A sales funnel is a visual representation of the steps required to sell your products or services. A sales funnel should reveal how many prospects you have in each stage of your sales cycle, and also detail your conversion rates for each stage. There are four key metrics that can measure the health of your funnel:
Describe the stages of the customer experience of the sales funnel
Stages
a) Awareness
b) education
c) repertoire
d) consideration
e) purchase
Regardless if you are trying to sell a very simple or a very complex product or service, the customers you are trying to target don't usually go from not knowing about you at all to purchasing from you immediately.
Instead, you have to take potential customers on a journey of discovery, evaluation, and eventually developing a purchase intent on their own time. Only then will you successfully close a deal and win a new customer.
You know this journey under the term “sales funnel,” which is divided into distinct phases, each of which require sales and marketing personnel to optimise it for a more positive customer experience.
Let’s take a closer look at how you might do that.
Phase 1: Qualifying the lead
First, you have to answer one simple – yet challenging – question, “Who is your target market?” This is where your marketing staff can help you define a “persona", which perfectly describes how your ideal customer would think, act, and purchase.
Phase 2: DiscoveryThis crucial information can take a lot of time to determine, but it informs every single stage of the sales funnel that follows. The more you know about your target persona early on, the easier it will be for you to optimise their experience as they go down the sales funnel – and ultimately to make a sale.
In this stage you will most likely still work closely with the marketing department as you will execute campaigns and promotions that will help your target customer discover your product.
To optimise the user experience during this important discovery phase, consider who you are targeting and where they are located at the time of being exposed to your product. With the increasingly fragmented market environment of thedigital age, in which consumers are spread across a wide range of digital devices, it is as challenging as it is critical to prepare various campaigns tailored to the different platforms and viewing behaviours of your customers.
Phase 3: Interest and evaluation
Once you have a potential customer hooked, it is time to provide her or him with enough information to further their interest and help them evaluate the product (to your advantage, of course).
Similar to the tailored marketing campaigns mentioned above, it is essential to customise the user experience in a way that provides potential customers with a feeling of familiarity and trust. You can help keep your customer engaged, for example, with related products or recommended “tips and tricks” articles that show how much you care.
Help them appreciate the value of your product by anticipating the questions they might ask and providing the answers before they ask them.
Phase 4: Intent and solution
Now it is time to provide potential buyers with the strongest arguments for why they should purchase your product. Your arguments can be strong now, because you have learned about the customer’s interests and preferences in phase 2 and 3.
Be specific, kind and helpful. If you can afford it, offering customer service either over the phone or via chat online is a great way to wipe out any last doubts the buyer might have.
Phase 5: Closing the deal
As a final offer and convincing argument to make a purchase, here is where you might bring up discounts, promotions or other deals. Make it irresistible and let the customer feel that they were the ones who “negotiated” or discovered the final offer.
Optimising the customer’s experience in this final step can be accomplished by making her or him feel like a hero, who got a better deal than everyone else. Also, now that you have a commitment, simplify the payment process as much as possible, which means keeping email sign-ups and endless credit card forms to a minimum and offering easy-pay solutions like PayPal or Apple Pay.
If you have done your homework in phase 1 and know exactly who you are targeting, you will notice that the rest of the sales funnel can be smooth sailing. The most important thing is to always put yourself in the customers’ shoes and ask yourself, “How would I feel or respond?”
Explain the effects of a range of factors on sales funnel conversion ratesFactors
a) Consumer life cycle:
In customer relationship management (CRM), customer life cycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service.
Marketing analysts Jim Sterne and Matt Cutler have developed a matrix that breaks the customer life cycle into five distinct steps: reach, acquisition, conversion, retention, and loyalty.
In layman's terms, this means getting a potential customer's attention, teaching them what you have to offer, turning them into a paying customer, and then keeping them as a loyal customer whose satisfaction with the product or service urges other customers to join the cycle.
The customer life cycle is often depicted by an ellipse, representing the fact that customer retention truly is a cycle and the goal of effective CRM is to get the customer to move through the cycle again and again.
b) quality of marketing activity:
Some are the most impotent marketing activity:
1.Doing market Research
2. Identifying the need in the market.
3. analysis of the market trend.
4. Branding
5.Advertising.
c) quantity of marketing activity:
How to review your marketing activities
Make time to review your 2017 marketing activities
Before you start to plan your marketing activities for 2018 it’s really helpful to understand what worked and what didn’t during the previous year. This will help you to make some important decisions, such as:
- Stop wasting time and money on activities that are not delivering a return
- Come up with ways to improve activities that are showing a degree of success
- Continue with activities that are working well
- See the gaps! What haven’t you tried that could make a difference in 2018?
