This is part two of a four part series. In this series, we’re exploring what it takes to create an online sales machine. In the first part, we explored The Number One Reason Most Online Businesses Fail and we learn about the sales funnel, aka the sales conversion funnel, as a solution. In this post, the second one of the series, we will learn about sales funnel design. In part 3 of the series we will learn how to build a sales funnel, and in part 4 we will discover how to leverage other marketers audiences to feed your sales machine.
In the last post: “The Number One Reason Most Online Businesses Fail (and the Sales Funnel Solution)”, we touched on the process of filtering the ideal customer from the ones that are not ideal. If you haven’t checked that post out yet, I suggest you jump on over there now, because you will gain valuable insight into sales funnels and the customer experience.
In this post we are going to go even deeper into the design of sales funnels. There are two distinct segments of the sales funnel: the front end and the back end. Many marketers focus predominately on the front end – making their website look good, creating low-priced front end offers, and drumming up massive amounts of traffic through social media, PR and paid advertising. Don’t get me wrong, all of these initiatives are valuable, after all without traffic, we would not have any income.
However the mistake that many business owners make is they focus dis-proportionally on the front end.
The Sales Funnel Model
So now let’s start talking about the basic structure of a sales funnel. This is your model for business growth. The beginning of your sales funnel should be targeted on attracting your potential customers, or prospects. These are the people who are called “leads”. They are eager to “learn more” but you can’t count on them yet to be official buyers, much less official “long-term” buyers. With time, your uninterested and non-committed leads will trickle off to leave you with your customers. These are the people who not only like what they see and hear, but are willing to pay for small-ticket items. With more time, your non-committed customers will trickle off and leave you with your “hyper-responsive customers”. These are the people who will buy all of your products—from the initial start-up products to the high-end top-dollar programs you offer.
So what tools do we use as a conduit for our flow of visitors, leads and customers? There are a number of online tools and platforms and of these, email is arguably the most effective.
Email Marketing: The Sales Funnel Sweetheart
Before we dig deeper into sales funnel design, let’s explore a tool that is the poster child for sales funnel success: email marketing. Sales funnels and email marketing go hand in hand, but the reality is that email marketing is something that few people truly understand. Yes—you can send a few emails, but are you truly on the mark in terms of making them relevant to your business and making them work for you long-term? If you have an email marketing list, it is important to have a goal driven email marketing strategy in place.
When your prospective customers first enter your sales funnel, it’s important to showcase your best self. It’s almost like that first-impression we have all heard so much about. You only get a short window of time to put your best self forward in person and the same is true of email marketing.
After initial introductions, it’s time to deliver immense value and demonstrate your expertise to gain trust. Throughout the next segments of your sales funnel you will eliminate prospects who aren’t a good fit for your products or your brand and then move the good prospects to your back end products.
It’s essential you understand, and feel comfortable with, the process of eliminating the customers who are not compatible with your offerings. Some entrepreneurs and marketers worry about having an email list of 10,000 and then slowly seeing it diminish to 8,000, 4,000 and then 2,000. As long as this loss is caused by a “leaky” sales funnel due to tech issues or poor copy for example, then not’s not a bad thing at all! You don’t just want your email list to attract any people. You want it to attract—and keep—the right people! Your job is to offer something that piques their attention, draws them in with more value and move your ideal customers on to the higher-end products that you offer.
Marketing on the Front-end, Money on the Back-end
Some newer (and even older) email marketers think that their ticket to wealth and riches is that one big-dollar product. They search high and low to find one big idea that will answer their dreams. This is remotely possible, but highly unlikely. The reality is that your first product most likely won’t be a million-dollar winner. Your second product probably won’t be there yet either. In fact, it can take a while to get your email list to the point where it is bringing in any revenue at all. I’m not sharing this to discourage you. I’m telling you this to let you know exactly what you are in for. Email marketing is not a fast-return task. What it offers though is a great possibility of building your brand along with revenue.
I want you to understand the structure of email marketing and sales funnels. The first-tier products are rarely the high-dollar ones. In fact, many marketers lose money on these products. The reason they are willing to do this is because they formulated a business structure that pays for the loss. All you have to do is search for affiliate programs and you’re likely going to find more than a few that offer upwards of $100 for some front-end product. That means every time an affiliate sells their product, the marketer loses that money…or do they?
