Have you ever wonder why your online business isn’t making you any money? You’ve spent tons of money to drive traffic to your website, but only a tiny percentage of the visitors actually purchased your products or services. At the end of the day, you end up losing money. Well that’s because you don’t have a sales funnel in place.
What Is A Sales Funnel?
A sales funnel is a structured process of qualifying and converting prospects into consumers, who are willing to pay for what you are offering. There are several steps in a funnel, which differ depending on the sales process involved. Each step in the funnel is designed to bring consumers to the next one, and usually end with customers purchasing the product.
To illustrate, here is an example of a simple sales funnel.
Awareness. Let’s start at the top of the funnel. At this stage, your company is totally unknown to your customers. It’s the first time your lead becomes aware of what you have to offer. In this day and age, that usually means your company’s social media post or website caught their attention. The key thing is to catch their eye in the first place.
Interest. Once you’ve piqued their interest, your prospects will probably do some comparison shopping for similar products, ask for their friends’ opinions, or even check out third-party reviews.
Decision. Based on all the information they gathered in the previous step, your leads will consider the advantages and disadvantages of your product. They would analyze it carefully, keeping mind any questions, issues, or doubts that may arise.
Action. Hopefully, your prospects decide to take action and transform into a paying customer.
As a marketer, your role is to cultivate prospects and guide them through the steps in the sales funnel toward the ultimate goal: a sale.
How Does This Apply To My Business?
Now let’s put this theory to a bit of practice with your ecommerce store for example.
Phase 1 – Awareness: They have found your store via a Facebook or Google ad.
Phase 2 – Interest: You have something that they are interested in. They clicked on the link for your ad and you’ve now got their attention.
Phase 3 – Decision: You’ve got the prospect where you need them, but your sales copy needs to convert them so that they go to the next step.
Phase 4 – Action: The prospect made a buying decision and purchased your product.
If this is your entire sales funnel then it’s probably the reason why you are not making money. While customers find you, you cannot expect them to make a decision on the first encounter. If they just clicked on an ad online to get to your site, you cannot expect them to pull out their credit card a minute later!
If your ad is compelling and your sales copy is persuasive, you might get some customers. However, the conversion rates will be low and you probably won’t make any serious money base on that alone. It’s a common mistake and one that inexperienced entrepreneurs make regularly.
How Can A Proper Sales Funnel Helps Increase Sales?
However, just because you see a negative return does not mean you should give up. The next point is the key differentiation between the experts and newbies… Dan Kennedy a top marketer probably said it best when he stated:
“Whoever can spend the most money to acquire a customer wins.”
You see with online businesses, people who make money, do not really care about losing money up front. They know that they have a proper sales funnel already built. The veterans would still go through the same process as you to get customers, but the only difference is that they know their numbers. Specifically their customer lifetime value.
When it comes to making sales, it’s not just the initial purchase that counts. The secret to profitability is to upsell the customer. And this can be done multiple times throughout the lifetime value of that customer, not just on the initial purchase.
This means you need to build a relationship with them, which does not happen overnight. You need to build an email list and market to your customers over time through email. The goal is get them to come back to you. Why? Because getting a customer who have already purchased from you to buy from you again is way easier than getting someone who have never bought anything from you before.
That customer has already built the trust with you and your business, hence they will much more likely to purchase again if they had a good experience the first time. On the other hand, a new customer will be skeptical of your product or service since they have never done business with you.
If you think about it, you’ll realize that a repeat customer can be consider pure profit as you have already paid the initial advertising costs to get that person to your site the first time. If you sell anything else to them on their second, third or tenth visit, you are not paying to acquire them again.
Let me break it down for you so you see exactly what I mean. Assuming you spent $20 for an ad to get them to visit your store once. If they bought something and you made $5, you’d consider that a loss of $15 right?
Now, if you get them to come back again through an email campaign and they make a subsequent purchase, you won’t have to worry about that $20 cost to acquire the customer. Let assume you were able to make another $45 in profit through multiple subsequence transactions from this same customer. You’ve actually now made a profit of $30 in total for this one customer. Here is the math, $5 profit from the initial purchase + $45 afterwards – $20 acquisition cost= $30 total profit.
In reality, you won’t be able to do that to every customer. Some won’t buy from you again after the initial purchase, some will profit you less than $45, some will profit you more than $45. For simplicity sake, let’s say the average customer lifetime value for your business is $50 ($5 from the initial purchase, and $45 from upsells and subsequence purchases)
That means you can spend up to $50 to acquire a customer without running at a loss. Anything less will be pure profit to you. If you don’t have that sales funnel in place to get them to come back again, your available budget for acquiring a customer without losing money is only $5.
Your competitors will bid up the ad price to more than $5 and take that customer from you. They might lose money up front, but they know they will be profitable in the long run because they have done the homework to calculate the customer lifetime value. And that’s the difference between those that make a profit and those that do not.
How To Exponentially Increase Sales With Sales Funnels
Watch the video below to learn how Russell Brunson is able to outspend companies with hundreds of millions in venture capital and took his company, ClickFunnels, from $0 to $100,000,000 using sales funnels.
Still not sure how sales funnels can help your online business? Check out this exclusive FREE 90 minutes training by Russell Brunson on how you can boost your product sales by an extra 540% with his secret funnel strategy. This presentation alone made him $3 million in sales at Grant Cardone 10X Event last year!
You will learn cool funnel-boosting strategies, like:
- How to Instantly Outspend Your Competitors
- How to Get The Best Sales Person On Planet Earth to Close Sales For You 24/7 Without Ever Complaining, Asking For A Raise, Or Taking A Break!
- How to Get The Exact Same Customers Who are Currently Going to Your Competitors Funnels to Start Coming to Your Funnel Instead!
This training was super helpful for me, so I wanted to pass it along to you for 100% FREE. I don’t know if Russell will ever take it down, but I’d recommend you watch the entire presentation while it’s still available.