Your sales are something that gives a life to your business because constantly bring cash flow in the business. With cash, you can develop your business to the next level. The realization of the sales comes up through your sales funnel. In the sales funnel selling is the final step when customers decide for buying something from your business. All of that activities that you perform before the sale is made represent your sales funnel.
The sales funnel start with your marketing campaigns that will initiate awareness about your business, your products and your services. The part of that individuals that will be aware about your business will show interest about your products or services. In the part of that individuals with interest will appear desire of buying something from your business. And at the end of the sales funnel, the part of individuals with desire will buy something.
You can see that your sales funnel has entrance as leads that will be transformed into buyers at the exit of the sales funnel. Because of that, when we are talking about improvement of the sales funnel, we have two possibilities:
- Improvement of the entrance in the sales funnels.
- Improvement of the conversion rate of the sales funnels process.
I will explain these two possibilities later. First I want to explain something about improvement. Improvement is something that we do better from previous. When we talk about improvement of the sales funnel, I think about better entrance and better conversion rate of the sales funnel. This will lead to better sell for our business and an overall business improvement.
Improvement of the entrance in the sales funnels
The number of buyers will depend on the entrance of individuals into the sales funnel. If we have more individuals that enter our sales funnel, we will have more buyers for our business. For example, let’s say that we have in the period of time entrance of the 1.000 people and our conversion rate is 5%. With this parameter, we will have 50 buyers that will spend average of 100$ that will be $5.000 income.
If we make some changes with which we improve our entrance in the sales funnel then we will have 3.000 that will enter and with 5% conversion rate will have 150 buyers. With average spending of $100, it is$15.000 income. How we can improve the entrance in the process? The one and only way which can make improvements in the entrance is marketing. If we improve our marketing activities with which we will increase visibility of our business, then the number of people that enter the sales funnel will be greater.
Conversion Rate Improvement
This is the second area where we can make our improvements. Besides marketing in the process of conversion come another features as location, interior and exterior, products or services quality. For example, if we have 1.000 individuals that enter our sales funnel, and currently we have conversion rate of 5%, we will have 50 buyers at the end of process. If we improve the conversion rate from 5% to 8%, we will have 80 buyers at the end of process. With the average spending of $100 that means $8.000 with 8% and $5.000 with 5% conversion rate. How we can increase this conversion rate? Some of the possible activities in this process of improvement will be:
- Convert more individuals with awareness into individuals with interest. Here the big role will play your marketing materials, choosing the right market niche, location, design of the interior and exterior of your sales store and so on. For example, you have 1000 leads with awareness about your businesses. Currently, your conversion rate from awareness into the interest is 50%. But, you want to improve that percent and because of that you perform market research and choose the right market niche for your business. You make improvements in the image of your business and because of that increase your conversion rate to 60%. Now, you have 600 individuals that have interest about your business.
- Convert more individuals with interest into individuals with desire. When some individuals have interest your sales team must convert them into individuals with desire. For example, your conversion rate from individuals with interest to individuals with desire is 50% that will bring you 300 individuals with desire of buying. Now your sales team makes direct call to them, send him e-mails, educate them about your products and services and in this way you increase conversion rate from 50% to 60% that will bring you 360 individuals with desire for buying.
- Convert more individuals with desire into individuals that buying. Now the potential customers are in your sales store and look and feel your product. For example, the quality of your products and services gives you conversion rate of 50% of individual with desire into individuals that buying. If you improve the design and quality of your products and services your conversion rate will increase on 60%. Now you will have 216 buyers at the end of the sales funnel.
In the table below are given conversion rates before and after improvements as an illustration.
| Current | Entrance improvement | Conversion Rate Improvement | Entrance and Conversion Rate Improvement | |
|
Number of entrances |
1000 |
2000 |
1000 |
2000 |
|
Conversion rate – Awareness to Interest |
50% |
50% |
60% |
60% |
|
Conversion Rate – Interest to Desire |
50% |
50% |
60% |
60% |
|
Conversion Rate – Desire to Buying |
50% |
50% |
60% |
60% |
|
Overall Conversion Rate |
12.5% |
12.5 |
21.6% |
21.6% |
|
Total Number of Buyers |
125 |
250 |
216 |
432 |
|
Average Spending |
$100 |
$100 |
$100 |
$100 |
|
Total Income |
$12500 |
$25000 |
$21600 |
$43200 |
|
Improvement |
|
$12500 |
$9100 |
$30700 |
You can see from the examples in the table that with 10% improvement of conversion rate between different conversions into the sales funnels, you receive overall conversion rate improvements of 73%. This is called as butterfly effect.
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