You’ve likely heard it before, “think of the marketing and sales cycle as a funnel.” But what does that actually mean, and how can you apply an understanding of this funnel to help generate paying customers? Let’s start by considering the funnel’s basic goal and identifying the stages of the sales cycle that help you achieve it.
At the top, you will find people who have potential to become your customers (leads), and at the bottom, you’ll find those who have made a purchase. Your goal is to transition leads into the funnel and move them through the various stages as efficiently as possible until they become a paying customer.
Based on the stages of the sales cycle, how does a lead become a customer?
At this stage, you are tasked with making your leads aware of your solution. This might also be the time when a lead first becomes aware of their problem. Be mindful that no matter how effective your solution, this critical stage tends to be one of the most difficult hurdles for a young company. Here are 6 lead generation tactics that can give your startup a boost during this phase.
Next, your goal is to convert a lead’s awareness of your offering into interest in learning more about your product as a potential solution to their problem.
Once you’ve captured their interest, you’ll want to educate the lead on how your solution solves their problem. Keep in mind, this is not always the appropriate time to push them into a purchasing decision.
Now your goal is to engage educated leads by showing them how to purchase your solution. This is often the stage when you can begin to apply appropriate pressure to convince the lead to make a buying decision.
In some sales processes, but not all, leads may be offered a trial of your solution which they can “test drive” before they decide to make the full purchase.
This is when a lead purchases your full solution and becomes a customer.
Qualifying Your Leads
Understand that taking a lead from the awareness phase to the purchase phase likely won’t happen overnight. Now, more than ever, potential customers have the ability and willingness to research multiple options before making a buying decision. Depending on the industry, a sales cycle’s duration can range from a matter of days to a matter of years.
How do you know if a lead is worth pursuing? This article from HubSpot outlines 18 questions you can ask yourself to determine if you should spend time and resources on a given lead. Assigning value to your leads can also be effective. The Grande Guide to Lead Scoring helps you understand this process.
Speed Up The Process
Be careful to avoid a situation in which a lead wants to move forward in the sales process, but you haven’t provided them with the necessary resources, incentives and/or instructions to do so. To avoid stalling the sales cycle, continually communicate with your leads. For tips on further accelerating the sales cycle, check out this article from WordStream.
You will never know what’s working and what’s not working unless you keep tabs on specific metrics. Be sure to measure the following:
- Conversion rates for how many leads successfully progress at each stage
- Money spent to convert a lead at each stage of the process
- Time spent to convert a lead at each stage of the process
- Opportunity costs incurred to convert a lead at each stage of the process
These measurements will reveal how many leads you must attract in order to gain one paying customer. In addition, you will be able to calculate an accurate return on investment figure, which can then be used as a benchmark of success for both current and future sales and marketing initiatives.
For more useful tips on getting your venture started the right way, check out JumpStart’s Entrepreneur Toolkit, which includes an in-depth Go-To-Market Strategy Tool and Go-To-Market Strategy Worksheet.
And don’t forget to sign up for JumpStart for Entrepreneurs, our monthly newsletter giving you more helpful advice along with local success stories and lists of local funding/networking opportunities.