Conversion Rate Optimization: Understanding the Sales Funnel

Are you capturing the attention of consumers or prospects with your content? Do they trust you enough to give you their contact information? Will they come back and buy from you again? Knowing how the sales funnel works and what you can do to improve it will take you down the road of success.

Business 101

As a business owner, your goal is to turn a prospect (meaning a prospective buyer) into a loyal customer. Nobody wants to lose a possible customer after putting a lot of effort into the attempt of establishing a relationship. Once you understand the different stages of the sales funnel, it will be easier to find cracks and holes within. The following sections unpack how sales funnel management can help you optimize your conversion rate and build a successful long-term relationship with your customers and website users.

The Sales Funnel

The sales funnel describes the path a customer takes on the way to buying a product or service. It visualizes the typical journey they go through and in which stage of the buying decision prospects are at the moment. As one of the core concepts in digital marketing, sales funnel management can help you to understand your audience and prevent them from dropping out before a sale is made. It is about giving every potential customer the treatment they are looking for. If you don’t understand your sales funnel, you can’t optimize it. What matters most when it comes to a sales funnel is website optimization.

Prospects move from the top of the funnel to the bottom as they become more familiar with what you have to offer. The sales funnel narrows as visitors move through it, and the number of people in your funnel will continue to decrease the closer you get to sealing the deal. It starts at the top with all the prospects who landed on your website one way or another, while the narrow bottom represents loyal customers.

The 4 Stages of the Sales Funnel

Moving people through the funnel can be a challenge. A stratagem to keep in mind is that your goal should be to solve the “problems” of your customers, or potentially make them aware of a problem they didn’t even know existed. Start by creating content that attracts your prospect’s attention, followed by offering an irresistible solution to the problem. All you have to do then is watch the magic happen.

Truthfully, that is easier said than done, but if you follow the four stages of a prospective customer’s mindset, you will reach your goal sooner than later. The different stages can be easily explained using the AIDA (Awareness, Interest, Decision, Action) strategy. To understand what moves a buying decision, we have to take a closer look at each stage and the approach it requires.

Awareness

To end up with a strong bond with your prospect, you have to gain attention first. Depending on how they found you (organic search results, recommendations, advertisements, or just pure luck), people will put different amounts of trust in your business. If you are lucky and all circumstances fall perfectly into place, a prospect turns into a customer immediately. More often though, the awareness stage does exactly what it sounds like; it creates awareness of your business and your products or services. At this point, all you are trying to do is lead prospects into the next stage, which will make them return for more.

Interest

Once a potential customer is aware of you, you need to build their interest. In this stage potential customers are interested in what you have to offer and are doing research or comparison. It is the perfect time to show off authority in your field and support them with helpful content that does not yet try to sell to them. Make sure your message stays consistent throughout the whole process and do not try to push too hard from the beginning. The interest stage should only lead them to be able to make an informed decision.

Decision

For the most part, the majority of people do not like making decisions and, therefore, getting a prospect to make a buying decision is not an easy feat. At this stage, you have to bring on your A-game and make them an offer they can’t refuse. Whether this means offering free premium shipping, a discount code, or a free month of your services is totally up to you; you just have to make sure that your potential customer wants to take advantage of it. Showcasing positive reviews or social proof is another powerful way that you can get people to take action.

 Action

Now your prospect turns into a customer. When he or she purchases your product or takes advantage of your service, that customer becomes part of your business’s ecosystem. But just because they reached the final stage of the sales funnel and the AIDA principle doesn’t mean your work is all said and done. Starting to build a long-term relationship with someone who already trusts your company is easier than starting the sales funnel all over again with a new prospect.

Sales Funnel Management

At this point, you should understand why sales funnel management is so important. Even the best prospects can get lost along the way if expectations aren’t met. It takes time to build a sales funnel that represents what your audience is looking for. The best way to optimize a sales funnel is to start with the results and work your way up. Another point of interest is the timing when people move from one point to the next within the funnel. This can help you find out where, when, and why you’re losing potential customers.

Too slow: New leads are nine times more likely to convert if someone follows up within the first five minutes. On the other hand, a lead is 21 times less likely to turn into a sale after 30 minutes have passed. To react within tight response times like that, you need to implement sales funnel management automation.

Too impatient: It can be tempting to dump a lead that isn’t converting right away and move on to the next. You should ask yourself the question if you are patient enough and if you are following up as much as you should. A marketing automation funnel also helps to stay in touch with the prospect over time.

