Your Business has Two Sales Funnels

We talk a lot about the sales funnel in our presentations to business owners.   The concept is pretty straightforward - you need to propose a lot more business than you actually need to meet sales targets because not every proposal turns into a sale.  With a little experience, studying funnel performance will clarify the “close ratio” or “capture rate”, and you can even develop a formula to use going forward.  (If you have more than one sales rep, you can also use funnel performance to measure how well they sell).

In our examples, we presume that half our proposals end up in a closed sale.  That is a 50% close ratio, and it means for every $100 of sales we want (or need) we must propose $200.  When you know how many sales calls it requires to generate $200 worth of proposals, you have the beginning of a sales activity plan for your sales reps (or you).

Most funnel discussions focus on “acquisition”; generating new business by converting prospects into customers.  Business owners should already have a sense that acquiring new customers is relatively expensive, and the most cost-effective source of generating sales is from existing customers.  Upselling, cross-selling, and generally keeping customers coming back for more is relatively less expensive.  When you think about it, a lot of the convincing that you need to do with a prospect doesn’t need to be redone with an existing customer; they already trust you.

Which brings us to the concept of “flipping the funnel”, or making sure there is some focus on “retention”: keeping customers as customers, upselling, and cross-selling.  It turns out that email and social media marketing, while very good for the top of the acquisition funnel process, are great tools for the retention/upsell/cross-sell retention process.

Email and social media marketing are all about engagement; sharing content that really resonates with your audience.  Since you’ve already established trust, your messaging can get right to the point.  And your messaging is more likely to be read and acted upon, too.

As you think about where your sales will come from and how you are going to get those sales, don’t forget the two funnels.  Work them both.  Understand that the dynamics of each funnel are different.  And your email and social media marketing needs to be different in both cases, too.  The end result is a better close ratio on your combined sales efforts.  And a more efficient and affordable sales generation process.