Thinking About Funnels


As a marketer working on improving a sales funnel, you must change only ONE element at a time and then wait to collect statistically relevant results.

Yes, this is expensive. Yes, it is slow. But it is the only way to learn whether what you did had an effect or not…and therefore be able to use it again.

This is also called “Barrier To Entry” and is the result of committing to the process: you learn things your competitors do not, and out-survive them because of it.

As to the thinking about funnels…

Traffic and Conversion are important but not enough. As we have seen, focusing on these two elements only results in a mystery: to improve results, should I work on the Traffic side or the Conversion side? IE. do I need a better quality traffic source…or would I be better to concentrate on improving something on the conversion tool?

What I am about to share is something I charge for. People get on consultation calls and I give them this information. It’s currently $2100 for a 2 call package so understand it is valuable. Use it.

To split up the effects of your funnel you need to discern two things. Is the quality of your traffic source good? And is your conversion tool doing its job?

Most marketers couldn’t tell you. They are busy furiously paddling in the waters and churning up muck so the results get confused. The tendency is to blame the conversion tool but this is often incorrect.

Getting the wrong people into your funnel has, in my eight years of doing funnel consultation calls, been the biggest factor of poor performance.

If I am driving tech fans into a funnel for gardening products, it doesn’t matter how many of them I cram into there, does it. I’m never going to get great results because that traffic source is simply not a match for my offer.

But if I can get people to hop over from an online ad or banner on a gardening magazine’s website or gardening forum…now we have something. It’s highly likely these people will be a fit for this offer. And I can have a strong certainty of this “fit”—a message to market fit—before I send one lead to the conversion tool.

Yet most marketers will start taking massive action on their conversion tool when results are not what they hoped for.

bag of money with funnels



So your thinking needs to begin further back. All the way to “Are the people here at this traffic source likely to be interested in my offer?” Sounds basic? Many marketers aren’t doing this. They’re dropping their ladle into whatever river of traffic they first see flowing by, and scooping those people over into their funnel.

A measurement needs to be included in the middle of the funnel. The truth is we don’t just need leads: we need qualified leads.

Qualified leads are people who have a need or a want (pain point) for what we offer…have a problem large enough to warrant our involvement in solving it (budget)…and have a personality we’d like to work with (in the IM world, not serial refunders; in the consulting world, not a Client From Hell.)

When we measure the funnel this way:

Unqualified Leads >> Qualified Leads >> Sales

we suddenly have a way to measure the effectiveness of traffic and conversion. We can separate out the elements and discern which to work on first.

Let’s say we dumped 1000 leads from Hot Water Heaters Weekly into our gardening funnel. It’s not a great overlap but could be worse: we’re likely to get some homeowners but mixed in there will be plumbers, landlords, and a majority of other folks who are not our ideal customer.

Since we are not sophomoric junior marketers running willy-nilly down Sales street, and have instead been trained by Jason Kanigan, we know that it is just plain dumb to send leads immediately to the conversion tool.



We need to qualify the leads.

And as we qualify them, we can warm them up.

First, we capture the lead. This basic step is missed by even experienced and corporate marketers who ought to know better—last night I spotted a Facebook post by someone who pointed out a major retailer wasn’t using pixels to continue to market to leads. That company paid for the lead…and it’s getting away. Do not underestimate the half-assedness of other people. So we send the lead from the platform we sourced it on to an opt-in page.

The lead gets the chance to sign up for an ebook or free video series or Top 10 pdf or whatever. This is the first opportunity for the funnel to fall down. And the funnel falls down at every stage. It’s Barrier To Entry again…stick with it and you’ll figure out something few others have. If one opt-in doesn’t work, try another.

Now that you’ve captured the lead, you can continue to market to them. Send them stories of how your customers use the product. In ecommerce, we don’t just show them the flashlight, and give them a lame features listing: that it’s 6″ long and black and lights up the night. Tell them a story about how this father used the flashlight to guide his family out of danger when the power went out—that sells.

Then give them one of many opportunities to go to the conversion tool.

First we want to bring them around to our point of view…why this solution is important, why it matters, why you need it in your life. Then we give them the opportunity to buy.

WHAT THE MATH LOOKS LIKE (and you had better stop being scared of a little math)

After the 1000 leads have been processed, let’s say the results look like this:

(U)nqualified Leads / (Q)ualified Leads / (S)ales

1000 / 52 / 7

That’s a 5% Qualified lead ratio…about what we expected given the traffic source, right? And a 14% conversion ratio on Qualified Leads to Sales.

Now your average marketer would be concentrating on the 1000 leads to 7 sales ratio and freaking out, because they don’t know any better. They’d start the furious paddling…changing everything up since they had no idea how to diagnose…and getting nowhere.

Instead of worrying about the (illusory) less-than-1% conversion ratio apparent in the 1000:7 numbers, you now know that there’s really NOTHING WRONG with the Conversion side of things. It’s converting at 14% which is actually good.

Where the problem lies, as you can now clearly see with what I’ve taught you, is on the Traffic side. 1000:52 ain’t good enough. We need a traffic source that has better than 5% of our target market floating around in it. This is where we’d get our biggest bang for our buck in improving.

Dumping 2000 leads from Hot Water Heaters Weekly, if that’s even possible—traffic sources have caps on the amount you can send over a period of time…after all, there are only so many subscribers to our imaginary online magazine—won’t get you the results you’re hoping for. If things continue as they have, all you’d probably get is around 100 Qualified Leads and 14 or 15 Sales.



Thinking about Cost of Customer Acquisition and Lifetime Customer Value, the two big variables in marketing, this result likely isn’t good enough to justify the effort. Advertising in the magazine to bring those hops over…the cost of the lead capture and autoresponder series to continue to market to the leads…how does this total cost compare to the total revenue you’re getting from 15 sales?

Let’s say you pay $2000 to get those banner ads, and the maintenance cost on your funnel infrastructure with the content generation cost amortized over six months is $500 per month. Over the month you drive those 2000 leads and each sale of some fancy gardening tool set is worth $50. This means you paid $1.25 per lead and a total of $2500 to make revenue of $750. Congratulations, you lost money.

Even if the sale price is tripled, $150, you lose money. Fail.

Now a good marketer doesn’t make their money from a single offer. There has to be an upsell, a back end offer, and subscription models are the most popular right now as you get the customer once and bring in revenue again and again for your trouble.

You can use the model I’ve given you to back out from the revenue figure you want to make all the way to the activity level you need to run at to get there: you can even calculate what Cost of Customer Acquisition this funnel can support BEFORE you ever run a lick of traffic through it. Imagine the power that gives you.

What smart marketers do is come up with a Planned (aka Pro Forma) performance, and then compare it to Actual data later on. Most marketers are “too busy” to do this, or “the numbers never work out”…funny how in real corporate businesses this is how it is done. Shows you immediately where the mindset of these marketers is at, doesn’t it.


I’ve given you plenty to think about here. Go use it.

And if you'd like to book a call to talk with me about your funnel...