Tag Archives: sales funnel strategy

When lead generation turns into lead DE-generation

By Aaron Hoos on August 29, 2012 in Business

One of the tasks of a business is to fill its sales funnel with leads. The more leads (and the more targeted those leads are) the better. But not all of those leads will buy from you.

Although most businesses will have some leads fall out of their sales funnel, it pays to spend some time investigating the causes of lead degeneration.

To find out how much a lead is worth to your business, determine is what the average spend on each sale, then determine your prospect-to-customer (conversion) rate, then determine your lead-to-prospect (qualification) rate. So, if your average customer spends $100.00 per sale, and if you convert 1 customer out of every 10 prospects, and if you convert 1 prospect out of every 10 leads, then each lead is worth $1.00. ($100/10 prospects = $10; then $10/10 leads = $1).

In the scenario above, if you can plug the holes in the lead stage of your sales funnel and save even one lead, you’ve saved $1.00.

So how do you plug the holes in your lead stage? First, you need to identify why leads leave.
Although each business’ leads will have their own unique reasons for leaving, here are some general observations:

  • The lead discovers that your product or service doesn’t solve their problem in the way they initially thought it might when they were in the audience stage.
  • You don’t qualify the lead at the right time (either too fast or too slow).

Although there might be other reasons, many of the reasons I’ve encountered are subsets of these reasons for lead fall-out. Here are a few practical scenarios of how leads fall out of the lead stage:

  • The prospective buyer realizes they have a problem and they start to investigate the solution. They sign up for your email newsletter to get more information but as the information starts to come in, they realize that they don’t have the problem they once thought they did.
  • The prospective buyer is price shopping and although your product or service seems equivalent or provides even better value than a competitor’s product, the lead discovers the price and heads away from your business to the cheaper price.
  • The prospective buyer asks to find out more about your product or service and although they want information to make an informed decision, they instead get a sales pitch that tries to push them to a sale faster than they are ready.
  • As the prospective buyer moves through lead the stage, they start to uncover objections about your product or service. However, your sales process doesn’t address objections until the prospect stage.
  • The prospective buyer learns more about your product or service, and seems very interested, but they discover other solutions (including alternates and replacements that they had not considered previously), which seem superior at the time.

The lead stage can be quite tenuous – you don’t want to come across as too pushy but you also need to take charge and help the prospective buyer understand what you have to offer and what value it provides.

You can keep leads from falling out of the lead stage by doing some of the following:

  • Take a poll of your leads and of your prospects and compare the two. Are there responses present among your leads that simply do not appear among your prospects? Chances are, something in your sales funnel is driving those specific leads away (or outside of your sales funnel is attracting those specific leads away).
  • If you have captured some contact information from your leads, follow-up when it becomes apparent that they are no longer responsive leads. Ask them what they chose instead, and why.
  • Examine the marketing you do at the lead stage. Test new methods or new ways of communicating.
  • Time your leads through the lead stage. Test a slightly faster and slightly slower rate and see what happens.
  • Look at where you handle objections in your sales funnel and try spreading them out a little so that some objections are handled earlier in the funnel.
  • If your qualification (lead-to-prospect) rate suddenly drops off, scour the news to pinpoint a possible cause. Did a news story related to your industry suddenly sour your leads?

Lead generation is vital to ensuring that your business sells its products or services and generates cash flow. But if you don’t pay attention, lead generation can easily turn to lead degeneration.

What are the qualities of a successful sales funnel?

By Aaron Hoos on August 9, 2012 in Business

The most important part of building a business is creating a sales funnel around the problem you solve for your target market. Your sales funnel will articulate how you’ll attract that target market to your business and ultimately sell them your product or service.

