Archive | July, 2011

Monthly Sales Funnel Check-up

By Aaron Hoos on July 31, 2011 in Business

It’s the end of July. Time to fill out your Monthly Sales Funnel Check-up. (Just because it’s the summer, doesn’t mean you should take time off from your sales funnel).

Wondering what the heck a Monthly Sales Funnel Check-up is? Read the first Monthly Sales Funnel Check-up blog post that kicked it all off!

There are only 3 ways to grow your business

By Aaron Hoos on July 28, 2011 in Business

Every entrepreneur wants to grow their business and they drink from the deep well of marketing and sales advice to help them. But let’s get one thing clear: All of those marketing- and sales-related tips and ideas and techniques and tricks can contribute to business growth, but there are really only 3 ways that your business can actually grow.

Here they are, in no particular order:

  • Replicate your sales funnel: This can be achieved by (1) hiring employees and managing them, (2) franchising your business, or (3) creating an affiliate program. Financial and real estate businesses may find that the first choice (hiring people to help support your practice) is the easiest and clearest option. The other two choices aren’t unheard of in financial and real estate businesses but can be a little more complicated in these highly regulated industries.


  • Create passive income: This is achieved by creating products (instead of services) that people can buy and receive without any ongoing effort from you. (An ebook is a classic example of this business model). For some ways to help figure out how to turn your active, time-intensive business into a passive one, check out How to be a lazy serial entrepreneur (part 1) and How to be a lazy serial entrepreneur (part 2).


  • Increase some aspect of the purchase: This can be achieved by increasing (1) the number of customers who buy from you at any given time, (2) how much volume you sell per customer, or (3) how much money you earn from each customer. These options are pretty straightforward to implement but their true success can be limited by some factors (such as the amount of time you have in a day to spend with each customer). For ideas on achieving all three methods of increasing some aspect of the purchase, check out this blog post on how to find the best customers in your sales funnel and earn more profit from them.

So, which should you choose? There’s no reason why you can’t select all three options and continually work at implementing them all, over time. But it also depends on who you are and how you like to operate. Each of these options requires something different from you. The first option — replicating your sales funnel — requires some administrative and management skill. The second option — passive income — can be quite profitable but requires a (sometimes considerable) up-front investment of time and money. The third option — increasing some aspect of the purchase — is probably the easiest and fastest to implement but its effects can be dampened by the time you have and whatever the market can bear.

Start by working on whichever option is easiest for you to implement based on who you are and what strengths you have. Then build off of those wins and select another option to grow some more.

Over the next few days, I’ll blog about some additional ideas and tips to help you work through each of these three options.

Aaron’s Answers: Sales forecasting with sales funnel metrics

By Aaron Hoos on July 20, 2011 in Portfolio

I received this excellent sales funnel question from a blog reader a couple of weeks ago. I’m posting the question and answer (slightly edited) here because I think it’s a question and answer that every business owner can benefit from knowing. Thanks again for the question!

The Question:
How do you determine if you have enough opportunities in your sales funnel to hit your fiscal year goal?

Aaron’s Answer:
If you know what your average conversion rate is, and if you know what your average per-customer spend is, you should be able to calculate your answer easily.

  • Your average conversion rate is the number of Prospects in your sales funnel compared to the number of those Prospects who actually become Customers. For example, if you have 1000 Prospects and 100 of them become Customers, then your conversion rate is 10%.
  • Your average per-customer spend is the amount of money each Customer spends on average in a given period of time (in this case, your fiscal year). For example, if each of those 100 customers (from the above example) spend a varying amount of money but it averages out to $1000 per Customer in a fiscal year, then your average per-customer spend is $1000.

Here’s what you do next:

Using the above numbers, along with your fiscal year financial target, you are going to do some simple math in order to know how many people need to be in your sales funnel (as Prospects) in order to reach your financial goals.

First, divide your fiscal year financial target by your average per-customer spend to find out how many Customers you need. (For example, if you need to make $100,000 per year and each Customer pays you $1000 in a fiscal year, you know that you need 100 Customers).

Then, divide the number of Customers you need (which you just identified in the above step) by your conversion rate to find out how many Prospects you need. (For example, if your conversion rate is 10%, then 100 Customers divided by a 10% conversion rate is 1000 people needed in your sales funnel).

