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Sales funnel is an effective tool for business development analysis.
This marketing model demonstrates the process of client promotion from the stage of acquaintance with a company to closing of the transaction.
Sales funnel helps to determine what stage of interaction is the most and what is the least effective, where the potential purchasers lose interest in the product, and the root causes of that. This powerful marketing tool also prompts how to build business processes and what stages of sales need to be optimized.
Sales funnels build
The sales funnel creation is the most effective with the implementation of CRM. The accounting system allows you to easily display the information about the current state of affairs as an illustration. The sales funnel has received this name due to its visual similarity with a household item. The number of turns on it will depend on the business model and its features.
The transfer of all stages of the funnel into the CRM displays the most complete picture of the interaction between the company and the target audience. The average version has the following structure:
It is normal, if at each step the company loses a certain number of potential customers. The funnel allows you to detect the problem areas and identify inefficient steps that require upgrade.
It is wrong to calculate the conversion, based on the ratio of the leads that are entered and the completed deals. It will be more effective to determine the ratio of positively closed transactions to their total number. A closed transaction is considered if the product or service is paid for, or if the person absolutely refuses to cooperate. This analysis method provides access to the following indicators:
- the quantity of users at the entrance
- the quantity of payments at the exit
- total conversion rate
- phased conversion
- terms of closing the transaction
- duration of each of the stages.
Determination of the visitor’s readiness to purchase
The sales funnel for business is also used as a method for differentiating of potential customers in phases from the acquaintance with the brand to the completion of the transaction. In the struggle for the attention of the audience, the usage of this algorithm allows you to structure and personalize your actions.
All leads have their own degree of readiness for purchase. Visitors can be divided into the following categories according to the level of interest in the product and the readiness to purchase it:
Cold leads face a company for the first time, they don’t know anything about it and are not ready to receive a commercial offer. Warm net users have already received the information about the proposed product, and it was a subject of their interest. The hot ones have already studied the benefits of the product and they are ready to make an order. This approach allows you to interact with the potential customer effectively at each phase.
The principle of the effective sales in online business
Before you build a sales funnel, it is important to identify its key points.
The first step on the road to profit is to attract leads. At this point, the most important thing is to highlight the target audience. To gain the attention of the target audience, it is recommended to offer useful and interesting content in exchange for the user’s email address.
The second point of work with the target audience is its involvement.
Partial information about the benefits of cooperation will gradually warm up the interest in a product or service. At this point it is effectively to use a series of information letters. Their content should be based on the mission of the company, veiled under a collection of cases or useful instructions.
The third step is the presentation of the starter – a product aimed not to make a profit, but to win the visitor’s loyalty. The task of the starter product is having gained the trust of the client to provide him/her with a positive experience of cooperation with the company. In the future, ordering the main product, the client will be sure that his/her choice of the seller is correct. In order to retain previously attracted buyers, it is recommended to suggest the positions that accompany the main purchase. The optimal way is if the associated product enhances the functionality of the main purchase and brings significant benefits.
The required number of sales funnels
To build a profitable business, it is necessary to create a funnel for each commercial process. Depending on the size and characteristics of the business, the following factors should be analyzed:
- Primary transactions
- Regular customers
- Channels to attract the target audience
- Offered goods and services
- Sales staff activities
- The target audience
- Region covered.
In this way it is possible to determine the effectiveness of interaction with new leads, the success of measures to retain and motivate the purchase of regular visitors. The funnel allows you to highlight the quality channels to attract traffic and minimize the cost of the inefficient ones. Analysis of goods and services helps to focus on the most interesting products for potential purchasers. The funnel also provides the information about the target audience and the necessity to expand or narrow it.
To highlight the maximum profit from business, it is important not only to know what a sales funnel is, but also to use it effectively. It gives the company a competitive advantage in attracting and retaining customers.