You are starting up a new business and you have the expertise necessary to provide high quality results. It is quite possible you do not know anything about sales. This is understandable if you’ve never done it before, but sales is the most critical part of business success. The sales funnel is a description of the process you go through from making the first contact all the way to a final transaction. If you notice a picture of a regular funnel it is wide at the top, and narrows significantly in stages to the bottom. There are five steps along the way.
1) The Lead
This can be a total stranger and a group of leads is quite large. You can narrow this group down a little bit by going with qualified leads who meet certain criteria that you have (e.g., age demographics, people generally interested in your line of business, etc.). It is your decision as to whether or not you want to pursue a given lead.
2) A Prospect
The funnel begins to narrow as you deal with prospects. The people who have a specific interest in your offering and are open to communication. You can nurture the relationship with contact and providing information of value to the prospect. This can lead to the next step in the funnel.
3) Qualified Prospect
This is an even smaller group, but it consists of those don’t just have an interest in your offering, but a need for it. If you have successfully provided information, the qualified prospect can see the possible value in what you have. Qualified prospect also has the wherewithal to make a sales decision. This is a delicate part of the sales funnel. You are close to getting a sale, but it could fall apart if you are not careful.
4) A Committed Customer
At this stage there is at least a verbal understanding of the sale. The details, including contract, delivery, and payment, have to be worked out. This is a very detailed area of the funnel. If you have a standard contract as well as a payment procedure to present, it makes things much easier.
5) The Transaction Itself
The sale is made and what remains is the follow-up administrative activity.
Each part of the funnel is something that you need to be aware about. Just as a real funnel, it narrows and it means that the number of final transactions is much smaller than the leads you start out with. You should be studying those methods by which you can operate the funnel as efficiently as possible. You must also keep in mind, along the way a lead or prospect can be lost unless you are careful. Not every lead is going to result in a final transaction and you do need to cultivate qualified prospects so they become committed to making a deal. This is really all part of the process of running a business effectively. In the beginning you will be responsible for all of this, but gradually your business may grow to the point where you hire an account executive or contract with a sales representative. You will be better able to work with either as you become more informed about the processes of the sales funnel.