That’s it! In the example above, if you want to earn $100,000, and each Customer pays $1000, then you need 100 Customers. In order to get 100 Customers, you need to have 1000 Prospects.

If you want to go deeper, you can divide the results you’ve just achieved into smaller goals to get quarterly, monthly, and weekly goals. I think those might be more helpful. And, if you want to grow your business, consider these tips to increase your conversion rate or my popular blog post 99 ways to optimize your sales funnel and grow your business.

Disclaimer: There are other factors to consider: Outside risks (like the economy) can have an impact. So can seasonal fluctuations if you’re measuring in the middle of a fiscal year. Also, your sales funnel’s conversion period can play a role in determining how accurate your numbers are. Every industry is different and these things need to be considered and factored in, even if it’s just as a rule of thumb.

Check out some of my other Aaron’s Answers blog posts. If you have questions you’d like to ask, feel free to email them to me and if I think all of my readers will benefit, I’ll post them here. Don’t worry, I’ll keep your info anonymous.

Does your sales funnel align with your preferred exit strategy?

By Aaron Hoos on July 19, 2011 in Business

Whether or not you’ve planned it, your business has an exit strategy. You will, at some point, exit your business.

It could be an intentional exit (like when you sell your business) or it could be an unintentional exit (upon your demise). Even if these exit strategies haven’t been stated formally in a business plan, they are still the preferred exit strategies of a business. (There are less desirable ones, too).

Your business has an exit strategy. But the question should be asked: does your sales funnel align with your preferred exit strategy?

Even if you haven’t planned either, your business has an exit strategy and it has a sales funnel. If you hope to achieve a preferred exit strategy, you need to ensure that your sales funnel aligns with it.

EXIT STRATEGIES

In my experience, there are 5 preferred exit strategies, which I’ve generalized at a high level, below:

  • Sell the business as a whole: The business owner sells the entire business to a buyer (who probably intends to run the business themselves).

  • Sell the business in parts: The business owner “parts out” the business, selling various assets to various buyers. For example, they might sell the website address to one buyer and the mailing list to another buyer and the leftover inventory to a third buyer.

  • Transfer the business: The business owner freely transfers the business to someone else (often a family member) who will take over the business.

  • Close down the business: The business owner will simply shut down the business and walk away. This might be as the result of a lack of success or it might be the simplest way to end the business after years of profitable success.

  • Run the business until your death: Upon the demise of the business owner, the business ceases to exist operate. This is the default option for many business owners who have not considered or planned for their exit strategy.

Which of these options is your preferred exit strategy? It’s a good idea to work intentionally toward one ideal exit strategy but to plan for at least one or two others, just in case.

(You should also check with your local laws on how your business structure (i.e. corporation, LLC, etc.) impacts your exit strategy because not all business structures can be easily passed on or continued after your death.

SALES FUNNEL

Once you’ve decided on a preferred exit strategy, you need to make sure that your sales funnel aligns with it.

Below, I’ve listed each of the preferred exit strategies from above, as well as some sales funnel tips to remember when aligning your exit strategy and your sales funnel.

  • Sell the business as a whole: Your sales funnel needs to be clearly written and repeatable. Your business’ buyer is not just buying the equity of your business’ name, they’re buying your entire “formula” with the expectation that they can continue running the business as successfully as you have been. Your sales funnel is part of your success. Record your sales funnel and keep track of what you do at each stage and step in your sales funnel.

  • Sell the business in parts: It’s not likely that you will be selling your entire sales funnel to a single buyer. (If you did, that’s basically your entire business and therefore your exit strategy would be the one above this one). However, by noting the various stages and steps and channels that you’re using in your sales funnel, you will find that you can target buyers more effectively when parting out your business. Instead of selling a mailing list, for example, you can sell a list that has a certain percentage of Audience, Leads, and Prospects, and you can clearly identify where they are in the sales funnel and what they’ve gone through already. You might even earn more for a list of Evangelists, for example, because you’ve noted that they are not only active Customers, they’re also telling their peers about their positive experience with your business.

