By Neicole Crepeau, Contibuting {grow} Columnist
Are you a small business owner or manager looking to improve your marketing and sales? If so, you’re also probably seriously time-constrained. So it’s important that the time you do spend yields tangible results with conclusions that can translate into actions that improve your bottom line. Based on my experience working with small businesses, if you only have time to do one thing, it should be becoming acquainted with your sales funnel.
In my experience, discussing and documenting the sales funnel has never failed to provide new insights, identify holes, and uncover opportunities to improve marketing, reach more target customers, and increase actual sales/conversions.
In this day of digital marketing, social media, and mobile, a simple sales funnel analysis may seem passé. But I guarantee that if you do the analysis and ask the right questions, you’ll find ways to improve all those aspects of your marketing … and more. That’s because reviewing how you acquire customers and the stages they go through to buy from you exposes the rocks in the stream.
Who should analyze the sales funnel?
One of the great things about sales funnel analysis is that it applies to all types of businesses—and even non-profits. B2B and B2C companies can benefit from looking at how they acquire customers. Non-profits can use the same process to evaluate how they acquire donors.
You don’t have to limit your analysis strictly to sales, either. For example, I worked with a services firm recently who uses subcontractors. We used the same analysis technique to examine how they acquire subcontractors, especially for key positions. Since doing that is critical to their business, it warranted a thorough evaluation, so we could find new ways for the company to “market” to contractors.
It’s best to perform the analysis with a small group of people, rather than trying to do it alone. In a small business, the CEO is very often in the analysis meetings. If the goal is to improve marketing/sales, then the marketing owner should certainly be involved. Other likely candidates: any consultant you are working with on marketing/sales, a key sales person or the manager of sales (if you separate marketing and sales), whoever owns digital, social media, or content marketing (if you are doing those), and whoever owns your website and watches the analytics. You may also find it valuable to include someone from customer support or, if you provide services, project or account managers who work with customers after the sale.
What funnels should you create?
To start, determine which products or services or markets you’ll analyze. If you have multiple products and they appeal to very different customers or are marketed in very different ways, you’ll want to analyze each. If you market different services or to different types of clients, then you may need to model each sales process separately. If you’re not sure whether you need to model them separately, start with one funnel. As you begin discussing the process, if you find yourself saying “Well, if it’s this product then xyz, but if it’s that product then abc,” you know you need to model each one separately.
How do I do the analysis?
I always draw a funnel on the white board. Begin at the top and work your way down. The basic stages are generally the same, though you might end up modifying them as the discussion ensues. I usually start with:
- Awareness of problem/need—Customer realizes that he/she has a problem or a need
- Awareness of product/service solution to the problem—Customer realizes that there are products that can fill his/her need or vendors who can provide services to solve it
- Awareness of your company’s specific product/solution—The customer discovers your product or service as an option
- Shortlisting available products/solutions—The customer narrows down the products or vendors under consideration
- Comparing shortlist products/solutions—The customer does additional research and comparison of the products/vendors. This step may only apply to large purchases.
- Proposal and negotiation—The customer puts out an RFP and/or contacts you, you provide a proposal and/or cost, and negotiations ensue. This step may or may not apply to your business (typically a b2b step).
- Sale—Sold! The customer purchases
Asking the right questions
The key to getting value from this analysis is asking the right questions. Start by trying to understand who your customers are. Include questions such as:
- The role or title of the customer (in B2B sales)
- The age, gender, and other demographics of the customer
- The demeanor of your customer, at the time they are in this sales process. Is your customer frustrated, worried, in a hurry or taking their time, in the store or at home or on the move, under the gun from upper management?
- The online behaviors and activity level of your customer. Is this a person comfortable researching or buying online? Is he or she a mobile user?
At this stage, you may decide to diagram separate funnels for different types of customers.
Now, for each stage, ask the right questions to prompt ideas, identify problems, and determine where you need more information.
Awareness
- How do customers describe their problem/need? In what terms do they think of their issue?
- How pressing is the problem? How likely are they to look for information about how to solve it?
- Will customers know already that there is a product or vendor to solve this need?
- How do customers learn about your company or product? What are all the possible ways now? How do they learn about competing products/vendors?
Short-listing
- What’s the checklist in the customer’s head? What requirements have to be met for you to even be considered?
- How do customers find out whether you meet these requirements? Where do they look for information? How hard do they look?
- How short is the customer’s short-list? What are the determining factors as customers narrow down their choices?
- Is there anything about a product or vendor that would cause customers to move directly to the next stage or even skip the comparison stage?
Comparison
- How do customers do a detailed comparison? Who is involved at this stage in making decisions?
- Where do they get the information they need?
- What are the deciding factors for selecting a product/vendor?
- How long does this process take and what can derail it?
Proposal/Negotiation
- Is the process formal or informal?
- How transparent are customers about their budget?
- What approvals are necessary and what other stakeholders become involved at this stage?
These are just seed questions to get you started. You may find that you don’t have the answers to even key questions, suggesting the need for further research. You’ll certainly see places where you may be able to improve. For example, you may realize that you don’t have the kind of information customers want to do a detailed comparison, at least not in a way that’s easily accessible to them. You may find that customers short-list by looking for reviews—and you don’t have any reviews on popular sites.
All of these represent opportunities to improve your marketing, and grow your sales. Of course, that’s only half the battle. Next, you have to actually use that information, create a plan, and execute on it. A sales funnel analysis is a excellent and relatively easy way to take the first step in improving your sales and marketing.
Have you used a process like this in your business? What would you add?
Neicole Crepeau a blogger at Coherent Social Media and the creator of CurateXpress, a content curation tool. She works at Coherent Interactive on social media, website design, mobile apps, & marketing. Connect with Neicole on Twitter at @neicolec