Sep
24
Sales Funnel: Part 3
Filed Under Year Of Original Content, fundamentals, learning, sales, systems
(No Ratings Yet)
Loading ...In Part 2 I mentioned 3 functions a sales funnel can perform. In this post we’ll look at the first of these – forecasting sales.
Sales forecasting
You can forecast future sales income using the sales funnel by looking at how many prospects you have at each stage and taking account of the time a prospect typically takes to move from the stage they are at to actually paying you cash. You also have to take account of the percentage of prospects that drop out at each stage and the likely value of the potential sale.
Say you have 17 prospects at a certain stage, and it will take 3 weeks on average for a prospect at this point to move all the way through to closing the sale and paying you cash. Say that on average about 25% of these prospects will actually go all the way, the other 75% dropping out somewhere along the way. This means that you will have about
17 * 0.25 = 4.25 prospects going all the way.
Well, you can only have whole numbers of prospects! So let’s call it 4.
You are likely to have 4 of these prospects buy from you. If the average sale is worth $45 then you are looking at $45 x 5 or $180 of sales income in 3 weeks, from the prospects at this particular stage in the sales funnel.
Repeat this process for every stage of your funnel and you’ll end up with a forecast of sales income for the future.
This seems pretty reasonable in terms of approach, though it is full of pitfalls and assumptions and while you do get a forecast it can be way off. The reasons for this are that few prospects in most industries actually behave like an ‘average’ prospect. You also need to collect, and keep collecting, accurate data on how your funnel performs and how many prospects fall out at each stage and how long they take to go through each stage. However, get good at collecting and analysing this data and you’ll soon be getting better forecasts.
There are still pitfalls with this approach, and I’ll go in to these in another article but at this point I’d say in my experience have an imperfect funnel as a sales tool is better than not having one… it helps you make better informed decisions…
How does this apply to internet marketing websites where the sales process is gone through pretty quickly – almost to the point of hardly looking like much of a sales process – or funnel?
Each page you ask a prospect to click to, each action you ask of a prospect, could be equated to a stage in your sales funnel. Prospects can and do drop out at any and every stage, but the data is still useful to know in helping you refine and improve your sales process. More on this later.
- Sales Funnel: Part 1
- Sales Funnel: Part 2
- Sales Funnel: Part 3
- Sales Funnel: Part 4
- Sales Funnel: Part 5
Trackback URI
Comments
Leave a Reply
You must be logged in to post a comment.