  • Transfer the business: As with the exit strategy of selling your business in its entirety, this exit strategy requires you to “hand over” your formula to the recipient of your business. By creating a recorded, repeatable sales funnel, you empower the next generation of business owners to continue running your business in the same way.

  • Close down the business: If you sell an ongoing service, this could cause an issue among your Customers who are still expecting service even though you are finished with the business. Contracts will need to be honored, guarantees will need to be honored, and don’t forget that your online marketing may still be sending potential buyers to a website that is no longer running. Your sales funnel still matters here, even if you decide to stop your business quickly! When you choose to shut down, you can do so cleanly by staggering the end date of your marketing (ending your Audience interaction first, then your Lead interaction, then your Prospect interaction, and then your Customer interaction).

  • Run the business until your death: No one wants to talk about their own demise but your current and future Customers will appreciate it if you gave it a few minutes of thought. Your sales funnel will still run after your death. Imagine what would happen if someone bought an ebook from you, then contacted you about a problem they were facing with downloading, only to never hear back from you. Yes, they can get their money back but the Customers who hoped for good service from you would be disappointed. As uncomfortable as it may seem, seriously consider creating “upon my death” instructions for a friend or loved one to handle your business affairs. Prepare an email to send out to your list, perhaps with a recommendation for another service provider who can help them instead. Is it morbid to think about? Yeah, it is. But if you care about your sales funnel contacts now, the reasons you care for them don’t disappear after you pass away.

Every business has an exit strategy and every business has a sales funnel. Successful business owners will articulate both and will ensure that the two are aligned.

For more information about exit strategies, and to download a list of 10 exit strategies, check out my blog post Business exit strategies.

Want to take this idea even further? Consider some undesirable exit strategy scenarios (i.e. bankruptcy, natural disaster, defamation, disappearance of the target market because of an unexpected competitor) and create contingency plans that align with your sales funnel. For related information about contingency planning, read Top contingencies to plan for and I accidentally stabbed myself today. Here’s why you should be worried.

Testimonial

By Aaron Hoos on July 17, 2011 in Portfolio

“Excellent work by Aaron! I will give him work on a regular basis and of course I would recommend him to anyone seeking marketing and copywriting. Exceptional job!”

-S. Mizrahi

Sales funnel terminology – Why I prefer the term ‘sales funnel’ to ‘marketing funnel’, ‘marketing pipeline’, ‘sales pipeline’, and ‘sales process’

By Aaron Hoos on July 13, 2011 in Business

There are a lot of terms for sales funnels. This brief post explains why I prefer the term sales funnel instead of the many other terms that people use to describe the relationship between a potential buyer and potential seller.

When people search online to find information about the relationship between a potential buyer and potential seller, they use some of the following popular terms to find the information that I define as a sales funnel:

  • Marketing funnel
  • Marketing pipeline
  • Sales funnel (plus two common misspellings: sale funnel, sales funnell)
  • Sales pipeline
  • Sales process

WHY I PREFER THE TERM ‘SALES FUNNEL’

Why I prefer sales funnel over marketing funnel or marketing pipeline: Ultimately your business exists to earn money and you do that by making a sale. What actually makes up a sale may be different in your business than it is in other businesses, but it’s the sale that counts in your sales funnel, not the marketing. Marketing is a means to an end. By calling it a sales funnel instead of a marketing funnel, the emphasis is placed on the desired goal.

Why I prefer sales funnel over sales pipeline: In my opinion, sales funnel is a strategic term that describes the relationship you have with various stages of potential buyers – you’re not only building a relationship, you’re also qualifying and filtering. Therefore, the number of people you meet earlier in the relationship is quite high compared to the number who actually buy from you. Sales pipeline (again, in my opinion) is a tactical term. It’s a way sales people describe the group of potential buyers who are somewhere in their sales funnel. I’d say that these terms are relatively interchangeable but I prefer sales funnel over sales pipeline because the relationships you have with your prospective buyers is best represented and planned through a funnel shape.

Why I prefer sales funnel over sales process: You’ll find that I do use the word sales process frequently in my blog. However, when I say sales process, I’m referring to the actual interaction a salesperson has with a potential buyer in the Prospect stage: A sales person will build rapport, fact-find, present a solution, handle objections, and ask for the order. That’s the sales process, in my opinion. The sales funnel is a graphical depiction of the relationship that the buyer and seller have from the earliest stages through the sale itself and well past the sale.

