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.

 

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.”

What’s in a Word?

list“Sir?” I prodded, interrupting The Effective Detective’s reverie.

“What?!” the startled detective exclaimed, “Oh Watson, what can I help you with,” regaining his composure after almost jumping out of his chair.

“I don’t require assistance at this moment sir, but I am puzzled about something. I guess you could say I consider it a mystery,” I said, so absorbed in my own thoughts, I didn’t even notice The Detective’s reaction.

“Well Watson, you have started today’s discussion, pray continue with details of your ‘mystery’,” The Detective answered, warming to the challenge.

“Ah, yes sir. You see what puzzles me is what seems to be a misunderstanding of the use of the word ‘list’. I have noticed often in your and others’ presentations that when that word is used, confusion seems to set in. It is as if the word has no meaning, or at least no meaning in the marketing sense,” I explained.

“Ah Watson, you have picked up on an interesting situation. One where the same word can have two different meanings depending on the audience. If you mention that word to an Internet marketer, there is no confusion, they know and understand of what you are speaking. However, I too have noticed the confusion in the eyes of brick-and-mortar product business owners, and professional service providers – even the ones that consider themselves virtual, at least in terms of their office location.

“To the Internet marketer, their list is the heart of their business. It is the thing that allows them to exist, and it is to be nurtured and developed above almost everything else. Unfortunately, too often, to lets call them ‘real-world’ businesses, the ones that see their customers, interact with them directly, their ‘list’ is much more akin to an accounting device. It allows them to calculate profit and loss on an individual basis. It allows them to claim a following in their marketing,” The Detective stopped here for his characteristic pause, designed to give me a chance to interject something that would spur the conversation on. Of course I obliged him.

“So they claim a following in their marketing, instead of marketing to their following?”

“Bravo Watson! An excellent line indeed. You’ve hit the nail on the head! What most non-Internet businesses do is constantly market to the universe of people who aren’t really aware of them, hoping that the message will strike someone’s fancy who is also in the market for the product or service at the precise moment it is being advertised to them. Whereas the Internet marketer will market their wares consistently to the universe of people who are aware of them – the list, knowing that even if now is not the time, next week, next month or perhaps even next year might be, and through consistent contact they will be there to serve,” The Detective responded.

“And to the universe of people not aware of them? Are they ignored?” I asked.

“Elementary dear Watson, they are marketed to as well, how else will you build the list? If, by chance they are ready to buy today, wonderful! But, if not, that is okay as well. They are invited to become part of the community, and will be given many other chances to purchase something,” The Detective answered patiently.

“So it is a constant series of sales pitches?” I asked, imagining a never ending barrage of advertisements to a helpless list armed only with a wastebasket and the delete button on their computer.

“Bah! Watson, that would be suicide for the business. However, that discussion is for another day,” the Detective responded forcefully.

“As you wish, sir.”

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”

 

A Change in Perspective is in Order

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Image courtesy of graur razvan ionut / FreeDigitalPhotos.net 

“I read a most interesting article about Big Data recently sir, passed on via Twitter by another business consultant,” I declared, beginning the latest conversation between The Effective Detective, and yours truly, Watson, his “virtual” (literally) assistant.

“I take it by the tone, you wish for me to read and comment upon said article,” replied The Detective. “Very well, please provide the link.”

“As you wish, sir: http://www.marketingprofs.com/charts/2013/9904/marketers-upping-the-ante-on-big-data-in-2013

I waited patiently while The Detective perused the article, curious to see his reaction. It did not take long, and he did not disappoint.

“Thank you Watson. I have rarely seen such a collection of well-meaning, well thought out, well researched, but largely useless words and charts in my career,” The Detective stated, giving me that slight smile that indicated he was both amused, and open to further discussion.

While I am used to The Detective’s somewhat caustic reactions to things that he does not see eye-to-eye on I was still taken a little aback by his reaction to what I thought had quite a bit of relevance to both our business and those of our clients. “I am not quite sure I understand your reaction sir,” I finally managed to splutter.

“Tut-tut Watson, you obviously referred me to this piece thinking it good news for us as marketers, since we deal in data, and also good news for our clients and readers as it gave some new avenues to pursue, and because the marketing tribe seems to be following the trend, it validates action in that direction. That the data is correct and well presented is not the issue,” The Detective both showed he understood my thinking, but letting me know that he saw a flaw. One that he was doubtless about to educate me on.

“And just what would the issue be, sir?” I asked, to move the conversation along.

The Detective paused, took a deep breath, then started in on his explanation.

“Watson, the issue is simple. Marketing-techno-babble like: ‘Companies are also starting to realize the need for real-time customer data flows to drive more personalized marketing campaigns’ is not only useless to the average small or medium business, it is dangerous. Reports such as these are done on, and for the most part aimed at, larger companies. How do you think a smaller organization feels when confronted with the text and graphs shown in this article?”

“I would tend to guess, inadequate to a degree. They most likely do not have the resources to pursue such projects, so they would tend to ignore the concepts discussed,” I answered.

