Aaron Hoos

As contacts move through your sales funnel, you nurture a relationship with them. The engagement that comes from that relationship elicits more and more information to help you know whether or not this contact is likely to buy from you.

As the relationship builds, the contact moves out of the Audience stage, where they were simply listening to general ideas about the problem or need they have, and they advance to the Lead stage, where they start taking action to pursue a solution.

But what exactly is a Lead? Is it a name? Is it an email address? Is it a telephone number? Is it an affirmation that they are interested in what you have to sell?

I believe that a Lead is a sales funnel contact who has realized just how acute their problem or need is and is starting to search out a solution. They’re willing to exchange a little bit of information about themselves in order to see if you could be one of the potential solution-providers to meet their needs. But what information you collect from them depends on your business.

I recently read an article that was published back in December 2009 (but the good stuff is always timeless!). In the article, Eric Rudolf proposes the difference between “a name”, “a lead”, and “an opportunity”. His article nicely bridges the gap that the marketing department and sales department often try to communicate over.

Summarizing what Rudolf says…

• A name is just a name with no context.
• A Lead is a name and contact information of someone within a target market who has expressed interest in learning more.
• An opportunity is a name and contact information of someone within a target market who has expressed interest in learning more, and has a budget, and is an decision-maker.

Those are pretty good definitions. And if I were to look at those and then compare them to how we understand sales funnels, I would suggest that a name is a contact from your Audience stage, a Lead is a contact from your Leads stage, and an opportunity is a contact from your Prospect stage. And this matches with what Rudolf is saying — an opportunity is the warmest and most likely to buy.

So what should you do? It doesn’t matter whether you work alone or have a big marketing department and sales department. You (and/or your team) need to get names in the Audience stage and then nurture the relationship into a Lead. Then, nurture the relationship into a Prospect. Once you’re there, the contact is ready to be sold.

Read Eric Rudolf’s article Is it a Lead or not? A marketer’s guide to communicating with sales.

As consumers, we all happily go about our merry little lives, until we realize we need or want something. Then we’ll consider buying it. But until then, everything is status quo.

For businesses, status quo is a big problem. New start-ups build businesses and then wonder why people don’t buy — it’s probably because the customer didn’t realize that they needed the product or service (and they were content with the way things are).

The purpose of a sales funnel is to help people see that the status quo isn’t as good as life with your product or service. And it’s a sales funnel (not a single sales event) because you don’t move people instantaneously off of the status quo. You need to gently nudge them away from the status quo toward a sales with baby steps.

Marketing consultant Matt Heinz offers a great blog about consumer complacency and satisfaction with the way things currently are, and he lists four problems that businesses have with fighting against the status quo. Briefly, his four problems are:

1. You haven’t created or communicated enough value for your offering.
2. You haven’t made your solution a big enough priority for your customer.
3. The cost of changing is greater than the perceived benefit.
4. The risk of staying the same is lower than the risk of doing something different.

He also gives ideas and suggestions about how to solve these problems to loosen up the strongholds in your sales funnel.

Check out Four reasons you will lose to the status quo by Matt Heinz and apply his ideas to your sales funnel to win against complacency.

Oh, and don’t miss this: In the comments to Matt’s blog post, someone added a link to a brilliant blog post by Andrew McAfee written way back in 2006 about a phenomenon called “the 9X problem”. In short, the 9X problem that says consumers value their current situation/solution over a proposed one. Read McAfee’s The 9X problem.

In one of my very first jobs, I worked at a gas station. Once I made a mistake at something, and although I can’t remember the mistake itself, I remember my boss asking me: “If you didn’t know how to do it, why didn’t you ask?”

It was the most ridiculous question I’d ever heard because I didn’t know that I didn’t know or else I would have asked! I was doing what I thought I was supposed to be doing, I just did it incorrectly. There was no way for me to know that I was doing it incorrectly and, therefore, there was no reason to ask. As soon as the error occurred, I asked. But my boss couldn’t wrap his brain around that.

Our customers face a similar conundrum: They know they have a problem or need and, in order to search out a solution, they look for what they think is the best solution. But it’s not always the best solution. And that’s why Henry Ford famously said, “If I asked my customers what they wanted, they’d have said ‘a faster horse’.”

I see this in my own business: When I write for a client, I frequently hear something like, “we need to have more content in more social media.” But that’s not true. Businesses don’t need to access ALL social media to be successful. They need to say the right things to the right people in the right social media.

All businesses see some type of customer response like this. The customer does their best to figure out what solution is needed based on their perceptions of the problem. But maybe their perceptions of the problem are completely wrong! Or maybe the solution they believe they need is completely inadequate.

Dutch consultant Robbert-Jan Van Oeveren wrote a great blog post about uncovering what our customers are really after (even if they don’t know it themselves). He talks about how today’s businesses have the opportunity to put the customer at the heart of their organizations, and he offers some ideas (and a very useful graphic) to describe what businesses must do to understand what customers want.

Use Van Oeveren’s blog post as a starting point to rethink what your customers want. In fact, move beyond just thinking about customers and consider everyone in your sales funnel: Are you communicating to people at each stage of your sales funnel in a way that connects with what they are REALLY looking for?

Read Van Oeveren’s blog post here: Designthinking: How to convert need into demand.

