Sales Funnel Explained With Illustrated Example (And Why Websites Don’t Work Anymore?)
I’m continuing my Online Business Challenge with great mentor Dave and I’m excited to share with you what I’ve just learned about one of the most fundamental sales and marketing strategies — Sales Funnel.
Make yourself nice cup of tea and enjoy — I hope it will make your cloudy waters of online marketing more clear.
To make it really easy, I‘m going to use the same illustrated Dave’s example from Online Business Challenge — John and his Secret Family Recipe BBQ Sauce.
John has awesome Secret Family Recipe BBQ Sauce he wants to sell.
John paid thousands of dollars to have his website built and now he is sitting around and wondering why his new beautiful website isn’t converting any sales?
And the answer is because websites aren’t really designed for making sales…
So, John runs into some smart marketers online who teach him about powerful tool — Sales Funnels. And John sets one up. The first page of Sales Funnel is Lead Capture Page.
In his Lead Capture Page John offers a visitor a free gift in exchange for his email address. We call this free gift a Lead Magnet.
Something like a short two page pdf called “The 5 Secret BBQ Recipes That Will Make Your Taste Buds Explode”. Now John can follow up via email even person doesn’t buy anything from him right away.
Once they opted in for John’s free gift, John emails them his pdf and he also takes them to Sales Page.
In sales video on his Sales Page John shows people “How to turn your basic meat into a Southern Treat”. He shows how to prepare meat, cook it and even what the finished product looks like.
Another tip to make any Sales Page convert more sales is — there should be no other distractions on the page for the visitor to click around, because a confused or distracted person will never buy.
Good news! Because John offered so much value up-front, his Sales Funnel is converting a good percentage of people who coming through it.
Most people will stop right there to celebrate, but John knows from these smart marketers — this is where everything just begins. Let’s say Jon makes 10$ profit on every bottle after he covers his hard cost to make each bottle of BBQ sauce. But he has to pay on average 20$ in advertising to generate each sale. What? Oh, no — he’s loosing money — 10$ on every bottle.
But that’s where Sales Funnel gets exciting, because after initial purchase John asks himself “What would be the next obvious thing to offer a customer who just bought my product?” and “What would they need or want that would make their purchase more complete or convenient, or add more value?”
The next obvious offer to make an up-sell would be discount for buying multiple bottles, like “Buy 6 Bottles And Get 1 Free”.
Let’s say 30% of people took that multi bottle up-sell. For every 10 customers that came through, 3 of them bought up-sell and John was able to collect extra 150$ in Profit with no extra work.
So, let’s recap. To get 10 Customers it cost him 200$ in advertising. He made 100$ on initial 10 customers purchases. At this point he is still 100$ in the negative, but 3 of his customers took his up-sell to buy additional bottles and got 1 free, so John made additional 150$ in profit which took him from 100$ loss (on those 10 customers) to 50$ profit.
A Sales Funnel allows us to have best possible chance to make money on a new customer…
Or at very least to break even on their initial purchase after we cover the cost of our ads.
So we essentially generated a customer for FREE!
And now anything that customer purchases from us in the future it’s ALL PROFIT!
The mistake mostly people do, they try to make all their money on that first initial sale, when really the key is to have that initial sale just break-even on your advertising costs.
That way you know for a fact — you’re able to generate more and more customers for free and then on the back end, you can focus on maximizing your profits.
So, after a month John emails all his new customers and he says “Hey, hope you loved my BBQ sauce and if you did and wanna get set up on a subscription for me to send you a new bottle every single month you can sign-up and do that right now”.
And the percentage of those people who wanna do that and every dollar that he makes at that point is ALL PROFIT!
All made possible because John utilized a Sales Funnel to make it all happen!
You just witnessed the power of Sales Funnel!
I hope this was useful and if you want to learn more about Sales Funnels or other powerful online business and marketing strategies or you are completely new to this, but want to start your online business and gain financial freedom — just dive into this amazing Online Business Challenge. It costs only few bucks, but you will get tons of valuable information.
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