What is sales funnel?

During a purchase all customers go through a certain journey, from the determination of their needs to the purchase decision, this journey consists of several stages, all of which are referred to as the sales funnel.

Let’s take a simple example:

During internet research an entrepreneur reads about the effectiveness of search engine optimization and the impact on the long-term increase in sales. Then he inquiries about suitable providers in his area, sends several inquiries, receives several answers, and after few discussions he decides on a specific company. This entire customer journey can be described as a sales funnel.

Why is sales funnel so important?

You can only improve and optimize something if you understand it. Sales funnel consists of several stages and optimizing each stage has an impact on the overall result. You can also quantify your sales process much more easily and define KPIs for the individual steps. In this article we try to explain all parts of the sales funnel in as much detail as possible, provide KPIs for the individual steps and explain the importance of LeadRebel for your sales funnel.

Structure: The stages within the sales funnel

The sales funnel is a process that consists of four stages: perception, interest, decision, action. Here you are reminded of the legendary film where Alec Baldwin explains the idea of the sales funnel in quite detail.

So, think of AIDA: Awareness, Interest, Decision and Action. Each of these steps requires a certain level of expertise from you. Depending on the size of the company, different people are responsible for the individual stages, different external service providers and, of course, different software and success metrics. Let’s go through each step in more detail:

• perception
• interest
• decision
• action

Perception

There are different starting points. In one, customers know exactly what they need and may already be actively looking for the appropriate solution. In other cases, customers don’t even know they have a specific need. For example, nobody had a need for iPads before they came along. As Steve Jobs said: “Some people say give the customers what they want, but that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d ask customers what they wanted, they would have told me a faster horse’. Regardless of where you pick up the customers, they first must become aware of you.

So, the goal here is to increase awareness of your product or brand, be it through PR, search engine optimization, social media, etc. This also applies to products/services that are new and that customers are not yet explicitly looking for. For example, many marketers don’t even know that there is a way to identify their website visitors. Accordingly, you are not specifically looking for such software. But we must meet these customers where they are.

Once the target audience has spotted you, you need to stay on their radar. In most cases, there is no purchase the first time. So, customers need to keep seeing you, hearing from you, so that when it comes to deciding, you’re the first port of call.

The aim here is (if we are talking about the website) to generate as much traffic as possible. So, we define the first KPI: Traffic. Of course, traffic is not just traffic, it can be highly relevant or completely irrelevant. The fine tuning will be done later.

Interest

Interested visitors come to your website more often, stay longer, look at more pages, often start the ordering process and change their mind during the process. In this step it is important to convince the website visitors with the relevant content and interesting offers. The relevant KPIs are length of stay, number of repeated sessions, number of pages viewed per visit, etc. Most analytics tools as well as LeadRebel offer options for optimal tracking of these KPIs.

Decision

At some point customers must decide for or against your products and services. At this point, customers can still be influenced, be it with particularly good customer service, pricing, special offers or a targeted build-up of pressure.

The number of qualified inquiries, registrations, trials, and other comparable customer actions can be used as a KPI.

Action

At the end of the process, the purchase decision is made. If a customer decides against your product, he is not yet lost. A customer can be reactivated via so-called lead nurturing, for example with the help of regular newsletters or information about special offers, etc.

The KPI here is the number of purchases, orders, subscriptions, etc.

An example of a sales funnel

Let’s take a fictional software company. This company generates web traffic primarily using Google ads and search engine optimization. Typical traffic is 2,000 visitors per month. 2% of these visitors contact the company and make an inquiry. Of these 2% (i.e., 40 inquiries), 5% are converted into customer projects. So that means 2 new customers per month:

2000 * 2% * 5% = 2, which means that 0.1% of all website visitors become customers.

In this fictitious example, we can now tweak various points and try to increase the number of customers won each month.

Increase in traffic

Suppose that on average a visit costs 1 euro (as a mix of free SEO traffic and paid Google Ads traffic, where a click costs 2-4 euros). If you want to double the monthly traffic, the company must dig deep into their pockets. Since SEO traffic would be difficult to influence in the short term, you now spend more per click on average, e.g., B. 1.5 euros/click. If the number of acquired customers is to be doubled, 4,000 visitors must come to the website, on average a click would increase by 50%, so a company now spends 6,000 euros per month on traffic. If one paying customer previously cost 1,000 euros, it now costs 1,500 euros. You can do it; But you don’t have to.

Optimize conversion rate of traffic

In our example, only 2% of the visitors showed active interest. What if you increase this number through various measures? There are numerous ways to optimize conversions: A/B testing, better content, call-to-action optimization, chatbots, etc. But suppose the company increased the website conversion rate from 2% to 3%. Then the company gets 60 monthly inquiries instead of 40! 1% increase in conversion rate increased the number of inquiries by 50%. While increasing conversions sounds easier than it is, the leverage is more obvious than just driving traffic.

And the last step

Turning inquiries into customers. In the original example we spoke of 5%. What if you increase that rate to 10%? Here at LeadRebel the rate is 30%! This means that every third trial registration turns into a subscription. But let’s take 10% for the sake of simplicity (which is already an excellent result in many industries). In this case, out of 2000 visitors and a 2% conversion rate, 4 visits are converted into customers. That corresponds to an increase of 100%!

