Sep
22
Sales Funnel: Part 1
Filed Under Year Of Original Content, fundamentals, sales
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Loading ...There seems to be some confusion about what a sales funnel is. From what I can tell, the concept used by sales operations in the larger organisations is different to the definitions being used in the world of internet marketing. As the larger sales organisations were using this term long before the Internet was a reality, and it’s a definition that I’ve found much more useful as a true sales tool, I’m going with that definition.
Before I get in to that I will just take a quick look at the other definitions as they have their own merits and/or potentially dangerous distractions.
What it isn’t
I made a quick non-exhaustive survey by visiting a few forums, and found several ‘definitions’.
One definition is that your sales funnel has various differently priced products. The free and low-cost products exist at the top of the funnel because these will attract the largest number of ‘takers’. As you go down the funnel, as it narrows, you have increasingly pricey products but fewer ‘takers’ or customer numbers, due to the higher costs.
With this definition there is no sense or implication of a sales process. This kind of funnel doesn’t work too well as a forecasting or sales strategy tool.
Should you have a range of products & services at different price points? I guess that depends on the market, though in general I’m inclined to say yes!
What I would say is that assuming there are lower numbers of customers for the higher priced offerings is too simplistic. Some standard analysis techniques will tell you that the middle priced products & services probably bring in the most revenue, closely followed by some of the higher priced items, so focus your resources here. Yet these customers may have first come to you via the free or lower cost items, and neglecting them too much may actually stop the flow of lower-paying customers to higher paying ones (where the bigger profits usually are to be found).
Related to this definition is a similar one, where you have more products at the free/low price points (top/wider part of the funnel) where there are the most ‘takers’ or prospects and converting one of these is more likely if you have a wider range of products and services that connect with a wider range of needs. Over time you convert these prospects in to higher paying customers as you now have a relationship with them and know critical things about them, based on the free and low cost products & services they’ve taken from you.
Again, there is no sense of a sales process and sales tool at work here.
I would say that you operate one of these (or other) strategies, but that you use a sales funnel as I will describe below as part of your sales process. Then you can extract the maximum benefits of greater sales conversions, greater revenues and greater profits.
There are other definitions kicking around, but these two above seem to be the ones most in use.
In the next part we’ll get in to what a sales funnel really is, and the benefits it brings.
- Sales Funnel: Part 1
- Sales Funnel: Part 2
- Sales Funnel: Part 3
- Sales Funnel: Part 4
- Sales Funnel: Part 5
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