Did you achieve the marketing results you were hoping for?
This obviously assumes that you set goals in the first place! Or perhaps you had a gut feeling of what a good result might look like, but didn’t quite get around to writing it down! It’s certainly true that what gets measured gets done. You want to avoid getting to the end of the year just to find out that a particular activity hasn’t been working. You could have reacted much more quickly and rectified the situation or avoided throwing money away.
How can you measure marketing success?
Here are some methods you could use to measure the results of your marketing activities:
1. Firstly take a look at the financial return. You might measure this by value of sales generated from:
- Each networking group you belong to
- Pay Per Click
- Website sales (or enquiries that converted to sales)
- Telemarketing (leads that converted to a sales)
- Exhibition etc
To obtain this level of detail you need to track where your leads have come from during the year. This could be your second marketing measurement.
2. Number of leads generated through each marketing activity as per list in No. 1.
You might then want to look at each marketing activity in detail. So your third marketing measurement might be:
3. Review each marketing activity
- Number of website visitors month by month
- Number of contacts added to your email marketing system
- Number of click throughs to your website generated from your newsletter
- Number of new pages added to your website (article/blog posts)
- Number of visits to your website from your Social Media channels
- Number of networking meetings attended and follow up meetings booked
Building relationships is important in most businesses and a crucial step to gaining a customer. The results in No. 3 are an indication of how engaged you are with your contacts.
There may be some eye opening facts that come out of this exercise! I’ve witnessed several ‘bing’ moments when going through this exercise with clients.
Making better marketing decisions for 2018
Having reviewed your marketing activities it will certainly help you to make informed decisions for 2018.
As an example when a networking membership comes up for renewal you will know exactly the return that it brings to the sales of your business and whether it makes good sense to renew. Perhaps it’s time for a change? If that’s the case you will want to ask yourself why it hasn’t worked as you’d hoped it would. Is it the organisation or perhaps your approach could do with refining?
As a marketing-centric web designer, I often find myself explaining to prospects and clients about how “web design” (when done right) is actually more about “marketing” than design.
The problem is that many small business owners don’t know where to begin when it comes marketing their business and tracking their efforts. They shoot from the hip, trying different things, not ever knowing what the return on investment actually is.
As a business owner you don’t also have to be a marketer, but understanding a few important metrics about your sales funnel can help you direct your efforts sensibly, without throwing your money away on advertising that doesn’t bring a return.
What is a Lead?
In marketing terms, a lead is any person or entity (as in a business) that is potentially interested in purchasing your product or service. Some leads are going to be better than others.
A “hot lead” might be more qualified (more ready to buy) than say a “cold lead” that needs more convincing before pulling the trigger. For this reason, a hot or warm lead would be understandably more valuable to you than a cold lead… But how valuable?
We’ll explore the value of a lead more in-depth in a bit, but first let’s talk about conversions.
What is a Conversion?
A conversion is any action that you define. It could be a purchase, an old fashioned phone call, contact form submission, newsletter signup, social share, a specified length of time a visitor spends on a web page, playing a video, a download, etc.
Many of the small businesses that I meet only have a gut-sense of where their new business comes from because they haven’t been tracking conversions.
Knowing your conversion rate(s) is a first step in understanding how your sales funnel is performing and what marketing avenues are giving the greatest return on investment (ROI).
Conversion Rate and How to Calculate It
Once you have defined what conversions you want to track, you can calculate the conversion rate. For the purposes of the following example, let’s call a conversion a sale.
Even if you’re still in the dark ages without a viable website, as long as you are tracking the number of leads you get and the number of resulting sales (conversions), you can calculate your conversion rate like so…
Conversion Rate = Total Number of Sales / Number of Leads * 100
Example: Let’s say you made 20 sales last year and you had 100 inquiries/ leads. Your sales to lead conversion rate would be 20%.
If you’re tracking conversions from website leads, your formula looks like so:
Conversion Rate = Total Number of Sales / Number of Unique Visitors * 100
Example: If you made 20 sales in a month and you had 2,000 unique visitors to your site, your conversion rate would be 1%.
What is The Value of a Lead?
The value of a something, is what it is worth to you. If you sell lawn irrigation systems at an average price of $2,000 installed and you turn a lead into a sale, then that lead is worth $2,000 to you.
