Sales funnels are the most important part of your business. Get an early glimpse into how they can help your business by reading this early draft excerpted from my Sales Funnel Bible book.
I was tempted to place this chapter later in the book because many people skip over the idea of metrics and tracking. To new entrepreneurs who are eager to crank out the sales, metrics and tracking seem to be huge anchors on passion and productivity.
I used to think that too. When I started my first company, I preferred to spend my time creating and marketing instead of tracking. It wasn’t until that company struggled (and ultimately failed) and I worked in sales for a while that I truly understood the value – and the opportunity! – inherent in tracking.
Metrics and tracking help business owners track the performance of the marketing and sales activities in their sales funnel, empowering them to spot problems before they become serious problems, and even to spot opportunities where greater sales funnel success can be obtained.
Think of your sales funnel like the engine of a car. When you drive your car, various gauges and dials track your car engine’s information (like water temperature and oil pressure and how much fuel is in the tank , etc.). And when you bring your car in for a tune-up, the mechanic hooks your car up to a computer and even more metrics are churned out. Those numbers, codes, and metrics all reveal the state of the engine.
A high-performance engine runs efficiently and the metrics reveal that everything is finely-tuned. When something goes wrong, the metrics can help you (or the mechanic) pinpoint the problem and return the engine to the state of peak performance. And even a simple tracking device like the water temperature gauge can indicate a potential problem before something really bad happens.
Likewise, with your sales funnel, identifying the right metrics and tracking them regularly gives you the best insight into potential problems and potential opportunities and, more importantly, you can make mid-course adjustments before the potential problems become real problems or before those potential opportunities vanish forever.
Let’s use a very simple sales funnel as an example of how metrics work: Imagine someone who uses Google AdWords to drive traffic to a sales page that sells a piece of software. Before deploying their sales funnel, they identify the metrics they want to pay attention to (and this kind of sales funnel lends itself really well to tracking) and they watch those numbers regularly.
Over time, they gain an understanding of how many people they can expect to click their advertisement and then what percentage of those people click the “Buy Now” button on their site. Nice, simple metrics that can be easily monitored.
Then one day they review their metrics and notice a change: AdWords views are the same but clicks have dropped dramatically. Because they were tracking these metrics, and because the metrics suddenly varied from what they were used to, they had something to investigate. Why had the number of clicks dropped?
Without these metrics, they would just notice a decline in sales but not apparent reason (and nowhere to start looking). But with these metrics they could focus on the right problem, allowing them to zoom in on a solution faster and more effectively.
In your sales funnel, try to identify metrics for every step that you’ve outlined. If you have just 3 steps, try to find at least 3 metrics, one of reach step. Even if you have a 10 step sales funnel, try to find a metric for each of those 10 steps. Yes, it won’t be easy and not all metrics perfectly capture all of the information in that step but tying a metric to each step helps you to measure something.
The reason why I’m advising you to try to find at least one metric per step is because a metric that is specific to a step is helpful but a metric that compares one step with another is exponentially more helpful.
The perfect metric is expressed as a ratio or percentage comparing two steps: How many people move from one of the steps to the next in your sales funnel. For example, how many people view your newspaper ad compared to how many clip it out and bring it into your store. Or how many people view your TV commercial compared to how many people visit your website.
Those steps don’t have to be consecutive: You can measure what percentage of your target market eventually become customers, or what percentage of early-stage leads eventually become your most avid referrers.
You won’t always get the perfect metric (and sometimes you won’t get any metric at all) but the closer you can come to it, the better.
Here are some examples of metrics you can use. These are just examples and they are taken from several aspects of a typical sales funnel (so they include marketing and sales activities). Use this list to inspire you and adjust them as necessary:
- Number of people in your target market.
- Number of people viewing your ad.
- Number of people responding to your ad.
- Number of phone calls it takes to reach someone in a cold-calling scenario.
- Number of sales calls it takes to close the deal.
- Number of people who click through your ad.
- Number of subscribers who click a link in your email.
- Number of subscribers who click the first (or second, or third, etc.) link in your email.
- Number of site visitors who click the “Buy Now” button.
- Number of people who contact you prior to making a purchasing decision.
- Number of people who respond to your direct mail marketing.
The list is almost endless and depends largely on the type of marketing and sales activities you do.
This chapter is excerpted from an early draft of my book. Comments and constructive criticisms are welcome. Please be aware that the chapter content and chapter order may change by publication.