Sales Funnels – What You Might Be Missing

salesfunnelThe Effective Detective was lounging back in his chair examining a funnel of the type used to possibly fill a car with oil, when I entered the room. I assumed that this was the topic of the day, and unable to conceive of anything else that might be a better topic, I played along.

“Planning on changing your oil sometime today sir?” I asked innocently.

“Eh? What? Oh Watson, don’t be silly. You know I would never risk damaging my car by attempting to change the oil myself. That is work – at least in my case – best left to professionals. Actually what an interesting segue to today’s topic. Which, as you might of guessed is about sales funnels.” The Detective replied.

“I had a feeling, sir. However, I am intrigued how changing the oil in your car is a segue into the topic of sales funnels,” I responded back, a little puzzled at this turn of the conversation.

“Not the process of changing the oil itself, Watson – please don’t pretend to be so dense – but rather the funnel itself. You see Watson, many of us were trained to look at the sales funnel as a metaphor, not a process. It merely represented how the number of prospects are reduced as they move through the sales cycle. You start off with a large number of prospects – a number that shrinks as information is provided and contacts made. That however misses the point of what is currently described as a funnel truly is,” as was customary, The Detective paused giving me an opportunity to interject, or to simply request he continue.

“I’m confused sir. How does it miss the point? What else is a funnel sales or otherwise?” I asked, knowing this would trigger the explanation The Detective was so obviously hoping to provide.

“Ah Watson, a modern sales funnel, one that would be used by marketers such as ourselves, is far more complex, perhaps even more elegant. In the past, this funnel represented advertising to some prospects to get them interested, calling them to gauge their interest, sending them sales literature – brochures and the like, calling them again to make a trial close, then finally going after the final close, so that a few clients would drop out the end of the funnel.

“Today’s sales funnel would be more like a fun house maze. If you take a certain action, you may go in a completely different direction. It is not a straight path. How you respond to your prospect is totally dependent on how they respond to you. Did they open that email? Did they watch that video? A real sales funnel has multiple paths to get to the final destination – a sale. The beauty of it all? The tools to do it are all there for us to make this happen!” The Detective finished with a flourish.

“Fascinating, sir! I don’t believe I have ever thought of it that way,” I responded quite pleased with the way this had ended.

“Quite, Watson,” The Detective said, ending today’s discussion.

 

Favorites

Woman relaxes in a marble tiled bath tub.“Sir,” I started out, taking the initiative in our current discussion. “I must admit to some confusion regarding the concept of favoritism.”

“Confound it Watson, you are slipping! I require a more specific query,” The Effective Detective answered with an annoyed tone to his voice.

“Sorry sir. In particular I am thinking about how companies tend to favor those who spend more with them, or invest in particular programs, versus doing the same with individuals in a work environment or perhaps even friends, a practice that is often frowned upon. My confusion is if one is right how can the other be wrong?” I clarified.

“Much better Watson, a much more specific and answerable question,” The Detective gave a slight smile. “As to your answer, I believe your confusion while understandable is misplaced. You are comparing apples to oranges. Favoritism as you put, in a personal setting is something I have no desire to address, and I leave that discussion to philosophers. Business on the other hand, both with customers and employees or contractors is a much simpler matter to deal with, since the concept of fairness is rather black and white,” The Detective took his characteristic pause allowing for an interjection or question from me.

“Why wouldn’t fairness enter into the equation in business matters, sir?” I asked

“It does, but not in the classic moral sense. You are being fair in business when you are being honest and not cheating someone. This has nothing to do about seeing different employees or customers as equal in value to each other. Customers are providing you revenue. The more revenue they bring in – without causing you undue stress or cost, the better you should treat them. They have earned it, and most likely they will respond in kind. Employees are providing you a service. If they go above and beyond they should be given special treatment as well. These are business transactions, not social interactions,” The Detective to take a breath, allowing me to get a word in edgewise.

“So you are saying that favoritism in the business environment both with customers and employees is a good thing, and in fact should be promoted?” I asked.

