sales funnel graphic

Sales Funnels: Psychology and Strategy

In another installment of the Seminar Series by Oahu Online Business, Sid Savara and Andy Fossett talked about sales funnels.  This won’t be a blow-by-blow recap, more a collection of notes.

Why do you need a sales funnel?

Unless you’re selling a low-priced item that people can decide to buy on impulse, most people need to be warmed up before feeling okay with spending money on a high-priced product. So setting up a checkout page isn’t enough. You have to map out a process that leads someone from being a prospect to becoming a buyer.

Andy pointed out how many marketing gurus use a dating analogy (which he finds cliche). But it is really apt. You have to take the prospect through a progression of steps, which lead to the desired outcome. However, the correct next step depends on how familiar the prospect is with you.

For a girl who doesn’t know you at all, asking her to marry you on the first date would be moving too fast. On the opposite extreme, if a girl knows you and has had a crush on you for months, taking her to a fancy dinner might be moving too slow (she wants you to kiss her now, you fool!).

Getting back to funnels. The further along the prospect is in the buying process, the more you can talk about your offer. In contrast, the earlier they are in the funnel, the more you have to focus on education and talking about their problem.

What makes a sales funnel work?

This leads to the concept of effective marketing being to provide the right message, to the right prospect, at the right time.  If a sale doesn’t happen, it’s because one (or all!) of those elements were wrong.

You don’t necessarily need high-tech tools to pull it off, either.  Andy shared a hilarious example, which I dug up an article about:

A Savvy Girl Scout Is Selling Cookies at a Cannabis Clinic in San Francisco

Excerpt:

Looking to drum up some new business, 13-year-old Girl Scout Danielle Lei and her mom set out for a San Francisco medical marijuana clinic on Monday, armed with boxes of Tagalongs, Dulce de Leches and other cookie varieties she and other scouts sell annually.

Any patients at The Green Cross with the munchies didn’t stand a chance. In two hours on President’s Day, Danielle sold 117 boxes outside the clinic — people gobbled up all her Dulce de Leches and blazed through the Tagalongs. According to her mother, Carol, that’s 37 more boxes than what she sold during the same two-hour period outside a small Safeway the next day.

There’s a related idea from the direct mail industry, saying that success is:

50 percent is the list. The audience.

30 percent is the offer. What you’re selling.

20 percent is the copy. The sales message.

Andy said you could have the worst sales copy in the world, but if you’re selling water (the right offer) to thirsty people in the desert (the right list), you will succeed.  On the flip side, the best sales copy in the world won’t sell ice to Eskimos.

Going back to the girl scout example, her mom was a genius. Marijuana makes people hungry for snacks, so sell snacks outside of medical marijuana clinics.  Hits all the right notes. No wonder her daughter sold 117 boxes in 2 hours.

How to design a sales funnel?

Sid and Andy outlined a classic online sales funnel:

Traffic –> Squeeze Page to collect e-mail addresses  –> Thank-you page with next action (sale, connect on social media) –> e-mail follow-up –> offers

This takes advantage of the idea of “micro-commitments.”  Rather than ask for a big action–like to buy something–ask for small actions. First, they’re easier for the prospect. Second, this gets the prospect into a habit of doing what you say. People like to be consistent, so if they get used to saying “yes,” to small actions, they’re more likely to say “yes” to buying from you.

The core principles are universal, and can work offline as well as online. I’ve come up with some simple questions to ask yourself, along with suggestions:

How will prospects find me? Online or offline? Search PPC, Facebook ads, newspaper advertisements, postcards, flyers on bulletin boards, public speaking at associations whose members are my ideal customers, etc.

What do I want prospects to do (so I can follow up with them)? Give me their e-mail address, call me to set up an appointment, request a price quote, schedule an on-location evaluation/inspection, etc.

What can I give them for free to build trust and authority? E-book, printed buyer’s guide or consumer awareness guide, seminar, workshop, 1-on-1 consultation, free evaluation, first class is free (or just charge a low fee like $10.00 to weed out tire-kickers), etc.

How can I make the first purchase easier? First-time customer discount, longer money-back guarantee period, free servicing or extra coaching, if they’re not satisfied then I’ll pay for them to get the same product/service from somewhere else (gutsy move!), etc.

How to maximize lifetime customer value? Instead of thinking, “What else can I sell them?” think “What else do they need to get to the next level?” Then offer that. Higher-end training to take a customer from beginner to advanced (think of those colored belts for martial arts), tools that make the work faster and easier, done-for-you services, personalized consulting, etc.

Answer these questions, and you can start to sketch out a sales funnel strategy to suit your particular business, your market and your customers.

For more, here’s a fine presentation by HubSpot: Optimize Your Sales & Marketing Funnel (PDF). Note that they’re a software company, so this presentation is aimed more at software companies selling business-to-business.

Beware the hidden funnel that robs your time

Sid explained that there are really two funnels that spring up when you start doing business.  The first is “The Sales Funnel”: people visit your site, opt-in to your e-mail list, buy and repeat buy.

