Aaron Hoos

A sales funnel is a roadmap of the relationship you have with your contacts, and the journey the two of you take from Audience to Evangelist. But a sales funnel isn’t JUST a roadmap. It’s also a crystal ball that can predict the success or failure of your business.

As your contacts move through each stage of your sales funnel, some will drop off because they don’t feel that your product or service can help them. But many will continue on through your sales funnel and ultimately buy from you.

As those contacts move from one stage to the next in your sales funnel, what they do and how long it takes them will act as a fortune teller for your business:

Start by figuring out your sales funnel ratios. How many contacts are in each stage?

Then, figure out how long an average contact takes to get from your Audience stage to become a customer.

With these two numbers, you have a very useful way to predict how your business will do in the short-term future.

HOW RATIOS HELP TO PREDICT YOUR BUSINESS SUCCESS
We’ll use some really simple numbers to illustrate how your ratios will help predict your business.

Let’s say you have 10,000 Audience members.
Of those Audience members, 1,000 become Leads.
Of those Leads, 100 become Prospects.
Of those Prospects, 10 become a customer.
Of those Customers, 1 becomes an Evangelist.
So, your ratio is 10000:1000:100:10:1.

Using this number, you can predict what would happen in your business if the only thing you did was double the number of Audience members. Assuming all else remains equal, your numbers would increase overall to 20000:2000:200:20:2. Double Audience means double everything!

By keeping tabs on this number, you can observe how slight changes in your business impact your sales: Let’s say that you had a ratio of 10000:1000:100:10:1 and then you made some changes in your Leads stage marketing and in your Prospect stage. Then you look at your numbers again and they look like this: 10000:600:120:12:1. This tells you that whatever you did in your Leads stage is hurting your sales funnel (driving the number of Leads down from 1000 to 600) but whatever you did in your Prospect stage is actually very good (because your Prospects should have dropped to 60, since the Leads dropped to 600, but they actually increased slightly).

So, you end whatever you are doing in the Leads stage and you increase whatever you are doing in the Prospect stage!

These ratios help you to know how changes to specific stages impact your business. This helps you to know how changes earlier in your sales funnel will impact the number of customers you have.

HOW DURATION HELPS TO PREDICT YOUR BUSINESS SUCCESS
Duration is the amount of time that a contact takes to go from Audience member to Evangelist.

Here’s an example from my own business. As a business writer, I not only write about sales funnels but I also write marketing and sales content for businesses. And I discovered early in my career that it took an average of 2 weeks for a Lead to become a Customer. I knew that active Lead generation would result in Customers almost exactly 2 weeks down the road.

So, in order to know how much Lead generation I needed to do today, I just looked at my calendar 2 weeks from today and figured out how much time I had to give to clients. Then I performed various Lead generation and Prospecting activities, and sure enough, I had the right amount of clients at the right time.

The reverse was true, too: If I didn’t do any Lead generation, I would have a lot of spare time on my hands 2 weeks down the road. So, knowing the duration of your sales funnel helps you to know how much business you’ll have in the future based on your Audience members today.

WHY BUSINESS PREDICTIONS ARE SO VALUABLE
Running a business is like juggling — there are so many things to keep moving. Having the ability to predict your success based on how many people are at each stage in your sales funnel, and based on how long they take to get through your sales funnel, gives you a serious advantage over your competition. Here are a few highlights:

• A predictable business lets you invest wisely to build capacity so you can handle more and more customers.
• An entrepreneur that knows what business is going to be like down the road can spend less time worrying and more time serving Customers.
• An entrepreneur that can accurate predict the amount of business coming down the pipe can optimize the entire business for greater profitability.
• A business that is that predictable can be set to autopilot faster and easier than a business that is unpredictable.

I’ve only listed a few of the many benefits that accurate sales funnel predictions offer.

Get to know your sales funnel ratio and sales funnel duration!

When you think of sales funnel content, you likely think of the content that is used as marketing and sales content in your sales funnel. For example, you might think of web articles or brochures or a sales page. But there are 3 documents that your contacts NEVER see, but which are absolutely critical for the success of your sales funnel and the profitable growth of your business.

These behind-the-scenes documents are:

BUSINESS PLAN
Your business plan is a key document you’ll use to cast vision, develop strategy, and get funding for your business. Business plans are often thought of as theoretical, although they should include your marketing plan and branding plan. (And, I’d also assert that a business plan is incomplete without a sales funnel plan, too!)

