One of the biggest mistakes many businesses make is trying to go directly from first contact with a prospect directly to a sale.
Does it sometimes happen that way? Sure.
Does it happen that way most of the time? No.
Just like a budding romance, for many businesses, the prospect has to warm up to you over time. It can take a while, this warming up period, especially for freelancers and service businesses where the style and personality of the person providing the service is a huge part of why customers buy.
It can be a dilemma for you, the seller of your product or service. What should you do while the customer is evaluating you and your offering? If you’re selling one-to-one, backing off completely isn’t the right option. But neither is pestering the prospect for a sale.
What you really need is a funnel, a way to track prospects through the journey between first contact and final purchase and plan your activities for each step along the way.
Now I know, as soon as I said “sales funnel,” you felt the black cloud of complexity starting to pass over you. We know that feeling all too well.
There are literally hundreds of CRM systems out there that promise to help you track your sales leads, close more deals, and make you more money, and most all of them are built on a sales funnel philosophy.
Our founders looked at a lot of those systems when they first built Stride. Honestly, they were all too complex. They’re slick, but as soon as you try to use them, the work it took to maintain them usually quickly outweighed the benefits.
We prefer things that are simple, which is why we developed a 4-step process anyone can use to set up a sales funnel that actually grows business, instead of just becoming a big headache.
1. Define the Stages and Keep them Simple
We recommend just five categories to build your funnel: lead, pitch, negotiation, closing, and won. This gives you all the data you need to see at a glance which of your prospects are where on the road to a purchase.
2. Track Only Prospects Who Might Turn Into Customers
A key problem with many CRM databases is that they ask you to put in information about anyone and everyone. The burden of manual entry is tremendous, and completely unnecessary.
Your CRM is for tracking prospects that might become actual customers. Don’t clutter it up with all of your networking contacts who are great people to know but will never become paying customers. Those people belong in your Contacts database, not your CRM.
3. Know Where You Are In The Sales Process
At a glance, you should be able to know how many deals you have in your sales pipeline at any given time. You should be able to see how much each deal might be worth, and where each one is in the process. This kind of tracking helps you see exactly what’s happening in your business and where future revenue might be coming from.
Plus, it gives you a chance to do some financial forecasting. If you have 7 active deals, each with a potential $10,000 in revenue, your pipeline is worth a maximum of $70,000. Add in your overall conversion rate and you can do some easy forecasting for where your business should be in revenue over the next few months.
4. Watch the Conversion Rate at Each Step
Typically, “conversion rate” means how many prospects end up buying. But that’s not specific enough to be helpful. Why didn’t they buy? Was it because of your marketing? Because your sales guy didn’t do a good pitch? Because they balked at the final price?
Don’t just track overall conversions. Track them for each step of the funnel. Doing so gives you a window into each specific step your customers have to pass through. Usually what happens is there are one or two steps that become sticking points. Fix those and your overall conversion rate will improve, sometimes dramatically.
Every business doing one-to-one sales needs some method to track its prospects. As you think about the right system for you, just make sure you don’t overcomplicate the process. Doing so will lose you time and efficiency, robbing you of precious hours you should be spending trying to grow your business.
Simplicity is the key to implementing systems that actually get used. Whatever system you choose to track your sales funnel, even if it’s just paper and pencil, make it as easy to use as possible. Do that and you should see improvement in every area of your sales efforts along with a healthier bottom line.
Mike Kamo is the director of marketing for Stride, a sales CRM that helps small and medium businesses increase their revenue.