But how do you know if your sales funnel is working? What are the indicators that tell you that everything is moving along nicely. Here are the qualities of a successful sales funnel that you can compare your sales funnel against:

  • A successful sales funnel articulates a specific solution to a specific problem experienced by a specific target market: Of course your product or service might solve other problems and be enjoyed by other target markets, your sales funnel will be the most successful when you recognize the solution, problem, and market and focus everything around those elements. (Note: Your business might have more than one sales funnel because you solve other problems for other target markets. Don’t try to squeeze everyone into one sales funnel).
  • A successful sales funnel has cash flow: Only one sale doesn’t necessarily indicate a successful sales funnel. Rather, you should be able to repeat your sale over and over. The more often you can sell, the more cash flow you have. (One of your key goals as the business owner is to increase the amount of cash flow moving through your sales funnel)
  • A successful sales funnel is profitable: This one seems obvious and easy – the money coming in should exceed the money going out. (One of your key goals as the business owner is to increase the amount of profit from your average sale)
  • A successful sales funnel is efficient: This is hard to measure but is still important. An efficient sales funnel moves the potential buyers through with the minimum number of steps. As the business owner, you need to figure out the fewest number of steps that your target market can move through your sales funnel… but still move through your sales funnel! If you have too many steps, your target market will go somewhere else because their problems aren’t solved in a timely fashion. If you have too few steps, your target market will feel like you are jumping the gun and not taking the time to understand their problem so it can be solved.
  • A successful sales funnel is trackable: You should be able to know how many people are in each stage of your sales funnel at any given time. You should be aware of the ratios between stages (i.e. your conversion ratio as well as your lead-to-prospect ratio).
  • A successful sales funnel is scalable: This one is going to be hard for some entrepreneurs (especially those who are used to doing it all themselves). A successful sales funnel should work just as well when 1 person goes through it as when 100 people or a 100,000 go through it. Scalability should be reflected in the infrastructure that supports the sales funnel as well as in the business’ ability to handle a growing number of customers.

Your business has a sales funnel (hint: EVERY business has a sales funnel)… but does it look like what I’ve described above? If not, what changes can you make to correct it?

100 small business strategy questions

By Aaron Hoos on May 18, 2012 in Business

Many small businesses are fueled by passion. They start because an entrepreneur has an idea (or is sick of working for a boss), they grow because their ideas solve a problem and somehow that solution is communicated to the marketplace.

Unfortunately, many small businesses fail… even ones that are seemingly successful and make profitable sales. The reason is, they’re simply existing day-by-day, sale-by-sale, without any real strategy or long-term vision to give their existence any direction.

If you’re an entrepreneur, answer these 100 small business strategy questions. The answers will help you to highlight areas of opportunity that you can exploit and areas of concern that you can mitigate. Bookmark this page and come back to it regularly to work through these questions every 3 to 6 months.

With your answers, create a list of to-dos that you can act on until you come back to these questions again. [Note: Since publishing this list, I have written individual posts about some of these strategy questions so I've updated this list with the links to those other posts.]