OPERATIONS MANUAL
While your business plan is the “big picture” of your business, your operations manual should be the well-thumbed, often-quoted document that employees use on a day-to-day basis to do their jobs. Your business plan may give the broad strokes and the strategy, while your operations manual ensures that those strategies are implemented.

TECHNICAL CONTENT/KNOWLEDGE CENTER
Filling the gaps between the business plan and the operations manual is the technical content. You might think of it as internal content or your internal knowledge center. It should be a resource or repository of the kinds of things that may not always fit in a business plan or operations manual. It might include documents like technical specs, internal news items, trouble-shooting guides, collections of tips and ideas shared between employees, etc.

These 3 documents are ever-changing and should be well-used. Customers will never see them. But they are still critical to the successful operation of your business’ sales funnel.

I’m working with a client right now who is a budding serial entrepreneur. He’s a hard worker and currently has 4 small businesses built to a point where they are each earning an income at varying levels of profitability. He has ideas for several more businesses and is working with me on the sales funnel for the fifth business.

As we worked on his sales funnel together, it became apparent that he was time-starved. This guy’s businesses were successful but he was wearing himself out. At first, we couldn’t easily pinpoint where his time was going. We knew he was spending his time on marketing and selling for his businesses, but it just wasn’t clear exactly where he was spending his time while marketing and selling for those businesses. Although adding another business would be good for his bottom line, we grew concerned that he could burn out completely.

So I put together this chart (below, I’ve posted a simplified copy of the chart, with his business names removed) and as soon as we did that, it clarified the problem and offered a solution.

In the “Marketing and Sales” columns, we included the primary activities he performed in each sales funnel, and we divided up those activities into passive marketing and sales activities and active marketing and sales activities. (I would define “passive marketing and sales activities” as those things which are done once and only monitored and tweaked from time to time, while “active marketing and sales activities” require a lot more attention and ongoing effort).

You can see that he has a lot of very active marketing and sales activities in his sales funnel: Blogs, articles, ezines, proposals, etc.

Then, in the “Offering” columns, we included his main income-earning activities, divided up into passive offerings and active offerings. (These definitions are a little more common in the online business world – passive offerings are those products which are built once and sold over and over while active offerings are those services which are performed anew with every transaction).

You can see that he has a lot of very active offerings – mostly consulting and freelancing gigs.

These are successful businesses for him, but he’s basically maintaining four separate sites with four separate sales funnels! That’s not necessarily a bad thing but it can be time consuming, especially because he has four separate active offerings.

And here we were, trying to build a sales funnel for a fifth business and thinking about where he would find the time to grow that business. He is an avid blogger and he was trending toward blogging. And, he is an effective consultant and he was trending toward consulting. But after creating this chart, it became clear that blogging and consulting were probably not a good fit for his next business; where would he find the time?

In fact, we started talking about what he could do in all of his businesses to move toward a more passive sales funnel and a more passive set of offerings. We don’t want to eliminate his consulting, freelancing, or teaching work completely, but we do want to help him make the most of his time.

If you find yourself in a similar situation, here is what I would advise: Be intentional about moving toward more passive businesses. Now, I’ve never been one for a “set it and forget it” kind of business. I think that’s often just snake oil when you see it offered. However, there are effective ways to automate parts of your sales funnel to make it a slightly more passive effort for you (even though you should still keep an eye on it!), and there are ways to create offerings that take less effort on your part every time you sell one.

You don’t have to retool your entire business from scratch to go completely passive, but you should slowly implement passive marketing and sales activities and passive offerings to allow you to spend time on the active stuff.
So, what kind of passive marketing and sales activities are there? I would suggest the following:

• Ads (print, pay-per-click, etc.)
• Affiliate marketing
• Sales letters
• Word of mouth

(And remember, when I say “passive”, I would still recommend that you keep an eye on these things and tweak them from time to time). Outsourcing or delegating some of your active sales and marketing activities is a good way to make it passive for you (but there is an associated expense, so make sure your revenue can bear it).

And what about passive offerings? I would suggest the following:

• Ebooks, ecourses, and other downloadables
• Ad revenue (i.e. AdSense)
• Affiliate revenue
• Membership sites
• Pre-built templates or licensed products
• Branded merchandise

If you’re starting your first business, my advice would be to start with an active sales funnel (active marketing and sales activities) and active or passive offerings (sell both!). Start with an active sales funnel to maintain total and immediate control over how well it’s working. Over time, you can move your active sales funnel into a more passive one by automating or outsourcing.