Sales funnel paygates: Paygates at conversion (series)

This blog post is the second in a series called Sales Funnel Paygates – a strategic look at where in the sales funnel your payment transactions can be placed. (See the introductory blog post in this series for more information).

SALES FUNNEL PAYGATE: AT CONVERSION

The first paygate location possibility we’re going to talk about is the paygate at conversion. This is when the act of conversion from prospect into customer includes payment. (Note the green paygate in the sales funnel at the point of conversion, below).

One example might be the purchase of a ticket at a movie theater or the purchase of a meal at a fast food restaurant. The prospect may still be a prospect when they walk into the cinema or the fast food restaurant, but when they place their order they have to plunk down their money at the same time or they don’t receive delivery (of the movie tickets or the Quarter Pounder Meal Deal). Concurrent with their conversion from prospect to customer, there’s a paygate.

Although I’ve given two retail examples, this paygate location isn’t ONLY used in the retail world. Consultants or freelancers might require full payment up-front when the customer signs the contract. Manufacturers might require full payment up-front before they even consider retooling their factories. Shipping companies might require fully payment up-front before they send out the truck. Granted, we don’t see this as often in the B2B world as we do in the B2C world, but it does exist. (In the B2B world, if there is any money at conversion, it’s usually a portion of the payment… but I’ll talk about that in a future blog post).

Why would a customer prefer this paygate? This model works well in situations where customers know exactly what they are going to get and feel confident that the product or service will be valuable, or in situations where customers feel that they have sufficient recourse to get their money back if they are not completely satisfied.
If a customer has any hesitation about the value or their ability to get a refund, they either won’t convert or won’t pay.

If you use this paygate, and you have a lot of prospects who aren’t converting or a lot of customers who commit but disappear without paying, this paygate could be part of the problem. Consider reworking some of your marketing material to improve on the sense of value you express about your product or service, and take another look at your guarantee.

Why would a business prefer this paygate? This is a good model for business owners because it eliminates accounts receivables completely and ensures that each purchase is fully funded. It helps to keep your bookkeeping fairly tidy because anything that leaves inventory has some income associated with it, and therefore you can measure your expenses accurately.

If you have a lot of receivables, consider switching to this paygate to eliminate them.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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