However, we know that not every lead you get will end in a sale. In reality you might only turn two out of 10 inquiries into a sale. That would make your conversion rate 20% (2/10 * 100 = 20).
That means you can expect to generate about $4,000 from your 10 leads (2 sales @ $2,000 ea). That’s because we know on average you are closing 2 out of 10 sales, a 20% conversion rate. This means that the value of one lead is actually $400 (4,000/10).
Here’s the formula:
Lead Value = Value of Sale / Number of Leads
The previous example is a bit simplistic and you can get much deeper with this stuff. As we discussed earlier, some leads will be more qualified than others and we will also want to look at what the actual profit is – not just the revenue. More on that in a minute.
Why The Value of a Lead Becomes Useful
When you know what the value of a lead is, you can determine how many leads you need each month to sustain your business and how much you should pay for advertising. This is true whether you are using pay-per-click (PPC) or any offline advertising like mailers or print ads.
Conversions Needed = Desired Revenue / Lead Value
Example: Let’s say you need to generate $15,000 per month to float your irrigation business. Based on your conversion rate of 20% (2 sales / 10 leads x 100 = 20) from the previous example, you already know that each lead is worth about $400 (4,000/10).
This means, you would need about 37-38 leads per month (15,000 / 400 = 37.5) to make about 7-8 sales ($2,000 ea) and generate $15,000 in revenue.
(Note: This is a very simplistic example using revenue generated. A more accurate option would be to use the profit generated by sales and not just the revenue, but many businesses have difficulty defining this number so we use revenue as a guide.)
Example: If each sale of $2000 actually costs you $1000 to deliver, the profit on each sale is really $1000. To get a return on your advertising spend you’ll actually need to generate 75 leads to reach your $15,000 monthly goal.
The math:
1 sale = $1000 profit
Conversion rate = 20% (2/10 * 100 = 20%)
Average lead Value = $200 ($1000 * 20%)
Leads needed = 75 ($15,000 / $200 = 75)
Even if you use revenue instead of actual profit, as long as you are constantly tracking these metrics, you will be able to make much more informed decisions.
Understanding your sales funnel, can help you determine the number of leads you need to get each month, how much you can safely spend on advertising and what you can expect in return.
How to Leverage Lead Value to Your Advantage
In the business world things aren’t always so simple. Not all sales are going to be equal. Some sales will be a homerun and others won’t.
Also, the conversion rates are going to be different depending on the traffic source. You may find that leads generated by paid search convert better because you’ve been hyper-focused on your advertising, using keywords with extremely high commercial intent and/or targeting customers that are very local to you.
So with an average order value of $2000 you might see something like this:
This shows that the value of a lead may be different depending on the lead source.
From this, you can see that a lead generated from your paid search campaign is worth more to you than a lead generated from organic search.
If you have Google analytics installed on your site (and you should) you can determine the average lead value and enter this into your analytics goal, then Google Analytics will do most of the hard work for you.
If you just stuff the average revenue value into the goal value, you’ll see highly inflated numbers that won’t make sense, as not every lead generated from the website will actually result in a sale.
Using a realistic lead value as your goal value will give you a clearer insight into how your website is performing.
2.1 describe customer experience of different sales journeys
A customer journey map is a diagram or several diagrams that depict the stages that customers go through in interacting with a company, from buying products online to accessing customer services on the phone to airing grievances on social media.
In order to create effective visual maps that reflect customers’ journeys through these channels, these journey maps must be rooted in data-driven research, and visually represent the different phases your customers experience based on a variety of dimensions such as sentiment, goals, touch points, and more.
To be comprehensive, companies often need to build several journey maps to encompass the various different scenarios and paths that customers may take to engage with a company. So, for example, one journey map may begin with a customer tweeting a comment about a company, product or brand on Twitter, then using the phone to reach a customer service line then using the company website. Another scenario may begin with online browsing, then proceed to a phone call inquiry and so on.
A customer journey map thus helps identify gaps in the customer’s experience, including the following:
- gaps between devices, when a user moves from one device to another;
- gaps between departments, where the user might get frustrated.
- gaps between channels (for example, where the experience of going from social media to the website could be better).
There are important requirements to map customer journeys effectively.
- Focus on customer perspective. The journey map needs to focus on how a customer experiences interactions, not a company.
- Account for customer segments. Account for the fact that different customer segments experience products, brand and service differently.
