SALES FUNNEL: WHAT IS IT?

Sales do not happen all at once. Entrepreneurs must perform several activities to transform potential customers (possibly interested) into the buyers. A business can have a huge number of potential customers. However, until they become real customers, business will not benefit from them, and actually anyone can be a potential customer. In retail store the potential buyer may be anyone who passes through or living in the area oflocation of your store. For the importers and whole sellers potential buyers are all small businesses in the state. For online sales, the all around the world Internet users are potential customers. From such many potential customers only a small portion will become real customers. Therefore, we use the term funnel, that means we want to collect a larger amount of liquids (potential customers) to come into the funnel and the only small part of that liquid will pass in the narrower part of the funnel in a period of time to collect the liquid (real customers) in the bottle.

Sales funnel is also called as a sales tube or a sales tunnel. Sales funnel is a way of visualization of the sales process. It would be easier if potential buyers can come to become real customers. But, it would be possible only if we don’t have the competition, or our business is unique and all must pass through our business. However, that is not in the reality. For every potential buyer, there is battle between you and your competition. Anyone who has better sales funnels will have greater efficiency in the transformation of potential customers in the real buyers. So, sales funnel if you use the laws of physics is something that transforms the potential energy of your business in the kinetic energy, which allows you move forward.

On the picture is present the sales funnel and the way how its functioning. All that is out of funnel is unlimited space, which represents an unlimited number of potential buyers for each business. Therefore, you as an entrepreneur must fight with your competition for that outdoor space or potential customers. Your first task is to use marketing campaigns to incorporate the larger part of potential customers into the funnel, or in your sales space. Successful marketing campaign is that will incorporate a larger number of customers into the funnel. With this campaign, the customers will know you, your business, your products and services that you offer, and will attract attention to your business. In this way, people will know that your business is here and from an unlimited space, you are reduced to a limited number of potential customers who come in your sales funnel. The number depends on your marketing campaign, the type of business and space in which operate a business (local, national, web space …). So there may be 100, 1.000, 10.000, million potential customers that are already passed into your sales funnel…
Your next task as an entrepreneur is to focus on those potential customers and to ensure their interest about your products and/or services that you offer. You must discover their needs and providing opportunities to try the products (through the presentation) to determine that exactly those products and/or services meet their needs. For example, the company that sells software offers the possibility of a 30-day free trial of the software to ensure potential customers that the software satisfies their needs and desire. The purpose of this is to wake up desire for buying. So if you raise the interest in your products and/or services that you offer, your job is to make the interest in the desire for buying. This desire came from information about the price, delivery, payment method… All those results in negotiating from which some part of the potential customers will be transformed into real buyers, or they will make the decision to buy your product and/or service.
How will look like the sales funnel in the numbers? From an unlimited number of potential customers, your business will be noted from, for example, 1000 potential customers. From that 1000 potential customer, interest for your products and/or services will provide for example 500 potential customers. From these 500 potential customers, a desire for buying will appear at 200 potential customers. But, at the end, the decision for buying will be made only ten customers. As you can see you have only 1% from potential customers transformed into buyers. This percent is called conversion rate of your sales funnel.
Your goal as an entrepreneur and the goals of your sales team is to ensure that sales funnel at any time will be full in all phases. This will be achieved through good marketing campaign and excellent products and/or services that you offer. After that you must find ways how to improve your conversion rate. Make analysis of your sales funnel and consider how to improve it. Remember, nothing is a perfect. Each process can be improved, and so your sales funnel.