My wife was invited to one of those “home parties” today; the kind where a host invites friends to attend a party and a consultant is there to demonstrate and sell a product.

Tupperware is the well-known pioneer in this field, but others have joined the fray: Norwex, Epicure, Creative Memories, Partylite, Pampered Chef. There are others, but these are the ones my wife has attended in the past year or two. (Disclosure: I love Epicure’s Jamaican Jerk seasoning).

There’s a reason that there is a surge in the number of home party-based businesses: They work! They have an absolutely brilliant sales funnel that simply cannot be matched by any other sales method.

THE BRILLIANT HOME PARTY SALES FUNNEL
Here’s why these home party businesses have brilliant sales funnels:

First, the sales funnel is very simple: “Call a friend”. The rep calls friends and asks them to host a party. The host calls their friends to the party. That’s it. The business grows from there.

Second, the sales funnel grows organically: Let’s say the rep calls 5 people and 3 of them host a party with 7 people attending each one. The 21 total party-attenders not only buy but they are also invited (and incentivized) to host a party. If 2 people from each party say yes, that’s 6 more parties. If those 6 parties each have the same number of attendees, and each party has 2 people who are willing to host, that’s another 12 parties. And on it goes. The numbers really add up.

Third, the sales funnel seems extremely low-pressure: Reps aren’t “selling” or “pushing their products”. Instead, they’re just demonstrating something that is remarkable about the product (like how well it cleans, how tasty it makes food, how creative you can be with the scrapbooking products, etc.). Prospects — the ones sitting around the living room — are just sipping their coffee, connecting with acquaintances, and hearing some good advice. It seems like a great time to connect with friends. What can be lower-pressure than that?

Fourth, the sales funnel is in reality suprisingly high-pressure: Yes, it is high pressure even if the rep is a low-key, no-pressure individual. It’s high pressure because of the pressure of relationships. The attendees see other people buying. They want to make the host happy and they know the host gets a bonus if they reach a dollar threshold at the party. There is usually a discount or bonus if you buy at the party. The products are useful and the rep is usually someone just like the party’s attendees. Bottom line? All of the elements are present to compel a sale (even if the product isn’t necessarily needed).

WHAT CAN YOU LEARN FOR YOUR OWN SALES FUNNEL?

• If you have a product that will work with a home party, give it a try.
• Leverage the power of friendships and relationships (between your prospects and their peers) to sell more products or services.
• Give discounts and bonuses to compel a sale (or more sales), especially if the buyer reaches a certain dollar threshold in the purchase
• Eliminate as much of the pressure and pushiness of a sales as possible (while helping the Prospect to buy)
• Offer a discount if the buyer becomes an evangelist by bringing someone else to you to buy your products or services
• Remember that peer-to-peer word-of-mouth is the most credible purchase-inducing marketing you can possible have. If you can generate lots of word-of-mouth, you can forget all of your other marketing

I hurt my back this fall while playing sports. At first I thought I could just walk it off or ice it, but it persisted: I could barely walk, I could barely sit, and I slept with great discomfort. Fortunately, the doctor gave me some pretty serious meds which, along with some careful exercises, got me to normal.

During the couple of weeks that I was recovering, I noticed something pretty surprising: We use our back for basically everything. Now, maybe that sounds funny to some of you, but it’s something I always took for granted before. I’ve always been in generally good health and only had one minor broken bone, so I never paid much attention to what parts were at work when I was performing various tasks. But once I pulled some muscles all down one side of my back, it became quickly apparent exactly how much my back is involved in everything I do. Even while I sleep, my back is the supporting framework for my body, keeping everything where it should be.

Now, I can stub a toe or get a headache, and I can continue to function without a lot of disruption, and only that part of my body hurts. But when I hurt my back, it was noticeable all the time because of the central role my back plays.

In the same way, your business’ sales funnel should be the “back” of your business! It should be the framework or central element around which your entire business is built. Now, lots of businesses will build their business around an idea or a tagline or a brand. These are important elements, but on their own they do not produce a sale. They are merely tools and resources in a business.

Rather, the one and only part of a business that is as critical to the function of your business as your back is to the function of your body is your sales funnel. Your sales funnel brings in leads and propels people through until they become customers, depositing revenue into your business, which pay the bills and contribute to your profit.

You can take away the idea or the tagline or the brand and you will still have a business. It might not be as attractive or as successful, but you can still operate. However, if you take away your sales funnel, you have nothing. You do not have a business!

So, how should you build your sales business around your sales funnel?

If you are just starting out in business, the answer is easy: With the help of competitive research and strategic planning, you can create a sales funnel that works smoothly and effectively to quickly move contacts through toward a profitable sale. Spend a lot of time and resources up-front to create your sales funnel. Once you have your sales funnel in place, add the other elements in: Tie in marketing across each stage in the sales funnel. Tie in sales activities in the prospects stage of the sales funnel. Tie in customer service activities across each stage in the sales funnel. Tie in purchase fulfillment and accounts receivables at the point where your prospects become customers. Tie in accounts payables and administration to each stage. Tie in Human Resources to all stages, too, so that they are hiring staff according to the activities that need to be performed at each stage.

If you are already running a business and you realize you need to create a sales funnel because you don’t really have one that is strategically designed, you’ll have to retrofit it. That’s okay, I’ll show you how to do it but you’ll have to come back tomorrow to read how!