Target is a word synonymous with sales and as a sales professional or business owner; you are faced with working to meet your monthly, quarterly and yearly targets. If you are a hunter sales person (read sales personality) then targets are an exciting motivation that keeps your adrenaline pumping and your feet on the move. If you are a farmer sales person however, targets might intimidate you a bit. No matter your sales personality, with an effective sales funnel, you would increase your chances of closing more sales.
So what is a sales funnel? Like the real life funnel, a sales funnel is a system in which you turn leads to prospects to customers and then to repeat customers. It is also a systematic process of qualifying your leads at different stages of the sales cycle to ensure that you can estimate the amount of prospects that would eventually become customers.
A good sales funnel makes your activities intentional, strategic and focused. Statistically, about one in five prospects would be converted to actual customers, so if you have a target of 10million per month, your approach could be any of the following:
Scenario one- large amount per customer, smaller number of prospects: in this scenario, you could start your sales funnel with 10 prospects with an average spend of 5million per customer. At the end of the sales process, you are likely to converts 2 of them into customers and you would have met your target of 10million.
Scenario two-Small amount per customer, large number of prospects: in this scenario, you could start your sales funnel with 50 prospects with an average of 1 million per customer. At the end of the sales, you are likely to convert 10 of them into customers you would have met your target of 10million.
Of course other factors like; type of business, sales cycle, customer approval process, need for the product and prospect generation process could affect the quality of your prospects and subsequent conversion rate. So how do you build an effective sales funnel?
- Understand who needs your product/service: One of the first things you have to do is to understand you target market or ideal customer (read this article: Let the real customers please stand up ). You also have to understand their buying patterns, the alternative they have to you. This means; who would they go to for similar products/services and why would they go to them?
- Decide how you would reach them: when you have a good understanding of your customers, you most likely know where they are physically and online. You have to come up with a plan to reach them. In this plan you need to identify the obstacles to reaching them. Some company executives are harder to reach than individual customers, so you need a way to reach them. It could be through networking, a targeted newsletter, a referral or outright cold calling. Decide what works for your target market.
- Understand your industry average conversion rate: your industry conversion rate is the average number of prospects that eventually become customers. You can find out by experience or speaking to peers in a similar industry who can give you information. You could also research it on the internet, but I don’t know how relevant the information would be to your country or local environment. This average would assist you in building your sales funnel.
- Create your sales funnel plan: your sales funnel plan should state how many customers you should have in your sales funnel at every point in time. If your goal is to sell to five customers in a month and your average conversion rate is 20%, you should target to have 25 customers in your sales funnel every month. You should also specify the system in which you would communicate with leads and follow up with them along the sales cycle.
- Implement and iterate: after all the planning, take action! Action brings clarity and you begin to learn what is working and what needs to be adjusted to improve performance.
I would like to encourage you to apply this immediately if you are not currently doing it and share your results with me.