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.
