The Sales Funnel is a great tool. Since its birth in 1898, it has helped countless companies improve their sales and marketing performance by helping them deliver the right sales message, to the right person, at the right time in the selling process.
Lifecycle of Great Sales and Marketing Tools
PHASE ONE: Someone develops a new approach to an old problem. Nothing really
PHASE TWO: The idea is easily understood, easily shared, it makes sense and companies begin using it.
PHASE THREE: Products and methods are developed, research is conducted, books are written and consultants get on board ‘spreading the gospel’ of this latest and greatest sales and marketing tool or approach.
PHASE FOUR: The original idea is refined, amended, poked, prodded and expanded until most of the real benefit is wrung out and washed away – not to mention complicated to the point of ineffectiveness.
PHASE FIVE: At the same time, it becomes the industry standard and all of your competitors begin using it. As a result, you and the tool lose your marketplace advantage.
PHASE SIX: A new tool is developed that builds on the strengths of the last tool while improving upon its weaknesses . . . and the cycle begins anew.
Some examples are SEO, Pay Per Click, Apps, QR Codes, Content Marketing, Customer Segmentation, Marketing Automation, CRM, Customer Journey, Persona, Omni-Channel, Analytics.
These are all very effective tools if used properly, but as soon as everyone is using them, they lose much of their effectiveness and it may be time to find a different and better solution. That is what is happening with the sales funnel.
Let’s think about the selling process at its most basic: You have something to SELL (A) that someone, somewhere wants or needs to BUY (B). The steps to get from A to B vary widely by industry, channel, segment, and more – but simply stated they are as follows:
The most important thing that the sales funnel has done is to get companies to stop and consider that there are different stages that different customers go through on their way to making a purchase.
Overly aggressive salespeople think that anyone they call on, meet at a trade show or have visited their website is ready to buy. This “always be closing” approach
They not only lose the sale when they don’t give the customer the information they want and need, they also lose more future sales because they are unaware of what the customer wants to know earlier in the buying process.
As an example, if the only call to action on your website is, “FREE ESTIMATE”, you probably need to review your sales funnel or create your first one.
Companies who make effective use of sales funnels understand that facilities managers, homeowners, architects, contractors, builders and others all require a very different selling process
Effective use of the sales funnel helps prospective customers form a positive opinion early on about the company, and that can have a big effect on whether or not a sale is made at the bottom of the funnel.
Effective Use of The Funnel.
A single product’s position-to-customer can require markedly different sales and marketing approaches, and without sales funnel analysis they could easily overwhelm your company – pulling your sales and marketing in many reactive and non-productive directions.
Fortunately, the sales funnel has been an excellent tool to guide sales process decisions.
Let’s use replacement roofing as an example.
Replacement roofing often begins its life with a distributor and enjoys a rather long-term selling cycle. Although important, for this type of transaction a sales funnel analysis shows us that the speed and agility of sales, marketing, and even production are of less importance when selling the distributor. Customer intimacy, product innovation, consistency, and dependability are the talents you communicate and bring to bear.
On the flip side, replacement roofing contractors often have a very different selling cycle. Here, the selling cycle may be highly compressed and on a critically short timeline as a leaking roof
In short, a well designed and managed sales funnel can be a great tool for gaining new business and maintaining and growing the business you already have – but there’s a more effective approach. It’s an approach that doesn’t look at distributors and architects and contractors and homeowners as individual purchasers and
Start Thinking in Circles
So how do we improve upon a seemingly good approach to marketing and selling a product?
My nature is to be a contrarian. I watch how many building materials companies focus on growing their sales by gaining new customers. They emphasize gaining new customers overgrowing their sales through existing customers. In short, they have a very ‘linear’ path through the sales funnel – a beginning and an end.
Instead of a funnel, I visualized the growth of a company as a tire going down the road. As the tire goes down the road it gets larger as it makes new sales.
If the sales goal is to grow 6% then the tire has to get 6% larger. Think of it as each new customer or sale as adding air to the tire and making it bigger.
Also think that when the tire moves down the road it is also leaking some air or losing business. No matter how good your tire is, there will always be some leakage.
The more leaks you have, the more new sales you have to make in order to make your tire grow (reach your sales goals).
If you want to grow 6% and lose 3% of your current customers, you now have to grow 9% to achieve 6% real growth.
Three other factors to consider when visualizing a tire instead of a funnel.
1. It costs more to gain a new customer than to keep an existing one
2. It is very hard to regain a customer that you have lost
3. Thanks to mergers, roll-ups and consolidation there are fewer channel customers to pursue
Taking Circles to Another Level
I have known Bob and Dana Schindler for over twenty years, since when they were the Chief Marketing Officer and Senior Vice President of Marketing for Associated Materials (Alside). I don’t know anyone who knows how to grow the sales of siding and windows through distributors and contractors as well as Bob and Dana.
And they achieved this growth in large part by focusing on growing their sales through their current customers rather than chasing new ones.
