Lets start here.
For a business owner, a sales funnel is probably the most important marketing tool you have. And yet many entrepreneurs - both new and established - have no clear understanding of what a funnel is or how it works.
As you can imagine, failing to fully understand this critical part of your business means fewer sales, lower profits, and ultimately, an unstable business.
A Simple Sales Funnel.
Simply speaking, a sales funnel is a path that you lead prospective customers through to get to a sale. A simple sales funnel generally consists of free content, which typically requires nothing of your readers. This could be blog posts, YouTube videos, Facebook content, and other information readers can access at no cost. This is the “top” of your funnel.
Next, you’ll have an attractive offer that requires a very small “payment” or investment of sorts - typically an email address. You’ve seen this type of offer on websites, and probably even signed up for some. This is the coupon, free ebook or guide, video series, checklist, workbook, or other valuable content that is available in exchange for “opting in” to an email list.
Once on your mailing list, you’ll then present your readers with a series of low-cost offers or products. Perhaps you have a low-priced ebook or a trial membership or some other introductory product or service.
Customers who purchase your low-priced product move further down the funnel, and are presented with more, higher priced products. As they continue to buy, they move closer and closer to your top-end offers, which make up the bottom of your funnel. Top-end offers can be high-priced programs or services or can even be continuity services (membership programs or maintenance agreements, for example) that offer an extended period of ongoing revenue for your business.
The key is that once you’ve captured their email address, they have given you permission to send them additional information. This is the opportunity for you to build a relationship with them – an opportunity to expand the Know, Like and Trust Factor.
How Your Funnel Works.
If you imagine your funnel as looking like, well, a funnel, it’s easy to see that your free content—at the top—is consumed by the largest number of readers. Below that, your extreme low-cost item (available only for the cost of an email address) attracts a smaller subset of the true freebie seekers. Next, your low-priced products bring in yet a smaller group.
Finally, as you near the tip of the funnel, only the loyalest of fans and customers will purchase your highest priced offers. The tip of your funnel can also represent the recurring customers – the ones with a higher lifetime value.
Your job, as the business owner, is to ensure that your funnel leads buyers naturally from the top, free offers all the way to the bottom. As you think about how your funnel is structured, think about what makes sense for each next step that the buyers are going to take. The more buyers you can keep in your funnel, the more money you will make.
Most new—and even established—business owners can easily envision the top of the funnel, but if you truly want your business to grow, you must master the entire process, and that starts with understanding what a funnel really is and how it works.
Take a look at a recent article where we talked about how you can automate parts of your sales funnel using your website.
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Holly Kile - Marketing Assistant