January 16, 2023 at 9:40 p.m.
Who Owns the Pickup?
The Sales Funnel and Hunting Seasons
By Richard Koenings-
The Common Steps of Selling
Since all businesses survive or perish depending on sales and, in keeping with the pictorial themes to help in visualizing these Small Business Advisory topics, let’s construct the Sales Funnel visual using some hunting aids-bear and deer and turkey.
As a funnel, think of it as a reverse megaphone with the wide end left and the narrow end right symbolizing you must start off with many more prospects than you will end up with customers. At the top left, for the length of the funnel insert the following words: Prospects, Qualify, Contact, Demo, Negotiation, and Close. Off the megaphone to the right of Close, add Follow Up.
A prospect is a potential customer you have identified as fitting your profile, the type of buyers you feel will benefit from your product, whether a goods or service. Let’s then break them down into three size categories. This is where hunting comes in because that is exactly what you are doing, hunting for customers, for sales.
Back to bear, deer, and turkey. We’ll call the largest prospects, those who might buy a lot of what you are selling but be harder to ‘bag’, the ‘A’ or bear accounts, then the next are the group ‘B’ or deer accounts, and finally the ‘C’ or turkey accounts, those who are at the lower end of individual product purchase value. And for the sake of the example, let’s say you have identified targets of five A’s, 20 B’s, and 50 C’s. That would be quite a freezer full if you got them all, but you won’t so hold off on the appliance store for now.
You are not going to bag five bears or 20 deer or 50 turkeys, so be realistic in allocating your efforts.
While it would be great if all the A’s became customers, but that’s not likely. Remember these are only prospects, that’s a long way from becoming a customer. While you will certainly decide to spend time investigating and cultivating all your A’s, don’t put all your ‘eggs’, that is your efforts in one basket. You must spread yourself out to pursue the B’s and C’s as well. There are more of them and you will likely sell to at least some of them, but it will take, in our example, 10 C’s to equal the purchase value of one A. On the other hand, if you spend all your efforts only hunting all five A’s and get none, you no longer have a pickup truck to go after any of the B’s and C’s even though you could have gotten some of them just by virtue of the numbers.
Now let’s talk about the progression from prospects to customers. Just because you have identified them as potential beneficiaries of your products doesn’t mean they’re ready to buy, you need to qualify them, that is rate them on a scale as most likely to be interested and looking for the solution to an identified problem that your product provides.
These prospects could have made your list as qualified because you have marketed your product and some of them have responded to your marketing, these are Leads. They could also have become qualified prospects because of a mutual connection that can speak to your products and how they benefited and how the product could benefit them as well. This is a Referral, a person between you and the qualified prospect whose mention can get you in the door.
In preparation for you contacting these qualified prospects, prepare a list of satisfied customers and some who will be willing to receive a call to verify the benefits of your products and their satisfaction in dealing with you. While ‘cold calling’ does sometimes work, it’s hard work with a low conversion rate.
The objective of the contact is an appointment to demo your products to, whether a good or a service. It may involve inviting them to you or you to them depending on your product.
Negotiate. If you get to the demo you are ready to negotiate the sale, it might be quick, it might take a progressive give and take effort, again depending on your product, but you definitely need to have shown your products benefits so that this stage is no longer about whether, but about terms.
Now you close, agree on the sale and deliver or set up delivery. The off the funnel step I mentioned above, is probably the most important step to retain the customer for the future.
A critical fact, selling to an existing customer is a fraction of the effort/cost to find and sell to a new customer. So follow up, stay in touch to confirm their satisfaction and your willingness to be available for questions that inevitably arise as to proper and most beneficial use of you product.
At the end of the funnel, what started out as a hunt for five A, 20 B, and 50 C prospects may only involve success of one A/bear customer, five B/deer, and 10 C/turkey customers, but that’s the equivalent of three A’s so you still own your pickup!
The Summary Message
So now create your sales funnel, your hunting list. List your A, B, and C prospects, then qualify them, rate them as most likely to buy and why. For each qualified prospect, how are you going to make contact, by referral, by the fact that they responded to your marketing, or by cold call. Remember, you only have so much time to hunt so allocate your efforts across the prospect sizes. Once you get an audience, a demo opportunity, you are very close to negotiate the close, don’t blow it. The demo is the crown jewel of the funnel, in sight of the finish line, but the follow up, after sale attention, is the next sale which avoids all the prior steps in finding a new sale. Happy hunting!
The future of retailing. Time now for another pause in these lesson topics to look at retailing, probably the business category most impacted by these last few years of Covid focus. Let’s remember the nostalgia of the past but visualize the new frontier. After that pause it’s back to the program and cash flow, probably more important to small businesses than profits.
Richard Koenings is an instructor and professor at Nicolet College and Concordia University, an executive manager of small and large businesses, a founder of three businesses, and has 30 years of experience as a business lawyer.