Sales Funnel - Identifying Markets & Possible Customers
One of the key concepts in developing any business is identifying the market and providing reasons for prospective customers to move down the sales funnel from "Never heard of" to "I am buying".
When I start an assignment with a new client, true to the principles of my Eight Pillars of Business Prosperity, I want to know where they are now and how they measure their current performance. Some of this is internally focused but of equal or even more interest is how they measure their progress from moving from the total local market to the customers who place orders.
I wrote about how to measure and monitor sales leads some months ago but now I want to take a more marketing based approach and look at the full sales funnel.
Definitions can be adapted to suit your particular circumstances but it is probably easiest to look at the sales funnel working upwards.
The customer is the person or business who receives your product or service and pays you the money although it is important to recognise that there can be a difference between the person making the buying decision, the person choosing the product and the person paying. (Think of children presents or wedding presents.)
A prospect in the sales funnel is someone who is qualified to buy (has the want and the money to pay) and has expressed an interest but has not yet made the decision to purchase. This could be someone who you have seen and sent a proposal.
A suspect in the sales funnel is someone who has expressed an interest in your product or service but hasn't been qualified in terms of want or money.
The target market are the group of prospective customers you have identified as potential purchasers for your business and who you aim your marketing at. These may be different type of market because you have designed specific marketing messages but in total, this is the market that you have taken positive steps to reach.
At the top of the sales funnel is your market universe. This is everybody else who could possibly buy your products but hasn't been selected for targeted action.
An Example of the Sales Funnel
I will explain how I look at my own business.
Customers or clients is easy. I send formal proposals or engagement letters which have to be signed and returned. Until they do this, even with a verbal commitment I think of them as a prospect.
A prospect is somebody who has expressed an interest in my services, we have met or had a long talk on the telephone and I have sent them a proposal.
A suspect is somebody who has expressed an interest and either I am yet to meet them or they rang up for information about business coaching or marketing coaching and they've gone away to think about it.
I know I posted an article a few days ago about "How To Stop Think It Overs" but sales appointments or initial consultations are expensive for me in terms of opportunity cost and I don't try to close them on a meeting unless I feel that they "feel the pain" and are ready to take action.
A suspect will also include anybody on my email list - from what I can see some read every email, some read some of them and some either can't be tracked or don't read my emails. Shame, they are missing some great content but you can lead a horse to water...
My target market splits three fold:
- Small business owners and entrepreneurs in the West Midlands
- Small business owners and entrepreneurs in the UK
- Small business owners and entrepreneurs in the world.
You will have noticed that the only words that have change are the locations - from the West Midlands to the UK to the world but my marketing methods and offerings change.
The West Midlands businesses are reached through local search engine optimisation of my website and blog but also through local networking, alliance partners, direct mail and occasionally telemarketing and I am promoting my business coaching and marketing coaching on a face-to-face basis, group basis or by telephone.
The UK businesses are reached through search engine optimisation and activity in forums and Ecademy and I am promoting telephone based business coaching and marketing coaching, perhaps with the occasional meeting.
For the world businesses, I don't offer coaching but I do recommend business development solutions I have tried and liked through affiliate links and these are attracted through search engine optimisation of long tail keywords.
The universe is anybody who could be interested in buying business advice but who is not currently searching on the Internet. It could have been you yesterday before you typed in a search that found my blog.
I was ready and waiting but you weren't. I hope you find what you are looking for on my blog. It is packed with information so why not jump up a category and join my email list up on the top left of the page.
The precise definitions of the categories with the sales funnel are not as important as you having a marketing strategy for each category.
Implications of the Sales Funnel
I have discussed the issues of selecting a niche and whether you should be a specialist or a generalist.
This will clearly affect the shape of your sales funnel and your conversion rates as prospective customers work down the funnel.
If you are a specialist your universe may be quite small and selective although it doesn't have to be.
If you are a private medical consultant you may have a very tight specialism but anybody could need your services if the problems occur. However if you are a business coach specialising in premium 5 star hotels, your universe is limited.
To compensate for a smaller funnel at the top, you will have conversion rates that the rest of us can only dream about. People with the problem you solve will only have a limited number of options and you could be the only one.
In contrast a generalist has a wide universe. People from 160 countries have landed on my blog in the last six months, virtually all of them making some kind of business related search but only a tiny fraction have become clients with more buying a recommended product or service.
It is not the number at the top of the sales funnel that matter but the number who reach the bottom and how much they spend.
Action Steps for your Sales Funnel
- Set your definitions of what each term means in your business.
- Decide your communication strategy for each stage in the funnel.
- Monitor your conversion rates.
- Improve your process, either to pull more people from the universe into your target market, offer extra products that may appeal to your target market and improve your conversion tactics. The aim is to turn the universe into target customers, the target customers into suspects who then become prospects and finally become prospects.
Your future customers are out there but they do need to be attracted towards your business.
To Your Success
Your Profit Coach
Paul Simister
Business coaching for customer focused entrepreneurs.









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