in the funnel. It is necessary to understand which steps are acceptable and which are not, when you build funnels. The following customer states should not be included in any of business or funnel stages:
- “in the process”;
- “In work”;
- “Customers for later”;
These statuses carry no information and should be discarded.
Error #2: keeping customers on the same funnel stage. It is often the result of a previous mistake, when you have a large number of potential buyers on previous stages, who can no longer advance through the funnel.
The reports may still indicate this client is a potential deal. The task of the head of the department is to identify those who do not buy your product soon and stop wasting time on them.
Error #3: creating multiple duplicate steps in the funnel. For example: in some companies the funnel may contain the following stages: an agreement negotiation — an agreement being in development — an agreement delivered to a client. This all is basically the same stage. It all only confuses and creates a waste of employees’ time.
Error #4: returning a lead to the upper stage. It should be remembered that the movement of the client occurs only in one direction — in the direction of finally closing the deal.A lead cannot be returned to the previous stage.
If in fact this happens — due to any force majeure — then you end the old deal and start a new one. Otherwise, the conversion will be calculated incorrectly, and wrong management decisions will be made as a result.
The role of CRM
CRM is a customer relationship management system. It is a special software that allows you to monitor and automate the sales process.
What you should pay attention to while choosing a sales funnels automation software
There are just a few points that deserve attention in this case:
- Convenience of the interface that allows you to enter information as quickly as possible;
- The ability to organize analytics on various data;
- Use of the knowledge base and database, the transition between which is just one click away;
- The ability to use advanced functionality;
- The presence of a role-based interface that supports different groups of users;
- A quick start, that requires minimal investment in IT infrastructure.
To sum it up on how marketing funnel works
To build an effective sales pipeline one should realize that it is (1) ongoing process of improving every part of it via (2) trial and error method:
- Top of the funnel = customer acquisition = lead generation
- Nurturing leads
- Maintaining and growing relations (building up a base of loyal customers)
Also remember: lead nurturing (e.g. educational content) is important at every stage of the sales funnel. As of right now, this guide has the ultimate goal to provide you with general information on the subject. More niche and topic specific articles (on b2b, startups, landing pages some case studies, etc) are on the way. Stay tuned.