“I thought I just said that,” snapped The Detective with more than a trace of irritation. “Remember though, you still must treat all of your customers and employees fairly and honestly. Having favorites does not mean giving someone who gives you less money inferior service, or denying an employee something just because they happen to have a lower level job. Service and respect are given freely to all.  Perks are given to those who contribute something extra to your success, and although the perks can vary in value, they should be freely given at all levels of contribution.

“Something I wish the cell phone companies would learn,” The Detective finished, throwing his latest bill on the floor, closing our conversation.

Doing the Right Thing, Wrong

oops“Watson, I have a wonderful example of doing the right thing wrong,” The Detective began with an uncharacteristically indirect and confusing statement for our weekly discussion.

“Sir?” I asked, not sure how else to respond.

“Come, come Watson, we all know that we should, as part of any well-managed and useable list, have included our customers or clients, however you choose to refer to them. We also know that one of the reasons we segment a list is to ensure that appropriate information is sent out,” The Detective paused, waiting for me to confirm that I understood. I obliged.

“Yes, sir, of course.”

“So I have a wonderful example of a business doing the right thing: labeling me as a customer and engaging me, but doing it wrong by sending me an offer that I cannot use. Worse, it was actually quite an interesting offer,” The Detective said almost wistfully.

“Can you provide me with details sir?” I asked, now that my curiosity had been piqued.

“What? Oh, of course Watson. I have purchased several cars from a local dealership in the last two years. I am very satisfied with the purchases. Now, what do you think would be an appropriate communication from the dealership Watson?”

“Ah, perhaps an offer for some maintenance sir?”

“Precisely! An offer that I would appreciate, that I can choose not to avail myself of, but definitely something I could use if I was so inclined. That, however is not the offer I received. Received three times in fact. No, what I received was an offer for a discount on activation of a feature that is not available on either of the cars I have purchased from this dealership. Worse, it wasn’t until I had clicked through several pages before I realized there was no way I could use this offer. Not only was I frustrated that I couldn’t use the offer, I was irritated that I had wasted my time clicking through multiple pages before I learned this was something I could not take advantage of.

“So, what do you think the lesson learned here is, Watson?”

“Don’t make promises you can’t keep?” I asked, feeling a bit mischievous, and seeing if I could provoke a reaction.

“Bah! Watson, you are playing! The lesson is to ensure that your segmentation includes critical information. There is a delicate balance between over-segmentation and not segmenting enough. It all depends on what you are trying to accomplish and who you are dealing with.  The dealership knew what models and years I had purchased from them. They also knew that the option they were promoting was not available on either of those cars. Any one of those pieces of information included in their list could have allowed appropriate segmentation,” The Detective responded, with an irritated tone – exactly the reaction I had hoped to elicit.

“Simply put Watson, the missing key here was not utilizing information readily available to target a message only to those who would be interested; in this case those who could take advantage of it,” The Detective finished succinctly.

“Simple, but not always easy, sir.”

“That is why it works Watson, that is why it works.”

Too Much Of a Good Thing

pie_chart“Do you know how to destroy the usefulness of a technique, Watson?” This time it was The Effective Detective who began our weekly discussion.

“By misusing it, sir?” I replied.

“Close, Watson. You are still, on occasion, quite vague. There are many ways to ‘misuse’ a technique. I am looking for one way in particular,” The Detective’s response came back with a barely disguised tone of irritation.

“Over use perhaps?” I ventured.

“Perfect Watson! Even if it was a guess,” The Detective shot me a sideways glance. “It is possible to fall into the trap of thinking that if a little of something gives me great results, than a lot of it will give me fantastic results,” The Detective paused briefly.

“Was there a particular technique you were thinking of sir?” I encouraged.

“Yes, Watson, thank you for asking. There is one technique that is often used to a point where the data it provides becomes meaningless. That one technique is segmentation,” The Detective paused uncharacteristically here; usually expounding a bit more on the subject before giving me an opening.  However, even with the limited amount of exposition from him, I had formed a question or perhaps a challenge.