The second is what he called “The Discussion Funnel.” These are the people who are visitors, readers, commenters and social sharers. They’re great for promoting your brand, and stroking your ego. While there might be some overlap with your sales funnel, the people in the discussion funnel usually are not buyers.

He cautioned that it’s really easy to fall into the trap of serving your discussion funnel, and thinking you’re being productive and working on your business. “I’m getting e-mail replies, Facebook likes and re-tweets, these people love me and will totally buy from me in the future, right?”

The bigger danger is you might turn off the silent sales majority, who would have bought from you, but now won’t because you’re not catering to their needs.

How do you tell the difference between the buyers and non-buyers?

Andy revealed an easy test of whether someone was a tire-kicker or a hot prospect. If a tire-kicker e-mails you, they tell you what they want, and don’t give away anything about themselves. Example: “Yeah, I’m looking for some great free abs exercises.”

He said a potential buyer will give personal details about themselves. Example: “I’m a busy working mom and only have about 30 minutes a day to work out. Do you have something that helps with that?”  This is someone you want to follow up with.  Ask for more details about their situation, then recommend whichever of your products is the best fit.

Market to the customers you want, not necessarily the ones you’ve got

An attendee asked a good question: “I want yoga teachers to be my customers, but I’m getting a lot of yoga students. What should I do?”  This sparked a terrific discussion about choosing your customers, not letting customers choose you.

I think because a lot of us are nice people, so we don’t want to turn people away. But that’s something you have to do. You don’t have to alienate them, just be like, “I don’t think my stuff is the right fit for you now.” We only have so much time and resources available, so you should be focusing on your ideal customers and most qualified prospects–even if you don’t have them yet. As you get more traffic, you’ll be ready for your best buyers when they land on your site.

Sid talked about some friends who had a podcast. For whatever reason, it attracted a lot of self-loathing, needy people.  The hosts changed the focus of the podcast to address them. However, over time, this made the podcasters miserable. The podcast wasn’t fun to do anymore!

You might even want to make a list.  Think to yourself, “Here are the characteristics of customers I want, and of customers I don’t want.” Here are examples.

Good Customer

  • Aware they have a problem.
  • Has money.
  • Willing to buy products or hire services to solve their problem.
  • Prefers to save time over money.
  • Believes in you, is compatible with you.

Bad Customer

  • Unaware they have a problem.
  • Does not have money.
  • Not willing to buy; wants to do everything themselves and for free, or at the lowest cost.
  • Prefers to save money and waste your time.
  • Does not believe in you, constantly compares you to competitors.

The next time an e-mail comes in, you can make a faster decision on how to deal with that person–or whether to not deal with them at all.

What I liked about this discussion was that you’ll not only make more money, but also have more fun interacting with your tribe and increase your quality of life.

Tools, Tools, Tools!

Landing Page Creation

LeadPages

OptimizePress

Unbounce – allows more customization, but more difficult to learn.

OptinLinks – this actually a WordPress plugin that only creates opt-in forms, not full landing pages.  You can do more customization with it if you’re a programmer.

E-mail Marketing

Just e-mail: simple autoresponder and e-mail broadcasts

Aweber

MailChimp – careful, they can be strict!

Mad Mimi

GetResponse

Intermediate: lightweight marketing automation

Drip

Advanced: all-in-one CRM software

InfusionSoft

Ontraport (formerly Office Autopilot)

ActiveCampaign

Overkill: setting up your own mail server. If your e-mail list is so huge that your provider is having deliverability problems sending out your e-mails, then it might be time to do this. Requires more money, hiring programmers, etc.

Self-hosted e-mail software: Interspire, arpReach, Sendy (only works with Amazon SES)

E-mail delivery services: SendGrid, Postmark, Mandrill, Mailgun, Amazon SES

Hosting: Linode, Amazon AWS

Does it all (?)

ClickFunnels – This is a new tool that looks promising. It’s an attractive proposition: using only one platform for your whole sales funnel (except for e-mail marketing, but it integrates with popular e-mail services). Nice to not have to worry about integrating multiple programs. However, I’m wary of applications that try to do everything.

Examples and Case Studies

12 Best Sales Funnel Examples to Help Your Website Convert More Customers – Great post that uses examples of how other online companies have designed their sales funnels.

Further Reading

Influence: The Psychology of Persuasion by Robert Cialdini – After reading it, you’ll feel like Neo at the end of The Matrix: you’ll be able to see these weapons of influence when they’re used by advertisers.

DotCom Secrets: The Underground Playbook for Growing Your Company Online by Russell Brunson – This Internet marketer breaks down the funnels that have worked for him. It’s like a $25,000 private coaching session in a book.

How to Build Websites that Sell: The Scientific Approach to Websites by Peep Laja. This $4.95 Kindle book is better than a lot of marketing courses that charge hundreds of dollars. It’s meant to be about conversion rate optimization, but the sequencing of the content is a good fit for sales funnels. He has a free blog at ConversionXL, but it’s nice to get his best material together in one place.

Photo credit: Laurie Caradonna / Flickr

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