Customer Acquisition: Maximizing Your Sales Funnel
Acquiring customers in the B2B world involves using a variety of marketing and sales steps with the goal of converting prospective customers into paying customers. The process is often thought of as a funnel where you pour in possible customers at the top, and through various steps, some percentage of prospects successfully convert to the next stage, making the funnel narrower as the process evolves.
This is the first post in a three part series that will cover how to identify and solve blockage points in your customer acquisition funnel. We’ll dig into two case examples on how to improve conversions and increase your sales.
No matter how large or successful your business is, you will have at least one place that is a blockage point in your customer acquisition funnel. This is the point where the conversion rates from one stage to the next are not satisfactory, or the point where you have a scaling problem, (i.e. you cannot profitably increase the number of people coming out of that part of the funnel because you have maxed out the capability of one marketing or sales technique).
As an example, you may have too few visitors coming to your website, which you see as the top of your funnel. Or you might have plenty of visitors to your website, but too few of them signing up for your trial.
Increasing conversion rates in order to lower the cost of customer acquisition can have a huge impact on increasing sales, so it’s worth thinking about and optimizing your customer acquisition funnel.
Identifying blockage points
The first step is to identify where blockage points in your customer acquisition funnel exist. The easiest way to identify a blockage point is to ask: “What is stopping us from increasing sales by 5x?”. Common answers include:
- Not enough leads coming into the top of the funnel.
- Low conversion rate from website visits to registered users.
- Low conversion from freemium product to paid users.
- Not enough growth in accounts after the first sale.
After many years of helping diagnose problems in different companies’ customer acquisition funnels, I have observed that there is one very common cause of blockage points:
You are hoping your customers will do something that they are not motivated to do.
You may be hoping your prospects will come to your website in droves. But first, you must make them aware of your site. Second you must provide a motivation or reason for them to want to visit it. What do you have on your website that is of real interest to your target?
Blockages in the customer acquisition funnel happen because most companies design their customer acquisition process around their own view of the world, instead of first taking the time to understand the customer’s buying process, and their concerns at each stage. This involves mapping out the customer’s buying cycle first, and then designing a process to fit.
However, most companies have already got a sales process in place, so instead we’ll focus on how to fix what is most broken in your current funnel.
Solving blockage points
Once you’ve identified your blockage points, get inside your customers’ heads and study their concerns and possible motivations at each particular stage of the sales process:
These concerns represent the friction in your sales process.
Mapping out customer concerns clearly in a written form will help you identify how you can motivate people to take the step or action you want them to take.
Think of the concerns as being the friction in the process, and the motivations as being the forces that you can use to pull customers forward in order to overcome the friction.
The art is identifying the right motivation that is great enough to overcome customer concerns, and help customers move forward through the sales process.
Customers now have an aversion to being sold to and exercise real control over the buying process, so old ways of moving them through a conversion funnel will usually have mediocre results. Getting superb results requires creativity and thinking outside the box.
It is important to realize that all sales and marketing funnels have blockage points. As soon as you remove one blockage point, another one will likely appear elsewhere in the funnel. This means there is always room to improve.
Use quarterly brainstorming sessions where key executives including the CEO, heads of sales, marketing, and product get together to work on coming up with creative ways to address the latest blockage point. Analyze customers’ concerns and try to come up with a motivation that will overcome those concerns.
When running these sessions it is highly valuable to have a flow chart diagram of your sales and marketing funnel process as one of the starting places for discussion. Without this diagram, you are unlikely to find that all the players have the same picture of what is going on. Use a whiteboard to brainstorm and write out customer concerns, and possible off-setting motivations.
Assigning a team member to ‘become the customer’
In my own startups, I found that I naturally gravitated into the role of being the person who tried to think like the customer, and represented their point of view to the rest of the group. In other companies, it is not always going to be clear which executive has the best natural tendencies to play that role.
Choose one person from the executive team to play that role and encourage them to become intimately familiar with how your customers think. This will only happen as a result of them spending time with a lot of customers listening and and asking questions. Then, in the quarterly brainstorming meetings their job will be to ensure that the voice of the customer is heard loud and clear.
The importance of metrics
I have talked a lot about the importance of metrics to drive performance (here and here). If you don’t measure your funnel’s performance, you have very little chance of understanding how to improve it. When designing any of these creative solutions, you will likely want to understand how effective your solution is and whether it is providing a good return on the investment you made. They key metrics you need are:
Measure the number of prospects going into each stage, and the conversion rate to the next stage. It’s also important to track the overall conversion rate of prospects from the top of funnel to closed deal, and the average deal size.
The shape of your funnel will likely vary for each different lead source (e.g. leads from Facebook ads may not convert well into trials. But, those that do convert to trials may have a higher conversion rate to closed deals than normal web traffic and the deal sizes may be larger). That means you will need to track the funnel metrics separately by lead source.
These metrics will show you your funnel blockage points, and help you understand whether your actions to improve funnel flow are working.
By identifying blockage points in your customer acquisition funnel, figuring out customer concerns and motivations, and making changes to improve conversions between stages of your funnel, you will can greatly improve sales.
I’d love to hear what blockages you have encountered in your customer acquisition funnel and how you think about addressing them. Please feel free to leave a response below!
In the next posts in this series, we’ll dig into two common blockage points encountered in the customer acquisition funnel:
We’ll cover how to identify concerns and motivations in each scenario, and offer possible solutions to increase conversions and improve sales.
This post was originally published on forEntrepreneurs.com.