- Research your maps. Use tools like customer analytics to develop your maps to best reflect your constituencies and their likely behaviour.
- Ensure that maps reflect all touch points. Maps must reflect all potential communication points through which customers want to connect with companies: email, text, website, social media platforms and so on. Maps must also reflect different sequences for these maps, in which customers take different paths.
2.2 select data required to evaluate success Key Performance Indicators (KPIs)
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.
Data (KPI)
a) Page impression
b) unique visits
c) click through rates (CTR)
d) average number of page views per visit
e) average duration
f) sales
g) bounce rates
Explain the importance of statistically significant data
Statistically significant
- Validity
- reliability
- sample size
- usefulness
Describe tools used for tracking data.
Here is a screen shot of how dat can be added to a website to track the pages.
Google analytics gives you a unique ID that you embed within the HTML of your website pages.
Add tracking tools to a campaign
Tools
- Tracking codes
- pixel tracking
- first party and third party cookies
Describe how tracking data is viewed
Viewed
- Analytic reports
- Dashboards
   Describe features of analytic software |
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These days, using social media is a great way to test your marketing campaign topics, themes, format, messaging, length, and anything else that should have been traditionally serviced by a focus group. The key is to test just one element at a time so you can isolate your variables for conclusive results.
3.5 suggest methods for optimising digital marketing campaigns
Don’t set & forget – optimise
The advertising technology available today is providing marketers with more visibility than ever before. This transparency allows for more objective decisions to be made in real time, versus the old world of ‘sound bite surfers’ waxing lyrical in subjective abandon.
It’s time to embrace the data and technology you have available, start optimising your digital advertising campaigns, and squeeze as much ROI from them as possible.
Optimisation doesn’t just happen during your advertising campaign
Optimisation and real-time seem to go hand in hand when thinking about advertising campaigns. However, taking a more holistic view and considering your options before, during and after a campaign will ensure truly optimal results.
With that in mind, below is our ‘holistic view’ on the top 10 tips your business needs to optimise your digital advertising campaigns. We haven’t tried to delve into the depths too much so you can apply these tips to most – if not all – of the online advertising platforms you use to deliver your ads.
1. Focus on profit
There are a lot of metrics you can use to measure the success of your campaigns such as: cost per click (CPC), cost per thousand impressions (CPM), cost per acquisition (CPA), return on ad spend (ROAS), click through rate (CTR), conversion rate and average value order. Often these metrics are reported in conjunction so that you get a clear picture of of each campaign in comparison, allowing you to optimise accordingly. However, while these metrics give you the surface return on investment (ROI) which is important for adaptive campaign management, what is the net profit of each transaction that’s generated? Understanding this will allow for more informed decisions.
For example:
Campaign A – generates a large volume of transactions at a high CTR and low CPC
Campaign B – generates a smaller volume of transactions at a lower CTR and higher CPC
Campaign A delivers a high volume but low value transactions, while Campaign B delivers a lower volume but higher value transaction. Therefore, the surface ROI of Campaign A is the clear winner but Campaign B actually returns the highest net profit. It should be noted here that there could also be additional customer service benefits or cost savings when dealing with a lower volume of deals.
2. From click to customer
Do you know what the complete user journey is like for people clicking on your ads? The last thing you want to do is spend money on targeting and having the right people click or view your business, only to have them abandon the process. Here are some basic steps you can take to start checking your user journey is tickety boo:
What happens when the user clicks through from mobile, tablet or desktop? Are all the pages optimised for the relevant screen size?
What does your landing page communicate above the fold? Do you have a clear call to action?
How fast does your page load?
If the customer abandons the process, what steps do you have in place, eg. re-marketing campaigns or abandon cart/form triggered emails?
If they do become a customer, do you place them into an onboarding process to mitigate churn and stimulate activity?
3. Analytics
Creating a trading room floor mentality to campaign management is crucial to great optimisation, but to do this you need to have your analytic platform set up correctly. Ensure that you have the right analytics platform such as Google Analytics set up correctly and syncing with your own admin system. This will create accurate attribution and reporting of revenue figures against a respective campaign, channel (paid search, organic, email, social, etc), and source or medium.
4. Timing is everything
There is such a thing as ‘right place, right time’ in the world of digital advertising. Sure, you could go out and buy as many eyeballs as possible, but how is that going to allow you to drive budgetary efficiency? One of the key aspects of getting the timing right on a large scale is understanding what events like school holidays, public holidays, sports, conferences, concerts and festivals might impact your business. Using the PredictHQ web app you can not only get event visibility across the world, you can also understand what events impact your business and when on average customers are most likely to buy relative to that event.
