What is a funnel?
In sales and marketing terminology, a funnel is a series of steps to filter and bring your many prospects to becoming a few qualified buyers. That's it, at the funnel's most basic level.
We can add upsells, downsells, cross sells and other elements to our funnel, but let's start with the basics.
I explain the three components of a sales and marketing funnel in this video:
Jason Kanigan Explains: What Is a Funnel?
So we see that a funnel contains three basic pieces. And if any one is missing, that funnel is 'broken.'
The Three Parts of a Funnel
Each of the three components of an effective funnel do a specific job.
First you need a Lead Generation System for bringing in traffic. Hopefully this traffic is at least somewhat pre-qualified; the more qualified, the better. But also, the more pre-qualified, the more expensive that traffic will be.
We are looking for larger numbers here. Prospects entering the funnel here will have to be filtered down to smaller numbers.
Second, a Qualification System is necessary. This component will filter leads from being unqualified prospects to those who are a fit for the offer.
Note that you are losing people as they progress through the funnel. This is normal and desirable! It is perfectly acceptable to have people who are not a fit for your offer to be gently and politely shunted aside by your funnel.
Third is a Closing System.
Written or VSL copy, graphics, layout and design...all these combine to comprise the Closing system.
Can you see how if all you're relying on is this piece of the puzzle, you are making life difficult for yourself?
Copy on a sales or landing page will qualify somewhat. But if you are getting a ton of traffic but only a handful of conversions, odds are your funnel is broken and you are doing a poor job of qualifying.
Can you see how by asking "What is a funnel?" and breaking the process up into each of these components, we can isolate them and see which one is working or needs improvement?
I frequently say, "Your traffic source is as or even more important than the sales copy."
Can you guess why, now?
That is part of the Lead Generation component. And if that part has been ignored, the quality of leads is likely to be low. Earning conversions off low quality traffic is tough work.
Final Thought On What Is a Funnel
Instead of throwing traffic from blind ad swaps or solo ads at your sales page and depending entirely on the Closing System to do all the work, build backwards from the revenue you want to generate.
You need so many sales to make the money you want to make over a period of time.
So, estimating at first but gradually building confidence in your estimates from real performance data, how many prospects do you think have to make it through the Qualification System?
And going back up the funnel, generating that larger number of qualified prospects waiting to be closed, how many leads do you think you need to enter the funnel's Lead Generation System at the top?
Leads >>> Prospects >>> Buyers.
We could estimate, for example--and this is an example, and likely not representative of what you will experience--you want 10 buyers this month at $297.
So that's the bottom of your funnel: 10 Buyers.
Moving up from there, we estimate a 2% conversion is what can be expected at this early stage in the funnel optimization process. We don't know how good our copy is yet. So 10/2% = 500 qualified Prospects.
Remember this is the path from qualified Prospect to proven Buyer we're talking about here, not the entire funnel. We could throw traffic at a Closing System and be very pleased with 1-2% conversion. But that's not talking apples to apples here.
Now we can go up to the top of the funnel. Those 500 Prospects...to get them, we initially estimate 1 in 10 entering the funnel will qualify for the offer.
So what have we learned?
We need 5000 Leads to enter the funnel.
If during the month we don't get 5000 leads to enter the funnel, and have sufficient time for them to pass through the process, we know we won't reach our revenue target. This tells us how much traffic to buy or direct.
By splitting traffic and qualification into two components, we can see a) how good our traffic source is, and b) whether our Qualification System works the way we think it should.
If you get through the month and you put 5000 Leads into the funnel, but only 300 Prospects made it to the qualified middle...you know that's where the problem is.
Keep in mind that these ratios are for THIS traffic source and THIS offer. Change variables and you'll change the expectations.
If you have any questions of your own about "What is a funnel?" please ask them below.
>> To get Jason's help with your funnel creation or optimization, click here. <<