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Siphoning the Sales Funnel

To put this into context; this post is not about marketing, PR and lead generation, it assumes that you already have an abundance of enquiries that are filling up your sales funnel.

What is a Sales Funnel?

The analogy of a funnel is one where all your prospects are tipped into the top of the funnel and only the heavy weight yeses make their way down the funnel and come out the end as cash in the till. 

What it can tell you?

Each sales funnel will be peculiar to the individual business but to keep it simple we are looking at five key stages.

  1. General enquiries tip in the top of the funnel through whatever marketing communication method is used.
  2. Giving a Quote is the next key stage; possibly after qualifying the enquiry.
  3. Orders
  4. Sales
  5. Paid – alas unless you get paid you have no conversion just a shortfall in stock.

How well do you know the key numbers in your funnel?

In this real life example of the sales funnel with regard to turning leads into fully paid up members of the brilliant BusinessXchange.

ENQUIRIES

100

50%

First time guests

50

60%

Second time guests

30

50%

Application

15

100%

PAID up members

15

If BusinessXchange was able to improve the conversion performance by 10% in each area it would result in an additional 8 new members per hundred leads. 

(Based on previous performance it would work out at 69 new members this year on top of the current membership minus churn.   That’s approximately 124 members!)

In comparison to achieve the same level of business at today’s effectiveness would require 25 more enquiries in every 100.  How much might that cost? 

So if we consider all other things being equal – same employees, same enquiries, same expenditure how can we use the analysis to improve performance?

imgres-1

How you can use it to improve your sales effectiveness?

This is the story of Amy; Tom, Dick and Harry and the comparison opportunity

Each allocated 100 enquiries but their individual final conversion rates are: 

Amy   43:

Tom   46:

Dick   54:

Harry 49:

The average works out at 48%

Based on the analysis of the bottom line we might want to replace all employees with more Dicks!  However, if we look at the conversion rates throughout the sales funnel process then we may wish to reconsider.

Sales Person

Amy

Tom

Dick

Harry

ENQUIRIES

100

100

100

100

 

85%

80%

70%

80%

QUOTATIONS

85

80

70

80

 

60%

60%

90%

63%

ORDERS

51

48

63

50

 

90%

95%

85%

98%

SALES

46

46

54

49

 

94%

100%

100%

100%

PAID

43

46

54

49

When you look at the full picture, Dick is truly brilliant at moving from quotations to orders, whereas Amy who’s bottom line looks really poor, is the best by far at following up general enquiries with quotations. 

What else can the team learn from each other that would improve the performance of the team overall?  Harry is a bit of a whiz at converting orders into sales and Amy could probably do with some support chasing debtors?

If everyone was able to perform to the best results the average conversion rate would be a stunning 74%.

Marketing the Black Art …

But that is not all!  You can make similar measurements from the marketing tools you use.

Marketing Source

Web

News

Mail

Refs

ENQUIRIES

100

50

20

15

 

 

 

 

 

QUOTATIONS

 

 

 

 

 

 

 

 

 

ORDERS

 

 

 

 

 

 

 

 

 

SALES

10

10

10

10

 

10%

20%

50%

66%

PAID

 

 

 

 

Business Planning

Turn the funnel upside down and you can now use analyse and support your business sales and marketing plan.  When you know what you need to achieve to breakeven or achieve your profit/sales growth you can work the way up the funnel to identify the leads that need to be generated to achieve the results.

For anyone interested the following link offers a free sales funnel calculator.  

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