What exactly is a Sales Funnel, and why is it important? We’ve all heard about the philosophy of funnelling, but the definition seems a little imprecise. In this short article I set out to clarify some points.
The idea of funnelling is always to push something to an inescapable conclusion, like filling a can with fuel. The funnel directs the liquid, or the process towards the desired result. Once upon a time, businesses were very focussed on Sales, and the Marketing part of the equation really only occupied the wider entry point of the funnel – the awareness and interest of the product or service. After that Sales took over, propelling a prospect to the inevitable moment when they said ‘Yes’. At least it was hopefully the inevitable moment.
Now, things are different, because Marketing runs all the way through the funnel, and in fact in the Digital Marketing Funnel, the functions of marketing and sales blend together. This is exactly how it should be to achieve success.
Today this comes in part because of Customer Relationship Management, or CRM, which compiles and consolidates a wide variety of data from numerous sources, about what potential customers need and want. I’m constantly telling startups to pay real attention to the vast array of data and metrics which they can access about their audience in order to really get to know them. This comes from across the range of social media use, and from interaction with the startup’s own website. It’s true that the desired end result may be a sale – or the signing up of an investor - but that’s in the future. What is important is first to establish a connection through awareness and interest. That’s the beginning of the funnel, or as Humphrey Bogart’s character said in that old movie Casablanca, “This is the beginning of a beautiful friendship.”
Does it seem strange to talk about a ‘friendship’ with leads and prospects? It shouldn’t, because all successful companies have a relationship with their audience, and through CRM they learn more about their audience, and increasingly give people what they need and want. Think for example about the stunning relationship between Apple and its audience, who behave more like fans than customers.
Running through all of this is the funnelling process. The segments of the funnel can be described in different ways, and it’s true that they blend together, but the way I view it is to think of the entire process as one of education. We must educate our audience so that they act from a place of knowledge, make educated decisions, and – most importantly – keep coming back to us for more. More education, more interaction, more relationship. And all the time, they are moving further down the funnel, closer to the point where they will say ‘Yes’.
The benefits of having a funnel process should be obvious: it is a process, and processes can be measured and evaluated. It’s possible to analyse exactly where in the process an individual lead is, or even assess whole groups of a target audience. And because of the rich metrics which are available through CRM, this isn’t a ‘hit or miss’ approach, but one which is repeatable and able to be tested and verified. Testing is another feature which I am always keen to promote, and which few startups pay enough attention to. I always like to have different options to see which works best – for example does Landing Page A get more hits than Landing Page B? That way I get to know what works and can figure out why it works, rather than scatter-gunning blindly at my audience. Targeting always produces the most satisfactory results, and to refine the targeting requires testing.
So to me, having a funnel is an essential, and it’s something which can be developed and learned. We need to be super-aware of the funnel, and how to use it to maximise success. My purpose in offering a new course in the importance of the funnel is to ensure that startups are left in no doubt about why this is such a vital activity, and how to achieve significant results.
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