With this timing in mind, you can start to leverage overt and covert marketing tactics as explained here to ensure you’re increasing your ad spend at the right time.
5. Understand who your target audience is
Who are the customers that are buying your product or service? There’s no point trying to sell Sea World family holidays to a male student with no dependents and a penchant for beer. Use the intuitive platforms of today that come complete with a wealth of targeting options to help you zero in on the people you want to target and better-understand your audience, not just in the traditional sense of demographics but also their interests.
6. Landing pages
Having optimised landing pages is a crucial step in generating the best-performing campaigns. So much can be won or lost on your customer’s first click experience. Below are some quick tips about establishing a great landing page:
Put content on the page which relates to your campaign to improve the quality score of your search campaign ads.
Make the landing page relevant. For example, if a user is clicking or tapping on an ad which is for ‘car hire from San Francisco airport,’ send them to a localised landing page that contains elements including but not limited to:
An image of San Francisco airport;
A title which includes the term ‘San Francisco;’
Deals available from San Francisco airport;
Localised content about hiring a car from San Francisco airport (which will also help with your quality score for Google Adwords campaigns).
Clear branding
What content and calls to action are above the fold?
What trust elements do you have on the landing page which validate your brand and reassure the users? Initial elements could include:
User reviews;
Awards or accreditations;
Social media following count;
Number of bookings, transactions or members;
Concise benefits of using your business.
7. Consistency
This is probably the easiest tip but something that is not often followed. What do we mean by consistency? It’s about ensuring that your potential customer has a familiar brand experience all the way through from seeing the hero image on the display ad, to it appearing on the landing page. The tone of voice, colours, logo, and other creative and visual cues you use should remain consistent all the way through the journey. Creating familiarity is a sure-fire way to keeping them on the path to conversion.
8. Abandonment
No matter what you do, there will be times when certain users abandon the process. Even worse is when these users become qualified leads and abandon at the point of signing up or transacting. To mitigate losing the cost spent in getting them to your landing page, try implementing abandonment tactics. This means if the user is either logged in or has completed an email field as part of the process but then abandons, you can trigger an email response.
In our experience, the type of abandon emails that work well follow these basic guidelines (although they can change depending on the product or service your’e trying to sell):
Leverage a platform that sends triggered emails which gives you details of open rate, click rate and allows A/B testing so you can refine what and when you are sending. For us it’s Mandrill – hands down.
Generally send the triggered email within the hour of abandonment. But again, test the timing of the send as this can vary depending on aspects like the average value order of your product.
Less is more. Don’t try and squeeze a lot of information into the email. Clearly and simply include:
A brief message asking if everything is OK and if you can help;
The product or service they abandoned and ensuring that when they click back they are not re-starting their search;
Contact details;
A few basic customer reviews of your business to reassure them.
9. A/B testing
A/B testing (sometimes called split testing) is comparing two versions of a web page to see which one performs better. You compare two web pages by showing the two variants (let's call them A and B) to similar visitors at the same time. The one that gives abetter conversion rate, wins!
You’re probably sick of hearing about A/B testing but there is a reason it comes up so much – it works. If used and quantified correctly in isolation, it can be an exceedingly useful tool for eliminating the subjective and asserting the objective. My only side note is that you should work towards a 95% (or higher) confidence level when assessing the results to ensure they are statistically significant. For extra certainty, build in a margin of error that you must be over to justify implementing the change.
So what should you be A/B testing on your landing page? It could be anything from including a video on your homepage or not, through to simply changing the text on the main call to action button from ‘view now’ to ‘start free trial’. Whatever the tests are, we recommend testing each element in isolation, which means only having one A/B test running on the landing page at any given time.
10. Fail fast
There are myriad advertising platforms out there that promise the world but deliver very little. However, diversifying your advertising platforms is a great way of finding new channels that can deliver higher value ROI than the usual self-service advertising platforms of Google (et al), Facebook, Twitter and LinkedIn, plus third-party players like Marin, Kenshoo, AdRoll, etc. Fortunately, if you implement most or all of the above, then you should be able quickly identify which platforms deliver the most accurate targeting options and in turn generate optimal levels of conversion.
If a certain platform is not delivering the results you want, then you will have the ability to quickly assess and switch off. Likewise, if you find a platform that works for you then you can ramp up ad spend accordingly.