  1. What does your business do?
  2. What does your business sell?
  3. What does your business stand for?
  4. What parts of your brand truly reflect your current business?
  5. What parts of your brand do not (or no longer) reflect your current business?
  6. What are the top 10 benefits your business provides?
  7. Who is your perfect customer?
  8. How are you adding value?
  9. What are your products’ or services’ biggest flaws?
  10. How do you define a lead?
  11. Where are your leads coming from?
  12. What demographic are your leads?
  13. How are you creating leads?
  14. How are your competitors creating leads?
  15. How will lead creation change for your industry in the future?
  16. How do you define a prospect?
  17. What is your lead-to-prospect ratio?
  18. What demographic are your prospects?
  19. How is your prospect demographic different from your leads demographic?
  20. How are you turning leads into prospects?
  21. How are your competitors turning leads into prospects?
  22. What objections do your prospects have?
  23. What objections do you NOT have an answer for?
  24. How do you define a customer?
  25. What is your prospect-to-customer ratio (close rate)?
  26. What demographic are your customers?
  27. How is your customer demographic different from your prospect demographic?
  28. How are you converting prospects into customers?
  29. How are your competitors converting prospects into customers?
  30. What has caused you to lose a sale?
  31. How do you define an evangelist?
  32. What is your customer-to-evangelist ratio?
  33. What is your evangelist demographic?
  34. How is your evangelist demographic different from your customer demographic?
  35. How is your relationship with your customers?
  36. What were your 3 most successful marketing campaigns?
  37. What were your 3 least successful marketing campaigns?
  38. What marketing and sales activities are you using in each stage of your sales funnel?
  39. How do you measure company-wide success?
  40. How do you measure personal and/or employee success?
  41. How are you improving your relationship with your customers?
  42. How can you improve the process for receiving and acting on feedback from customers?
  43. How are you encouraging repeat sales?
  44. How are you encouraging upsells?
  45. Who else can use your products or services that you aren’t currently serving?
  46. What is your business model?
  47. What other peer-businesses use the same business model?
  48. What can you learn from peer-businesses that use the same business model?
  49. What other businesses (in other industries) use a similar business model?
  50. What can you learn from businesses in other industries that use a similar business model?
  51. Who are your top 3 competitors?
  52. Who/what are your indirect competitors?
  53. What does the most successful businesses in your industry do that you don’t do yet?
  54. Why would someone buy from you instead of your competition?
  55. When should someone buy from your competition instead of you?
  56. What are your competitors doing differently?
  57. What are your competitors doing better than you?
  58. What are your competitors doing worse than you?
  59. How are your relationships with your suppliers/vendors?
  60. How can your supplier/vendor relationships be improved?
  61. What does your organizational chart look like and what strengths/weaknesses are the result?
  62. What are the next 3 roles you need to hire for?
  63. What was the last thing you tested in your business?
  64. When was the last time you tested a price change and what were the results?
  65. What political changes do you see affecting your business/industry?
  66. What economic changes do you see affecting your business/industry?
  67. What social changes do you see affecting your business/industry?
  68. What technological changes do you see affecting your business/industry?
  69. What financial best practices have you implemented?
  70. How have buying habits changed in your industry?
  71. What trends are influencing buying habits?
  72. How will buying habits change in the future?
  73. How has your industry innovated in the past decade?
  74. How has your business innovated in the past year?
  75. Where does your business plan to innovate this coming year?
  76. How are you investing in your business’ growth (i.e. innovation, new equipment, etc.)?
  77. What is your plan to scale up your business?
  78. If you had to get rid of 90% of your customers, what 10% would you keep?
  79. If you kept 10% of your most profitable customers, what would that demographic look like?
  80. How can you increase your ideal customer base?
  81. How can you decrease your less-than-ideal customer base?
  82. Where are people talking about your business online?
  83. What are people saying about your business online?
  84. What is your plan if your industry suddenly received a lot of bad press?
  85. What is your plan if your business suddenly received a lot of bad press?
  86. What is your plan if your marketing went viral and you suddenly had 10x the customers?
  87. What contingency plans do you a have in place for natural disasters?
  88. What would happen to your business if you were unable to work?
  89. What has changed about your business since you started?
  90. How has your income trended since you started?
  91. How has your profit margin trended since you started?
  92. What plans do you have to increase income next year?
  93. What plans do you have to increase profits next year?
  94. Where do you see your business in 1 year?
  95. Where do you see your business in 5 years?
  96. Where do you see your business in 10 years?
  97. What strengths/assets can you leverage for growth?
  98. Where are your blindspots?
  99. What are the top 3 problems keeping you from advancing to the next level in business?
  100. What about your business, industry, or customers keeps you awake at night?

Case study (part 3): Looking for opportunities in the sales funnel

By Aaron Hoos on March 25, 2012 in Business

In a previous blog post, I showed you how to draw your sales funnel. I showed you the sales funnel for a typical (but made-up) business.

Opportunities in the sales funnel

Now, I’m taking that same made-up business and using it as an example case study to show you how to find new opportunities to run a more successful, profitable business.

One way you can optimize your sales funnel is:

Reduce the people who fall out of your sales funnel

There’s a reason that a sales funnel is funnel-shaped. Lots of people come into your funnel from the top but only a few make it to the bottom. Everyone else either drags their heels or finds some other way to solve whatever problem that your product or service solves. So, I guess a sales funnel is actually more like a sales sieve!

It’s okay that SOME people fall out of your sales funnel. You don’t want or need everyone to buy from you. But you should try to keep more people in your funnel than you have been. Some people need a longer-term relationship before they are willing to buy.