Too fast: Instead of asking people to buy from you right away, you should cultivate them over time. If you adjust your sales approach to the different stages, you don’t just avoid chasing them away; you also find out what is working and what is a waste of your time.

How can you optimize your conversion rate?

There are countless ways you can improve your conversion rate and turn a “no, thank you” into a “yes, please.” In sales, a no often simply means “not until later” or “try again, I’m just not totally convinced yet.” Any time you encounter problems like that, you can use one or multiple of the following, mostly automated sales techniques, to reach your goals.

Target your Audience

To lead people into your sales funnel, you have to put the right content in front of your prospects. How and where you do that depends on your target audience. Be creative with your content, but make sure it mimics your offer and the call-to-action you are using. Customer relationship management (CRM) can help you track interactions with current and future customers.

Build a Landing Page

A landing page offers content that addresses a specific problem, ideally with a single call-to-action, and should steer your visitor towards becoming a customer. A/B testing your landing pages will help you figure out what your audience responds to best and what language, imagery, or layouts can help you improve conversion rates. Experienced hosting companies like 101domain can help you along the way. Additionally, you can use pay-per-click campaigns to drive traffic to your landing page and contact forms to gain subscribers to a mailing list.

Targeting Soft Conversions

When considering which page to use as a landing page, you can increase your conversion rate by bringing leads to an on-site resource to gain a “soft conversion.”

 To illustrate the importance of a good landing page and soft conversions, consider the following data:

RED: Cost per conversion BLUE: Number of conversions X-AXIS: Time (Screenshot supplied by Howard Ahmanson)

The initial strategy represented in this graph was to take visitors directly to a sales page. This resulted in a very low number of conversions, about a rate of 1%,, which in turn drove the cost per conversion way up. Later, the landing page was switched to an on-site resource, such as  a form fill of “get the free retirement planning guide.” This prompted a few soft conversions, or in other words email addresses. Upon doing this, the average number of conversions per month increased from about 10 to between 30 and 45, which in turn dropped the total cost per conversion from a median of about $400 to about $100. This is an approximately 300% increase in conversions at 50% of the cost.

But how does increased conversions translate in terms of sales numbers? To see an example of this, consider the data from the Ken Tamplin Vocal Academy:

RED: Total conversion, including soft conversions
BLUE: Sales conversions
X-AXIS: Time

When running ads for Ken, the initial strategy was to bring prospects directly to a sales page. Later, this was switched out for a “Yes! I want Ken’s free lessons!” page.

This led to an increase in the number of soft conversions, which led to a tightly correlated increase in sales. There was an increase from around 30 conversions per month up to over 225, which is an increase of 750%.

Create an Email Drip Campaign

Email drip campaigns are used to send a pre-written set of emails to subscribers or customers over time. You can use those campaigns to educate the receiver as well as make them aware of sales or offers. Last but not least, don’t forget about existing customers. This technique is ideal for building up loyalty and making them feel like part of the family.

Customer Journey Mapping: The data-driven approach to understanding your users

Businesses across the globe are on a mission to know their customers inside out – something commonly referred to as customer-centricity. It’s an attempt to better understand the needs and wants of customers in order to provide them with a better overall experience.

But while this sounds promising in theory, it’s much harder to achieve in practice. To really know your customer you must not only understand what they want, but you also need to hone in on how they want it, when they want it and how often as well.

In essence, your business should use customer journey mapping. It allows you to visualise customer feelings and behaviours through the different stages of their journey – from the first interaction, right up until the point of purchase and beyond.

The Data-Driven Approach 

To ensure your customer journey mapping is successful, you must conduct some extensive research on your customers. You can’t afford to make decisions based on feelings and emotions alone. There are two types of research that you should use for customer journey mapping – quantitative and qualitative research.

Quantitative data is best for analysing the behaviour of your customers as it identifies their habits over time. It’s also extremely useful for confirming any hypotheses you may have developed. That being so, relying solely upon quantitative data can present one major issue – it doesn’t provide you with the specific reason behind those behaviours.

That’s where qualitative data comes to the rescue. Through data collection methods like surveys, interviews and focus groups, you can figure out the reasoning behind some of your quantitative data trends. The obvious downside to qualitative data is its lack of evidence and its tendency to be subjective. Therefore, a combination of both quantitative and qualitative research is most effective.

Creating A Customer Persona

A customer persona is designed to help businesses understand the key traits of specific groups of people. For example, those defined by their age range or geographic location. A customer persona can help improve your customer journey map by providing more insight into the behavioural trends of your “ideal” customer. 

