Why is the sales funnel concept so important?
As suggested, once you have targeted visitors entering your sales
funnel, a percentage will make some kind of commitment to your
business and a percentage will simply leave.
Consequently, your job in this situation is twofold.
Firstly, you should be applying every tool and resource available in an
attempt to minimize the people who jump straight back out of your
sales funnel after first entering.
At the same time (and secondly) you should also be doing everything
within your power to ‘push’ people to the next lower level of your sales
funnel as quickly and efficiently as you can. With every level that they
descend further through the funnel, the more they are increasing their
level of commitment and therefore their value to your business.
For example, if someone chooses to subscribe to your mailing list, you
are in a position to send them a continual stream of promotional emails
pushing your primary products.
At some point, it is likely that a percentage of prospects that you are emailing
in this way will buy the products that you are promoting
because it is widely accepted in online marketing that most prospects
have to see an offer anywhere between seven and twenty times before
they finally decide to buy (or not).
Of course, successfully selling a product in this way is exciting and
rewarding because it puts money in your bank account, but it is not the
end of the story. Indeed, it is really only the beginning.
Go back to the previous sales funnel illustration, and imagine that this
first sales level is represented by the yellow level.
Note that there are a couple more layers further down that are even
more tightly focused, getting ever closer to the narrowest point of the
funnel. These levels represent people who have moved even further
through the sales funnel, people from whom you can make even more
profit.
It should be obvious that the likelihood of a prospect turning
themselves into a customer by buying the product that you recommend
will to an extent depend upon the price of that product.
If for example the product only costs $7, it is pretty much a no-brainer
for anyone who has even the remotest interest in it to buy. Thus, if you
were selling a $7 product you could probably anticipate big sales
numbers whilst understanding that the income is going to be relatively
low.
13
Logically speaking, it is going to be more difficult to sell a $27 product,
and harder still to move one that is priced at $47. Nevertheless, as long
as the product offers clearly outstanding value, even at these levels,
you could expect to see reasonable sales figures.
So, let’s say that you sell a $7 or $27 product to your customer as the
first piece of business that you have ever done with them. What do you
do next? Is that it or are you going to push for something more?
I hope that you have answered in the affirmative to the second option
rather than the first, because this is only the beginning as you will see
when I construct a sales funnel for you step-by-step later in this report.
What you now know is that if you present a suitably well targeted offer
to each individual customer (as they now are), they will buy at this
price level.
What you don’t know is the depth of their interest in the subject on
which they have just spent money. Nor do you know how far they are
willing or able to go on spending money or where their price ceiling is.
So, if you have just generated a $27 sale, the next step is to offer that
new customer a $47 or even a $67 product.
As you’ll discover, you should do this as soon after they have completed
their initial purchase as possible because at that very moment, they are
in full-on ‘buying mode’ and this is always the best time to ask for more
business.
It is a fact of doing business online that the hardest thing in the world is
to convince a new customer to get their credit card out of their wallet.
Thus, once they have done so, you should maximize your returns by
presenting them with an immediate upsell offer of some type.
Some of your new customers will buy, whilst others will decline the
offer.
If they buy, that’s great, you have even more cash in the bank, but this
is still not the end of the story. Now you need to know whether they
have the wherewithal and/or the inclination to spend even more money
on targeted products in your market.
The customer who buys your upsell offer could well be in the mood to
keep buying, so you should keep offering them the opportunity to do
so. And even for those customers who do not buy your upsell or
anything else that you offer them, you should definitely start offering
more higher-priced products in your promotional e-mail messages to
them.
14
After the initial flurry of sales activity, at every step of the way, you
must progressively narrow down and focus your business by
establishing how far each individual customer who is on your mailing
lists is willing to go. This concept is based upon the somewhat clichéd
but nevertheless remarkably accurate notion called the Pareto principle
or 80/20 rule.
When applied to sales, this principle dictates that 80% of your business
will eventually come from 20% of your customers. To a large extent,
my own experience indicates that this principle generally holds
reasonably true.
What it means for your business is therefore relatively straightforward.
By continually qualifying your customers, thereby narrowing the
number of people still in your funnel, you will gradually whittle it down
to the situation where you have isolated the 20% of customers who are
willing to spend the most money with you.
These are the people who will not bat an eyelid if you propose a $2000
or $5000 training course to them. They are therefore the customers
who you should be focusing almost all of your attention on.
By isolating the individual customers who are going to make the most
money for your business in this way, you ultimately ensure that your
business is as profitable as it could be.
At the same time, you are not wasting your own time trying to work
with customers who are never going to make a great deal of money for
your business, so this ‘narrowing down’ process also makes your life
easier and far less complicated as well.