What the smart email marketers know is that after they pay out that $100 to the affiliate who procured the qualified lead, they are going to move that prospect through the sales funnel that will eventually result in the sale of a high-end product later on in the funnel. We’ll discuss this more later, but for now remember that the front-end products are attractively structured to draw in your potential long-term buyer. While some businesses do make all of their money dealing in front end products, most marketers find that the back-end is where the real growth is.
Making Sure Your Front-end Does What it is Supposed to Do
With the main purpose of our front end offers being the acquisition of as many new customers as possible below, or at, break even, let’s take a look at how we can achieve this:
The first product or service a new customer gets from you should be of truly remarkable quality. The value the potential customer receives from your front-end products should be disproportionate with the price they pay. The value of your front-end products should instead be based on the average lifetime value of your customer.
Low Barrier to Entry
Your funnel front-end is intended to be an acquisition mechanism. Your main goal is to get the maximum number of new customers possible, at break-even or less.
It’s human nature to be wary of new things. It’s an innate survival trait that has been with us since the cave man era. It’s no different in the world of online marketing. This is why offering products or services with a low barrier to entry at the front of our funnel can increase the likelihood that prospects will enter out funnel. Not only that, but ow-priced items reduce risk for your prospects and easier for you over-deliver on value. It’s win-win
Over-Deliver on Your Commitments, Exceeding Customer Expectations
Many marketer make the mistake of over selling their front-end offers. The potential customer hands over their email address based of the benefits promised on the sales page or adverts, only to disappoint their new sign-up by offering a substandard product that does not fulfil the expectations they have set on the other side.
Whatever you promised to prospects when promoting your front-end offer, you need to fully deliver and exceed their expectations.
A great way to do this is by adding high quality bonuses that have not even been mentioned in your promotional materials. Every product in your funnel should be accompanied by at least one unexpected bonus.
Another way to over deliver is by delivering exceptional customer service. Every point of the customer experience should be designed and implemented with your customer’s satisfaction in mind. Product ordering delivery, customer on-boarding, and customer service should all leave the customer with a smile on their face, feeling like you have gone above and beyond to make them happy.
Seed Desire for your Up-line Products
Your front-end products should not be created in an isolated fashion. They should be deigned in the context of your entire marketing funnel. Each product should be congruent with the next. A funnel with the high mid-level item being a $197 training course on Instagram marketing would not be a logical stepping stones to a high ticket $2,000 course on Mastering Facebook Ads. Why? Because someone wanting to learn Instagram Marketing would more likely be inclined to want a high ticket item such as Mastering Instagram Branding for E-commerce or Mastering Instagram for Personal Branding (depending on the target market)
Included with every product in your funnel should be an opportunity to progress to the next product. For example: You can interweave mention of other products and include case studies and customer testimonials. It is important to avoid being too aggressive with your back-end product promotions in your front-end product. You can position these offers as “Thank You Offers” to take a soft sell approach.
Gently, gently is they key, as you want the customer experience to be enjoyable to avoid losing customers.
Covering your Front-end Advertising Costs
The front-end is all about capturing the attention of your potential pool of buyers as you usher them into your sales funnel. The great news for marketers is that there are a wide variety of ways you can attract new prospects into your sales funnel via the email marketing of the beginning. What is important is to always understand the numbers. Your marketing efforts need to be tested over and over again. There will never be a point where you’re “done” testing. The reason is because different tools work better with different customers. Your job is to find out what works for YOUR desired customers.
Of course, you probably have some limitations on your resources right now. That’s fine—most marketers do. You can re purpose blog posts, create PDF checklists, design templates, video training – there is no end to the free lead magnets you can create. Your main goal is to create something that is in demand and delivers immense value, in quick and easy to consume format.
To create your funnel front end, you will need to create a way to attract traffic. This can include Social Media, blog posts, paid ads, and a myriad of other traffic channels. A key component to creating marketing funnels is an email list with an autoresponder. An autoresponder is a feature provided by many email service providers which enables you to create a sequence of emails in advance, and have these emails send out over a period of time relative to the date the visitor opted in. If you opt in to a list today, you will receive a welcome email today and an educational email each day for 4 days, then you will receive an offer on the final day of the sequence. If I sign up to that exact same email list 3 days after you do, I will receive the exact same email sequence, with a welcome email starting on the day that I opted in, an educational email for 4 days after that, then the same offer on the final day. Regardless of what day or date each person signs up, the same sequence of emails will be delivered.