The one downside to using customer personas is that they can be over-generalised at times. Just because a group of people shares a similar age, for example, it does not mean they all share the same beliefs and interests. Nevertheless, creating a customer persona is still beneficial to customer journey mapping – especially if used in combination with the correct customer journey analytics tools.

All Roads Lead To Customer-centricity 

To achieve customer-centricity, businesses must consider using a data-driven approach to customer journey mapping. First, it requires that you achieve a balance between both quantitative and qualitative research. Quantitative research will provide you with definitive trends while qualitative data gives you the reasoning behind those trends. 

To further increase the effectiveness of your customer journey map, consider creating customer personas. They will give you further insight into the behavioural trends within specific groups. 

This article was written by TAP London. Experts in the Adobe Experience Cloud, TAP London help brands organise data to provide meaningful insight and memorable customer experiences. Find out more at wearetaplondon.com.

The Future of CRM Systems

Growth comes hand in hand with technology advancement. Today CRM software help in handling all customer data including buying habits for as long as they are attached to the company. With all the data collected, what next? How can CRM systems make things better? Most companies find themselves with a lot of data on their hands but fewer tools to capitalize on it.

To have a glimpse at the future of CRM systems, we ought to recognize the problems businesses have now. The critical issue for most companies is to offer personalized communication and products. What should we expect from these systems in the future? Why the need for improved CRM systems?

Retaining customers is easier than pitching new ones. Your clients also become an essential marketing tool. Most of the referrals you get will be from proud customers. With this said, there is the need of a system that enables a business to offer targeted information and products to the customers.

Systems that can Collect all Customer Data even from Other Markets

At the moment, your client information is only based on what you have collected internally. But wouldn’t you want to have a sneak preview of what your customer’s buying habits are outside your business? This will help you come up with relevant data that will meet customer needs. When there is a centralized unit that collects customer data from several sources and shares appropriately, business owners benefit more from the information they garner.

The Birth of Intelligent Units for Business Owners

In the future, we see business owners accessing software or multiple units that can bring order in data collection, analyzing and grouping. With all the data collected, companies are overwhelmed when it comes to utilization. Intelligent systems can analyze and even recommend proper usage of each set of data. This means customized products, recommendations, and appropriate sales formulas.

With all the data collected, businesses are overwhelmed when coming up with sales campaigns. Most of the effort is not recognized because it is not unique to customer needs. Many clients don’t even open emails from shopping outlets because they deem it as a waste of time. It is time to change this notion.

The Need to Use Different Marketing Channels

What if based on the customer data you have collected, you can reach clients through various means? Technology allows a person to use different devices all at the same time. Mobile marketing has not been delved into exhaustively, yet mobile devices are more popular nowadays because of the convenience they bring along. Some people no longer use PCs. When systems target mobile devices, chances of getting a better response are higher.

Social Media Integration

How can you profit from your clients’ social trends? Marketing can be easier when CRMs take into account social media habits. These should be customer specific with approaches that are both friendly, engaging and to the point.

Personalized Services

CRMs in the future will be able to detect customer preferences, styles, and tastes. What is your favorite color? How do you like your products packaged? Have you changed your address? Future systems will be able to detect this quickly and even update business data. No more wrong shipments or guessing what your customers would prefer? The systems will even be able to identify future buying trends that companies can use to their advantage. Customer understanding is vital when offering personalized services.

Customer Involvement

Through improved CRM systems customers can find it easier to make recommendations, offer suggestions and even get involved in the developments in the company. The more interactive a business is, the longer the clients will stay around meaning more sales. Systems can periodically interact with customers on given topics such as new product suggestions, the feedback of which can be useful for growth.

Customer interaction is also essential in promoting product knowledge. All the emails, inquiries and questions coming in can be overwhelming, but when a business has artificial intelligent units handling the incoming traffic, things get easier and tailor made to satisfy customer requests.

Sales Automation

In the future, the need to go through every order and dispatch will be a thing of the past. Systems will automatically detect orders, specifications and make appropriate shipments. This will make things easier and even reduce time spent on each order. CRMs will be able to work on multiple orders efficiently without human supervision. This will enhance a 24-hour working economy. The intelligent units will work day and night meaning that most business operations will go on past the regular working hours without having to employ more staff.

Efficient CRM use will reduce operating costs for most businesses. The need to have many employees or bigger operational space will go down. Customer expectations will be met which will mean better relations. This will result in a vibrant economy.