“But sir, isn’t it important, in fact, critical, to have as much information as possible?” I asked.

“An excellent point Watson. That said, there are two dangers in overuse of segmentation.

“The first should be rather obvious. It is possible to segment your audience to such a point that the segments shrink down to a size that renders them unusable. Unless you have a high ticket item that you are marketing to a group that you intend to try to reach at a premium price, who you have a high confidence level of engaging with,  segmenting down to less than fifteen or twenty individuals is most likely not going to produce results equal to or greater than the labor and cost  involved in producing those results.

“The second, and perhaps less obvious, but still deadly, danger is segmenting into sections that will have no effect on your message. If the appropriate age for use if your product or service is anyone older than sixteen years old, dividing your audience into a standard set of age segments like 18-24, 25-34, 35-54, 55-64, 65+ will largely be a waste of time in terms of getting that information, and a colossal waste of time and energy in crafting multiple messages for the different groups,” The Detective took his more characteristic pause here, and my mind raced to come up with an observation or question.

“So one only needs to segment down to the level where the message will resonate most strongly!” I exclaimed in a sudden moment of clarity.

“Precisely, Watson! Well done.  A more specific age example would be  if your product or service is aimed at adults aged 35-64, then you shouldn’t care if they are 35-54 or, 55-64, that breakdown isn’t needed. A tad simplistic I admit, and age is certainly not the only demographic you could over-think,  but you see the point.”

“Indeed I do, sir. So the trick then is finding that balance between too little segmentation, and too much.” I responded.

“Quite, so. That however, is a discussion for another day.”

Spending versus Investigating

test“Watson, I have been pondering something that seems to come up quite frequently with small businesses in relation to their marketing,” The Detective began.

“And that would be?” I interjected.

“Patience Watson, patience,” The Detective smiled. “What I have been pondering is the seeming reluctance of many small businesses to engage in active marketing,” The Detective paused only briefly here, seeing the puzzled look on my face. “Active marketing or interruption marketing as Seth Godin calls it, advertising, direct response mail, and lets throw pay-per-click in there. Instead too often, we go after what can be perceived as easy: passive marketing – Social Media, referrals, blogging, you know the variety of ways that you can, shall we say, ‘get the word out’.

“The issue is not that passive marketing is bad, but that it typically relies on you already having a tribe. What good is a blog in the short-term if you only have a few readers? Of course you hope they pass you on to others, but only a small percentage will do so, and if  the tribe is small, we are talking a small pass along as well,” The Detective stopped here for his characteristic pause for effect.

“An astute observation sir, but isn’t there a distinct disadvantage to active marketing?” I inserted into the pause, knowing mild praise and a question will always get The Detective moving again.

“Of course, Watson,” he said with a smile, accepting the praise and warming to the question. “Active marketing can carry a relatively hefty price tag and that is where I believe we will find the root of the average small business person’s hesitation.

“What we all fear is that we will spend vast amounts of money without results, and thus, that money will have been ‘wasted’.  Yet we believe we must cast a ‘wide net’. Our hope is that by reaching thousands we will find the proverbial needle in the haystack – our prospect. Sometimes, if the product and the market are appropriate, it can work. However, this requires a leap of faith; one not always justified and of course an outlay of cash, which we fear to waste, and a circle of doubt begins.

“Yet, there is another way, one which leads us to doubt conventional wisdom about ‘wide nets’.

“The answer of course is to test; but we must review the information from the test carefully. I myself ran such a test just in the past week. I ran a pay-per-click ad to a very narrow audience for a very niched product. I received a small number of views, and a very small number of clicks. So I expanded the audience ten-fold, received a phenomenal number of views, and a decent supply of clicks – which of course resulted in a further investment on my part, albeit a small one. Now what would be your initial reaction to this Watson?” The Detective asked at the end of his story.

“Why that the broader market was the better one, sir,” I quickly replied.