“I could not have said it better myself Watson! When the use of data is presented in this manner, smaller concerns tend to turn away. They believe since they couldn’t possibly execute the kind of programs that are implied here, data analysis is only for larger businesses. Of course we know that nothing could be further from the truth!

“Every business of virtually any size, has data flowing in. Big Data is a misused term. Unfortunately, writing about simple databases and segmenting customer data across a few categories is not something most of these information sources wish to write about.  They wish to talk about Big Data in reference to the volume of data, when actually it can just as easily refer to the impact even a relatively small amount of data can have on a business,” The Detective summed up.

“Big things can still come in small packages, sir?” I said, not being able to resist the temptation.

“And you accuse me of being corny on occasion Watson? Nevertheless, I concur. It just depends on your perspective. Back to business now,” The Detective responded with a sideways look.

A King Needs a Queen

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Image courtesy of podpad / FreeDigitalPhotos.net

I had a burning question to ask The Effective Detective, so I took the initiative to open the conversation. “Sir, I have noticed you have a propensity lately to sigh when you hear the phrase ‘Content is King’. Is there a particular reason for this?”

“I see that your observation skills continue to evolve in a most positive direction Watson,” The Detective answered. “And yes, I would say that I have begun to feel a sense of melancholy when that phrase is bandied about,” he finished heavily.

“I’m confused sir, don’t you advise most stridently that business people need to make useful content the priority in their marketing?” I asked, puzzled at his answer.

“Yes, and I still insist that content is key, Watson. However, I have noticed a propensity among our marketing brethren to spew content randomly as if the entire world could benefit. It may be excellent content, but it is being randomly spewed nonetheless, and that is causing a couple of problems,” The Detective’s voice began to get more animated, a sure sign he was warming to his topic.

“What would those problems be, sir?” I asked, cutting to the chase.

“First, it creates a type of ‘the boy who cried wolf’ scenario. You asked for your audience’s attention by claiming you had something to say that was important and relevant to them. If your audience is then given a steady stream of messages that are frequently not truly relevant to them, or worse, is all about the author instead of his or hers audience – which by the by is most certainly NOT excellent content, then when one does happen to hit the right topic, you have already been tuned out. No one is listening to you anymore, you squandered the trust you were given,” The Detective explained.

“Not to be impolite sir, but if someone wants to gum things up for themselves why is that an issue for anyone else?” I responded to his explanation.

“Ah Watson, an excellent question. That is the second problem. You see, it is an issue for all others because it creates a sense of distrust  of all of us that are trying to deliver content. We are all painted with the same brush, fairly or unfairly. It diminishes our sign up  and open rates because visitors begin to assume that you will bombard them with useless messages just like others. While there is nothing we can do to prevent others from sending irrelevant content, we can avoid it ourselves by remembering a simple truism.”

The Detective paused, prompting me to encourage him to continue. “And what would that be sir?”

“It is quite simple Watson: If content is King, then The Target must be Queen.”

“Corny, but effective sir.”

“Quite so, Watson.”

The Mystery of The Incomplete Explanation Part 1

Sometimes in relating information The Detective and I forget that giving a couple of bullet points is often insufficient to fully explain an important concept (or concepts!). Case in point. If you are an observant reader you might have caught the link to an article in Time Magazine that we sent out over the weekend just past. If not, fear not! We realized belatedly that perhaps we could have or should have expounded a little bit more on some of the key points; at least given an example that fits in more with our readers. After all, the article was talking about databases with hundreds of thousands of names, perhaps millions. How could that possibly relate? Let The Detective give it a try:

“Watson, do you think perhaps we were a bit, shall we say, vague in how some of the data mining techniques mentioned in that article could actually apply to the smaller list owner?” asked The Detective as we sat enjoying our brandies.

“Funny thing, I was just considering that,” I replied.

“Very well then,” launched The Detective, “perhaps we should give a slightly longer explanation a go. Let me start with the first point: too many databases.”

“Even a relatively small business could have too many databases. In fact, too many could easily be two, depending on the data that is stored in each of them. Take as a simple example a business that deals with consumers rather than other businesses. It would be quite easy for them to have two databases: one for email through one of the many systems out there, and a direct mail listing, perhaps a mailing list database or document they can merge.

By merging the two data sources, or more simply, picking and choosing items that can be used to properly segment the list, such a business could easily send highly targeted emails as well as direct mail to a potential customer base.”

“What types of items could they, as you put it, ‘pick and choose’ pray tell,” I asked, intrigued.

“Elementary, dear Watson. The simplest in this case would be zip code. If the business is local, then  they probably know the neighborhoods and thus the zip codes of the more affluent residents. Given that information included into the Email list, one could send an offer for high-end merchandise, knowing they would not irritate those who have less interest or capability to pay for such a purchase,” answered The Detective.

“Brilliant, sir!” I exclaimed in spite of myself.

“Another simple example would be if they have tracked the purchase history of their customers, perhaps in an accounting system. By adding an indicator of a high volume purchaser to their email program, they could also target special offers for such loyal customers!” finished The Detective.

“I think that gives a much better idea of what was meant by too many databases, sir. Now perhaps the others?…” I encouraged.

“All in good time, Watson. All in good time.”