I asked Bob and Dana to share their approach at one of my Whizard Summit workshops on building materials sales and marketing.
As we discussed their presentation, they introduced me to how they think in circles. And how that thinking allowed them to build a truly world-class marketing department. Instead of my simplistic concept of a tire inflating and deflating their flywheel was multidimensional.
Smart Energy In . . . Senseless Friction Out
And then came my eureka moment. It was when I realized that the approach Bob and Dana took was beautifully simple when thinking of the customer’s flywheel they had two fundamental questions: how can we put smart energy in, and how can we pull senseless friction out. In my mind’s eye I could see how this way of thinking would result in solutions – and not just run-of-the-mill solutions.
I began to see how the flywheel not only assists with sales growth, but how the principles of the flywheel could help align an entire company while also providing insight, opportunity, and continuous feedback.
Now I saw the inherent flaws of the sales funnel. The most obvious being its linear nature – while the sales process is viewed as moving through
There is no feedback loop, no readout of problem areas, no recognition of the all-important ‘promoters’ of a product or a brand. In fact, the stages of the sales funnel can actually act as dividing lines and result in silos of tactics that may not be cohesive in their approach.
With the sales funnel approach, it’s the product that is at the center of the universe – not the customer. And on and on. In essence – all of the energy is dumped into the top of the funnel, and if we’re lucky a sale falls out of the bottom. THEN WE START ALL OVER AGAIN.
Seems like a lot of wasted energy, right?
Instead, we should think of the selling process as a continuum. Energy that is added to the ‘wheel’ creates momentum that builds upon itself. Rather than tailoring all messages and actions around the product, we put the buyer at the center and all activities are designed around them.
A flywheel puts the customer in the center of everything. A funnel puts the customer at the end.
When you’ve perfected this approach, it becomes circular in nature and rather than end, it continues. Sales
In essence, we’ve created a flywheel. The energy we are feeding into the wheel creates momentum that continues to drive the wheel, creating additional energy.
Putting the Shoe on the Other Foot
How do you begin developing your sales flywheel? With your customers, of course! Instead of thinking about your selling process, think about each step involved in their buying process – each one. And, although your flywheel may differ based customer type (architect, distributor, contractor, builder, homeowner, etc.), it will often involve several of them at once.
The More You Put In The More You Get Out
There are three levels of a flywheel.
LEVEL ONE FLYWHEEL
Level one flywheels help you learn how to outperform your competition in how you support your customers every day. The level of customer service for channel customers is declining as more companies look at what’s best for them instead of their customers — this fact alone makes the flywheel approach worth adopting. Although cursory, level one allows you to see
If you research your customers and their businesses, you will most likely discover how dealing with your company (or competitors) frustrates them.
Why does it take so long to get accurate information or pricing? Why does it fall on them to follow up?
Are you acknowledging orders the way your customers would prefer or do you expect customers to accept your process?
If you ask your customers, “What could we do differently that will help you?” they will tell you. Most of these changes are not expensive, but they go a long way in keeping the customer loyal and your flywheel growing.
A level one flywheel is a company that operationally supports its customers better than the competition. It’s not about price, it’s about which company is easy to do business with and provides the customer with the secure knowledge that: “I’ve placed my order, they’ll take it from here.”
LEVEL TWO FLYWHEEL
Level two flywheels allow you to dig a little deeper and do something extra for the customer. You may provide them with leads or sales or marketing support, training, or reward programs.
Programs of this type can be very effective in building sales and retention, but they can have two problems. If you provide your customers with an exotic loyalty program or keen marketing
The other problem is that these programs can be matched by your competition. For the most part, they are easy to match if a company wants to make the investment.
Early in my career, I worked with a large company who took their best customers on a very impressive trip each year. The problem was that they had two competitors who soon started to offer their own trips.
We soon found that customers were deciding which company to buy from based on which trip they wanted to take. You never want your customers to be more focused on the reward than your company and products.
The harder it is for a competitor to match your customer support program, the better. And the more it is linked to the business success of your customer, the better.
If you’re going to use trips or events, focus on the content. Anyone can pay for a trip to Hawaii. It’s not so easy to make the trip an experience that improved their business.
LEVEL THREE FLYWHEEL
Don’t just put your Foot in the Door . . . Insert Your Entire Organization!
Level Three Flywheels allow you to invest in holistic, highly customizable (and extremely difficult to mimic) programs that are only available
By centering your gaze with the customer journey as the center, you’ll quickly see the customers processes and be better equipped to become their absolutely invaluable partner.
Thanks for the following comments. I’d like to hear your feedback and suggestions on how to sell architects.
“Mark is the Guru of Building Materials Sales”
CEO & Chairman
Entekra, NAHB Manufacturer of the Year.
“Yes, Yes, and Yes! , One of your best, Mark! Couldn’t agree more. “
“This is great stuff! Mark Mitchell strikes again!”
The Art of Construction
“Never thought I’d identify with a “tire” vs. a sales funnel but Mark Mitchell has my attention on his model and theory.”
VP of Residential Sales