So, if you’re looking for information on marketing funnels, marketing pipelines, sales pipelines, and sales processes you’ll probably find it on this blog. But I call it a sales funnel.

6 sales funnel tips for real estate professionals

By Aaron Hoos on July 12, 2011 in Real Estate

Getting and keeping clients in your real estate practice can be so challenging: There’s a lot of competition and customers only buy once every 5 to 7 years. You have to fight for every Lead and nurture that Lead into a Customer.

To help you succeed in the intense real estate profession, here are 6 sales funnel tips that you can use to grow your practice:

  1. Differentiate. There are so many real estate professionals out there and they’re all promising the exact same thing. As a result, Customers don’t know or care who they go to, to buy or sell a home, because they don’t perceive a difference. Don’t be a real estate pro that’s just like everyone other real estate pro! Set yourself apart! Last year, I wrote a series called “5 marketing tactics Realtors commonly use that can hurt their business” and I talked about differentiating the following situations: Offering free home valuations, promising to give great service, using schtick (like a chicken costume) to capture attention, guaranteeing a home sale, calling yourself a “city expert”.

  2. Ramp up the emotional quotient of your marketing. Buying or selling a house might be commonplace for you but it’s thrilling and scary for everyone else. Lots of real estate professionals do a good job of trying to portray confidence and success in their marketing, to assure Customers that they know what they are doing. Customers want to feel that. But they also want to know that you understand and empathize with their extreme feelings. Unfortunately, not very many professionals empathize with the emotions that their potential buyers or sellers are experiencing. Take another look at your marketing content and see if you can take the emotional level up a notch. For example, buying a house for a growing family isn’t just about proximity to schools and parks. It’s about giving children a safe place to play with friends and learn so they can grow up to be whatever they want to be. Or, selling a house for empty-nesters isn’t just about downsizing now that the kids are gone. It’s about an indulgent reward for the years of sacrificial parenting (while also sensibly preparing for the joys of grandparenting).

  3. Define the stages and steps in your funnel. Most real estate professionals work hard to acquire Leads, but too many pros use the “shotgun” approach: They get names, follow up with some of them, and maybe convert a small few. That’s because there isn’t a clear sense of the journey that these potential buyers or sellers are on. When you know what steps your sales funnel contacts typically take, you’ll be able to sort your Leads better. This results in better communication and faster sales (because you’re prioritizing your contacts). Check out this blog post about how to identify the steps in your sales funnel.

  4. Segment your list. As you meet new potential buyers or sellers, learn more about them and use that information to segment them. By doing this, you’ll see which ones are the most profitable and you’ll be able tailor your services to them. Use this list of 55 target market questions to help you understand who your Customers are and how you can help them the most. That doesn’t mean you won’t help anyone else, but it does mean that you can become an expert in some aspect of real estate that will attract your most profitable Customers.

  5. Stay in closer contact. When I bought my (current) house about 7 years ago, my real estate agent was really helpful. Until the day we got the keys. I never heard from him again after that. No calendar. No fridge magnet. No Christmas card. I know he’s still a real estate agent because I bumped into him not that long ago. But before the rest of the real estate industry pats on the back for distributing calendars each year, consider this: I get tons of calendars from real estate professionals. So do my neighbors and friends. The next real estate agent I call to sell my house and help me buy a new one won’t be one of the calendar-givers who think they are staying in touch with me (but don’t know me from a hole in the ground). Rather, I’ll list my house and buy a new one with with someone I’ve built a relationship with. And a calendar isn’t a relationship. Get closer to your customers. Show up in their lives from time to time. Get onto their speed dial. Get invited to their kid’s soccer game.

  6. Get referrals. Since most people move every 5-7 years, staying connected with your customers is important to get that sale every 5 to 7 years. But what will you do for the interim 5-7 years? Remember that they have friends and those friends will also need a real estate professional. Get people talking about your business. Differentiation helps, so does remaining in close contact with your customers; however, the most effective way to grow your real estate practice profitably is to create an army of Evangelists. Check out the Evangelist Equation to learn how to get more of your Customers filling your sales funnel for you.
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