“Now what if I told you that I received nothing from any of those clicks? Even with copy that had resulted in positive results before,” The Detective smiled, springing his trademark “trap”.

“I’m not sure, sir,” I answered truthfully.

“Let me give you another clue, Watson. Analytics showed me that the people who clicked on the ad spent virtually no time on the page the click led to, even though the copy was directly related to the ad,” The Detective teased.

“I would have to say they were the wrong people sir, they had no real need, maybe they were curious, or even clicked accidentally,” I hesitantly ventured.

“Precisely Watson! Rather than supposing that pay-per-click is a useless marketing vehicle; which may yet be the conclusion – at least the pay-per-click sources being tested, instead, we can arrive at another conclusion – that the ad itself was faulty. Perhaps a bad headline, or imprecise text, which resulted in fewer clicks from our true audience.  Theories arrived at with minimal cost, and which can be tested with minimal additional cost,” The Detective summed up.

“And then if more positive results appear, we can decide to invest more money in the ad. I must say I like the sound of that sir!” I exclaimed.

“Elementary, my dear Watson, it is all in the data,” The Detective replied, turning back to his work.

 

 

Ground Control to Major Tom

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Image courtesy of sscreations / FreeDigitalPhotos.net 

The Effective Detective looked particularly intense today as he shot his first question at me.

“Watson, are you aware of the term ‘Signal to Noise Ratio’?”

“I am sir, in what context?” I answered.

“Context? Oh. Quite right Watson. The marketing context,” The Detective smiled, acknowledging one of the rare times I had confounded him, if only for a moment.

“Yes, sir. The marketing context would refer to the vast amount of content available to just about everyone via print, advertising, radio, television, and of course, the Internet, compared to the relatively small amount of content that is applicable to one’s particular situation.”

“Excellent Watson, you have been paying attention and absorbing the lessons from our adventures well,” The Detective congratulated me. “But now the million dollar question, how do you increase the Signal to Noise ratio?” The Detective asked with a slight smile. A smile more related to the hunter zeroing in on his prey than the previous smile he had given me.

I hesitated, with a vague sense of disquiet that a misbehaving school boy experiences shortly before he is rapped across the knuckles. “Umm, I would have to say have more quality content, aimed at a particular audience sir.”

The Detective threw back his head and laughed, “You truly have been paying attention Watson! Bravo! But there is still a  missing piece.”

“Sir?” my figurative knuckles now smarting slightly.

“The audience Watson. Even if you have but a relatively small audience, how can you ensure the appropriate content is reaching your specific target or targets?”

“I am not sure I am following you, sir,” I responded feeling a tad confused.

“It is quite simple Watson,” The Detective started, with a trace of irritation in his voice. “The issue is getting your signal through to the right people, the people who are listening for that signal through all of the background noise of their daily lives. Good, strong, valuable, perhaps provocative, content,” The Detective paused, winding up for the delivery.

“Pray continue, sir.”

“But there are always multiple channels of content being sent out, the noise as it were. If the difference is extreme, say your sports channel vs a political channel, then the need for segmentation seems less. Your content will tend not to overlap. But what if the channels are less distinct, say fitness trainers, some who specialize in weight loss vs others specializing in aerobic endurance?

“Segmenting your audience and generating such specific content becomes more difficult,  but extremely rewarding. Because your content is aimed specifically at their concern, instead of the general universe of people who are fitness conscious, or in the wrong niche, and most likely bombarded with messages from any number of fitness based sources, the Signal to Noise Ratio increases dramatically, and there is a far greater chance that the content will be read, and the benefit attributed to you,” The Detective paused again, eyeing me, as if he knew the question I was about to ask.

“Yes Watson, I have made this point before ( A King Needs a Queen ), but the concept of niching things down even further is important. It is easy to believe that we have something to say to everyone in a generalized market, and perhaps we do. But the real world says unless you have a really powerful transmitter, you’re better off fine tuning the frequency.”

“Reach fewer with more impact,” I replied.

“Quite so, Watson”