So, one of the opportunities we can see in this case study sales funnel is to add some “stickiness”… something that keeps people in the loop if they aren’t ready to buy just yet.

Email newsletters and autoresponders are perfect for this. They offer you an easy way to capture some basic information and then stay in touch.

Here’s what I would do to integrate an autoresponder into this sales funnel:

  • Measure to see what my close rate is on people who are getting to the ebook landing page… and instead of offering the ebook for sale on the landing page, I’d offer a free newsletter and see if that captures more people’s information. Then offer the ebook in an email.
  • Put the email sign-up form on my home-page and make that my primary offer. Get people signing up to it.
  • Create a special email sign-up page just for people from the Chamber… an exclusive list that keeps them up-to-date on my speaking and answers questions about what I do.

By doing these three simple things, the business would capture more leads and prospects and keep them in a holding pattern. The ones who were going to buy would buy anyway but the ones who weren’t going to buy right away would be nurtured until some of them were ready to buy.

Case study (part 2): Looking for opportunities in the sales funnel

By Aaron Hoos on March 22, 2012 in Business

In a previous blog post, I showed you how to draw your sales funnel. I showed you a fictional (but pretty typical) business and drew a sales funnel around it.

Opportunities in the sales funnel

Over a few blog posts, I’m going to show you how you can examine the sales funnel you’ve drawn to find new opportunities to run a more successful, profitable business.

One way you can optimize your sales funnel is:

Reduce the number of steps in the sales funnel

Although there is a limit to how fast people will move through your sales funnel, there are ways you can speed up your sales funnel by reducing the number of steps in it.

The sales funnel (above) we’ve drawn for the case study is already pretty minimal (many businesses have much more complicated sales funnels than this!). There aren’t a lot of steps that move people from one stage to another but there ARE things we can do.

One opportunity to streamline this sales funnel is to stop splitting traffic between the homepage and the landing page. Since the landing page is the page that sells the ebook, and (presumably) ebook revenue is a key way for this business to make money, there is a risk that only a portion of potential ebook buyers are actually getting to the landing page. The ones who are sent to the landing page from articles get there (obviously) but other marketing efforts are sending potential ebook customers to the main page where they have to navigate to the landing page.

So two solutions to this problem are:

  1. Sending more people to the ebook landing page instead of the homepage
  2. Moving the ebook sales letter to the homepage

The other opportunity to reduce the number of steps in the sales funnel is on the right-hand side: Face-to-face marketing at the Chamber of Commerce leads to a contact (email or phone) and then signing a contract. But this can be improved further to save the business owner time and freeing up to allow more marketing and delivery.

A couple of solutions include:

  1. Automating the contact stage with a website that answers questions and provides a downloadable contract to sign
  2. Outsourcing the contact stage for 24/7 coverage
  3. Stop sending people to the website

Neither of these ideas might seem like much but even a slight increase sales funnel speed can increase your business by moving more people through, faster. (Plus, a streamlined sales funnel frees up more of your time to focus on other things).

Stay tuned. There are many more opportunities we can derive from this sales funnel.

Case Study (part 1): Looking for opportunities in the sales funnel

By Aaron Hoos on March 20, 2012 in Business

In a previous blog post, I showed you how to draw your sales funnel. I led you through an example and we ended up with a fictional sales funnel that looks like this. (Even though it’s fictional, it’s pretty close to many real businesses… but just simplified a bit).

Opportunities in the sales funnel

In the next few blog posts, I’m going to show you how you can examine the sales funnel you’ve drawn to find new opportunities to run a more successful, profitable business.

One of the first things we can ask as we look at our sales funnel is:

What do we do with someone AFTER they become a Customer?

Our example sales funnel doesn’t do anything with these Customers. But customers have already decided that you can solve their problems and they have seen the value you provide them. So you should follow up with your Customers and offer them new products and services.

New products and services might come in the form of…

  • Ancillary products and services that are sold at the time of the sale
  • Upselling the Customer into bigger and better versions of the products or services they just bought
  • Cross-promoting the products and services of complementary service providers using affiliate marketing
  • Selling additional products and services in a follow-up sequence

A great place to start is to use the tool I describe I this blog post: Product development, pricing, and sales funnel strategy made easy. It’s a simple way to find new products and services that fit within your existing offering!