While there are many free options for driving traffic into your sales funnels, many marketers opt to pay for traffic for more immediate, and bigger results, knowing that the margins on the mid and high end products will cover these advertising costs.
So how do you know if your back end revenues will cover your front end expenses? Once the front end and the back end of your sales funnel are set up, your traffic has been flowing for some time, and your traffic is consistent, you will be able to forecast your earnings. This is the beauty of having a solid sales funnel setup. When your systems are well established, you can project your revenue, expenses and your profits, and once you are that this stage you will have a formula to work with. Just imagine have the data at your fingertips which enables you to forest a profit of $2000 for every $300 spent on Facebook Ads!
The key to operating a successful online business is stability and certainty. Most marketers will find that the front-end of your sales funnel isn’t stable. Different traffic sources will bring in different volumes of traffic, and there can be so many external factors that influence email sign up rates.
Certainty becomes more apparent after the initial conversion from site visitor to sales funnel lead. After you have a few months’ worth of solid traffic, you can start to analyze the data for conversion rates. If you notice that for the past six months you have consistently had 100 people per week sign up to your email, and within a month see 99 fall off, then you know at the end of the six-month period you can predict with a degree of certainty that you will have about 3-8 real customers.
It is your back-end that is going to be your obsession, because the stability and certainty will allow you a looking glass into the immediate future. As you can imagine, your opt-in and conversion data will become your best friends. This data can be used for create predictive analytics so that you can measure performance and predict what will happen throughout your sales funnel. This information can help guide pricing strategies and other key decisions. Sales efficiency and revenue growth can both be positively impacted using predictions based on sales funnel data.
Looking at the example above, if you know that you have 100 people sign up per day, and in six months you’ll have 10 true customers, then your conversion rate is at 0.02%. Doesn’t sound like much? Well… what if that 0.02% equates to ten customers consistently purchasing back-end products priced at $2,500 each. Now, you have a profit of $25,000 for your work. How does that sound?
How Location in your Funnel Affects your Price Point
There are two key components to concern yourself with when pricing the products in your sales funnel: your front-end products and your back-end products. As mentioned, products that are located at the front-end of your funnel are high value but free, or at a very low cost. The purpose of these products is to demonstrate the value you can deliver and to build trust. This is why you want to ensure you are delivering quality information or a quality product. If you don’t, the prospect will simply never convert to a customer. Products that are located at the back-end of your funnel are of even higher value, which justifies you putting them at a higher price point. These are products that are much more robust than your initial ones. Here you have your DVDs, MP3s, podcasts, seminars, coaching sessions, etc. You can even include some usually lower-end media like e-books and newsletters, as long as they deliver outstanding value in line with the financial commitment the customer has made.
If you’re looking at the front- and back-end products, you are going to find that the biggest differences are the customers they attract and the price point attached to them. Think about the progression. The people who are your “hyper-responsive customers” have gone through your entire sales funnel and found it useful enough to push them to the next level. They have enjoyed your materials enough that they still desire more and are eagerly awaiting your next move.
When you get your customer base whittled down to the “hyper-responsive customers”, making sales is significantly easier, because by this stage of the funnel, you understand what these customers want and you know how to deliver immense value. By the time your hyper-responsive customers reach the end of your funnel, it is not uncommon for them to account for only one percent of your entire email list.
The front-end products you offer will usually be free, or at a very low price point. The higher end ones usually come in at the few hundreds of dollars to thousands of dollars. Some online entrepreneurs are charging $25,000 and beyond, for high ticket, one on one coaching. There is no real structure for what you “must” do in terms of pricing, but remember the progression and the value. Here is an example of a pricing structure:
• Begin with a free newsletter
• Offer a $19.99 PDF that further explains your topic
• Offer a $99.99 video course that guides your customer through their issue
• Offer a $49.99-per-month subscription for detailed counseling and exclusive communication
• Offer $999 online webinar
• Offer a $1,500 private coaching package
Somewhere in your pricing structure there will be a cut-off. Your hard-core die-hard customers will be the only ones who pass that cut-off. These are the customers who have the desire, need, funds and time to commit to finding answers for their problem. As you solve their pressure points, they continue to seek you out for more.
Sales Funnel Design takes time
Designing a good sales funnel can take months, sometimes years, to achieve. Remember that it is built on data you collect along the way, and the implementations and improvements that you make based on this data. Keep your eyes on your vision and maintain a positive mindset. Over time you will sharpen your skills, improve your products and learn more and more about your “hyper-responsive customer” base.