Sales Funnels
You may have heard the term “Sales Funnel” and had a vague idea of what it is, but maybe you haven’t looked at it in more detail. Knowing your sales funnel is very important in business.
The standard sales funnel has the four basic steps – Awareness, Interest, Decision and Action. But depending on your type of business, these steps can be broken down even further and even further still.
Your sales funnel could be much more detailed. And it’s in these details that make the difference between a poor sales funnel and a successful one.
To understand what a sales funnel is, let’s look at a basic one for a brick and mortar store.
People are walking past your store. They look in. They see what they like and they decide to walk in. That’s the first step – the Awareness step. You’ve made people aware of your store. Say 100 people walk past and 20 walk in. That’s 20%. Knowing the percentage at each stage helps you determine if your sales funnel is working. It only takes a small percentage increase or decrease to totally change the effectiveness of your funnel.
The second step is Interest.
The 20 people now in your store look at your display of Star Wars T-Shirts.
They are showing an interest.
Four people pick out a lovely Jar Jar Binks t-shirt and they enter the next step – Decision.
They have decided to buy a t-shirt.
All they have to do now is walk to the checkout and part with their money.
This is the Action step, the final step in your sales funnel.
But two people change their mind on the way and put the t-shirts back, maybe remembered that Jar Jar Binks isn’t all that.
Two people pay.
So from the initial 100 people walking past your store, you have converted 2 of them into paying customers.
So now we know the four steps of our sales funnel, we can look at each in turn.
If we can get 200 people to walk past, we should sell four t-shirts. We’ve doubled our turnover.
We decide to stock some BB8 t-shirts as well as Jar Jar Binks. More people will decide to buy.
We make it easy to pay with no distractions, maybe even a poster stating Jar Jar Binks is cool ?
Again we have increased our turnover.
This same principle can easily be duplicated for an online business, but also include micro steps that could also be used to increase turnover.
A step could be something like the flow of your checkout process or something as small as the wording in an email you send.
Later in the Roadmap we will look at how to optimise each step to increase turnover.
The first step though is to identify your sales funnel and to start measuring its effectiveness.
The SystM Academy contains a full course on this subject.
We go much deeper, gaining more insight and using the skills and knowledge in your own business.
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