What if you optimize the KPIs across the sales funnel at all three points, we calculate with 4,000 visitors, 3% conversion rate and 10% conversion of inquiries into customers:

4000 * 3% * 10% = 12, a sixfold increase!

It is a theoretical example and in reality, the numbers do not increase linearly (more traffic does not always have the same quality, processing 60 leads is more difficult than 40 and supporting and onboarding 12 customers is significantly more complex than 2. But the core message remains – if you optimize the KPIs across the sales funnel, you have multiple leverage.

LeadRebel in your sales funnel

But where does LeadRebel come into play here? The answer is clear: in the second stage, where you convert visitors into conversions. In reality, the 3% conversion rate is pretty good, not every website can guarantee such a high rate. But even in this case you lose 97% of the visitors and they remain at the level of perception or interest at best (at worst these visitors forget about your existence).

LeadRebel is THE answer to this problem. By knowing which companies have visited your website, you can proactively contact them. A calculation example:

Traditional funnel: 2000 * 2% * 5% = 2 customers/month

Now we make the following assumptions:

• Traffic stays at 2000 visitors/month
• For example, LeadRebel recognizes 20% of visitors, so at the end of each month you have 400 recognized companies.
• Around 50% of this will likely be irrelevant, e.g., B. educational or government institutions, your competition, your suppliers, or existing customers. So, there are still 200 contactable companies
• You contact them and get a worst-case 1% activation rate, so you can convert visitors into customers. That equates to two customers.
• In addition to that, you still have your 2 customers per month, resulted from inbound marketing.

With LeadRebel alone, you doubled the number of monthly customers, and that for only 89 euros/month. If you remember, it has the same effect as triple the Google Ads budget.

Sounds interesting? Then read on.

Build sales funnels

For each stage of the sales funnel, there are dozens of methods to help you grow the funnel. However, it makes no sense to tackle all possibilities at once. Instead, you evaluate the options one at a time, what works stays, what doesn’t gets dropped from the list (or you can try a second time, with a different approach). Here are some ways you can achieve your own goals in each phase:

Sales funnel: achieve visibility

• SEO
• Ads (Google, LinkedIn, Facebook, etc.)
• Social media
• Content marketing
• Public relations
• Referrals / affiliate programs
• Banner ads
• Street advertising
• Word of mouth
• Virality
• Advertising in print media
• etc.

Sales funnel: Build interest

• Retargeting (one-time visitors are targeted with advertising via different channels)
• Offer interesting content
• Helpful tools and solutions
• Cultivate interest with newsletters, pushes, mail marketing, etc.
• Webinars, free training sessions
• Product trials, demo sessions
• etc.

Sales funnel: Influencing decisions

• Conversion optimization
• Social proof (references, press, big names as customers)
• Fast response to inquiries
• Generate FOMO
• Regular and persistent follow-ups
• Short-term offers and promotions
• Face-to-face meetings (bring your own charisma into play)
• etc.

Sales Funnel: Force action

Same methods as above. If you’ve been diligent, you’ve already done most of the work up to here. Sometimes you’re just having a bad day, or someone else is having a better one. But, at the end of the day, the sales funnel is all about the math. When you are in the right market with the right product, your total efforts will yield a predictable result.

Sales funnel KPIs – how to measure success?

The results of your sales efforts must be measurable. If you work based on gut feelings, “it’s working” or “everything sucks,” you don’t notice important changes in the business or in the market until it’s too late. It may be that sales are increasing, but important KPIs are already sending warning signs. If you’re not careful and don’t react in time, sales growth will also go south at some point. On the one hand, KPIs serve as early warning indicators, on the other hand they confirm or reject a hypothesis about the effectiveness of certain channels.

Here is a list of the KPIs that we believe are important for online sales and lead generation:

1. Traffic

Self-explanatory, although the relevance of the traffic is important here. You can see the relevance based on user activity on the website, such as length of stay, number of pages per visit. By the way, on LeadRebel you can also see a video recordings of all website visits.

• Traffic to inquiries or traffic to trial conversion

If you get 1000 visitors a day and 50 of them sign up for a trial, then your conversion rate is 5%.

• Customer conversion rate inquiries/trials

If out of those 50 trials, 5 become paid customers, then your rate is 10%.

• CaC (Customer acquisition cost): Cost of your marketing and sales efforts divided by the number of customers acquired

From the example above: Before the optimization, for 2000 Euros you acquired 2 customers (if we neglect all other costs), then CaC in this example is 1000 Euros. After integrating LeadRebel and paying an additional 89 euros per month (we omit the additional costs for distribution for the sake of simplicity), the CaC is 519 euros.

• Customer Lifetime Value

It describes the contribution margin that a customer realizes throughout his “customer life”. Of course, CLV should be higher than CaC.

You can find these and more KPIs in this article: 10 important KPIs in modern sales.

Sales funnel summary

If you’ve read this article up to here, let us know and you’ll be credited with an extra week of our free trial (three weeks total). Now that you know what role the sales funnel and optimization play in modern sales, you can optimize your funnel step by step, hopefully with the help of our software.

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