To use the example that we’ve been working on: Perhaps the business can offer basic, intermediate, and advanced ebooks instead of just one ebook; or perhaps the business can sell the coaching and offer the ebook plus a workbook for a slight additional cost; or maybe the business owner can turn the ebook into a print book and sell it at the back of the room during the seminar; or maybe if the business owner presents several different seminars on different topics, they can record them and offer them as a package to ebook buyers.

Another thing you can do in your sales funnel is turn your Customers into Evangelists. For the same reasons that they might buy from you again, they might also tell their friends about your business, too. You can make it easier for them by asking them to tell their friends or even by asking for their friend’s contact information. And you can make it even easier for them by incentivizing your customers with kickbacks if their referred friends buy from you.

Stayed tuned. There are many more ways to find new opportunities in your sales funnel.

Is the ‘CSI effect’ hindering your success?

By Aaron Hoos on December 6, 2011 in Business

If you are a financial advisor or real estate professional, a condition very similar to “the CSI effect” could be hindering your success.

WHAT IS THE CSI EFFECT?

The CSI effect is a problem faced by the justice system when juries place too much faith in fingerprints and DNA evidence. It’s called “the CSI effect” to suggest that forensic shows like CSI (and others) are tainting real-life juries by making them believe that forensic evidence is easy to obtain, can be processed by a lab in hours, and decisive beyond a shadow-of-a-doubt.

Although the CSI effect is just a hypothesis, it does raise the issue that today’s media might be making everyone an expert.

WHAT DOES THE CSI EFFECT HAVE TO DO WITH YOU?

You might not be prosecuting criminals but you might be impacted by the CSI effect anyway… or, at least something similar. Our prospective clients have access to all kinds of information — from us and from others; on TV and the web. There is no shortage to the information that they can access.

Unfortunately, it has made “amateur experts” out of many clients, turning naive homebuyers into superstar DIY real estate agents and untrained investors into the next Jim Cramer.

Let me be clear about something before you read any further: Savvy clients are good. I’m not proposing that financial and real estate professionals would be better off with clients who couldn’t tell their left hand from their right hand. The root of the problem is NOT that they have access to lots of information to make better decisions. Rather, the root of the problem is that they have no filter to help them navigate the complicated world of real estate or investing.

They’ve been empowered and informed but not equipped.

The result is: Real estate professionals are finding lots of people going the list-it-themselves route or are assuming that they are expert househunters. And financial advisors are finding lots of people who leave voicemails on the advisors’ office overnight because of some great stocks they found while browsing online.

WHAT YOU CAN DO ABOUT IT

This is tricky. You don’t want to belittle them by telling them that what they know is wrong, nor do you really want to validate that their unsorted knowledge is a replacement for your expertise.

What clients really need is structure. They need decision-making systems. They need rules. They need ways to synthesize their information. They need frames. They need order. They need taxonomies. They need context. They need the bigger picture.

Right now, your clients are looking at splotches of paint on canvas; you need to help them step back and see the entire painting.

Here are some ways to work with your clients to counter the CSI effect:

  • When writing your blog, make sure you use categories (or some other sorting system) that make sense in the bigger picture.
  • In all of your marketing, make sure to highlight that the one piece of information you’re expressing is a single cog in a giant piece of machinery.
  • Prepare information, verbal and written responses, and proactive marketing to address the reality that some of your clients will tell you about something they saw on TV or the web that doesn’t mesh with what you do. (For example, a normally conservative investor tells a financial advisor about a speculative stock they just heard about from a friend on Facebook).
  • If you’re looking for a great idea for your next downloadable document, consider a “big picture” ebook that your users can use to sort out the huge, unsorted mass of information available to them on the web.

I believe the CSI effect is real… and it’s affecting more than just the justice system. I think many of my financial and real estate clients are facing a similar situation.

But I also think that this is an opportunity for you! Rather than joining the ranks of real estate and financial advisors who ONLY give out unsorted, unfiltered information, why not become the professional who helps prospective clients MAKE SENSE OF IT ALL.

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