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Sales Funnel

Kevin Carney

The concept

The Sales Funnel is a concept that relates to how prospects move towards becoming a customer or “fall away”, as they learn about a companies products and services, perform research, and decide to buy.

That is why it is referred to as a funnel.

At the top of the funnel are people who have some form of interest in the product or service you provide. At the bottom are people who buy.

And at each step in the funnel, there are fewer and fewer people.

This post is part of a series and here is the link to the main glossary page.

An example

To illustrate the point, let us assume you sell a link prospecting software tool, such as BuzzStream.

There are a standard set of steps in your sales funnel:

  1. People visit your site to learn about your backlink prospecting software tool.
  2. To learn more they read posts, watch videos, download eBooks etc.
  3. At some point you have an opportunity to capture their email address in a form, so you can nurture the lead.
  4. They contact your businesses to assess how well your product meets their needs.
  5. They buy.
  6. They leave ratings (hopefully good ones).
  7. They tell others to buy.

Of the people who show up on your site to learn more, a subset of them do research.

Of the ones who research, a subset of them fill out your form.

You get the idea.

The AIDA model

There is a common “model” of a Sales Funnel called AIDA.

A generic AIDA sales funnel

The letters stand for:

And the fact that the graphic is that of a funnel that narrows as you get to the bottom is to illustrate that a subset of people who are at one level move onto the next.

Conversion measurement leads to conversion improvements

Over time, you can collect statistics on this and learn how many people need to show up at your website in order to make one sale.

You can, and should, also use this to work in incrementally improving your conversion from each step to the next.

If you have a five step sales funnel and you can increase conversions by 10% per step, that’s the equivalent of a 60% increase in website visitors.

Your sales funnel is not the generic AIDA model

When we buy stuff, we go through a decision process. For small purchases (for example: a ream of paper for your printer) the decision process is short and quick.

For larger purchases (for example: a car) the decision process is much longer, more involved, and contains many more steps.

The point here is that the buyers journey your customers go through is very unlikely to be the generic AIDA funnel shown above, but instead is specific to how your customers relate to your content, your business, etc.

When you understand the decision process people go through in the course of becoming your customer, you simple flip it over or turn it upside down, and THAT is your Sales Funnel

And the best way to do this is talk to several customers, preferable new customers who recently bought, to ask them what decision process they went though.

After you get this from 10 to 12 customers, you can then “average it out”, flip it upside down, and implement it as your sales funnel.

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