Measuring Sales Funnel Conversions

By Bill Freedman

Conversions in business-to-business marketing and sales processes are always exciting things. Amid the excitement, its important that the entire team shares a consistent understanding of how to measure sales funnel conversions.

This article lays out the three key performance metrics for conversions and why they are important. Along the way, you’ll learn the best practices to increase the leads of your businesses that many lead generation b2b companies implement.

Conversions

Measuring sales funnel conversions

Credit: Eyeview

Simply put, a conversion is where an individual progresses from a less engaged state to a more engaged state. Increasing levels of engagement correlate to some degree with relevance, trust and purchase intent–all good things.

The total number of conversions is important because they give a sense of the magnitude of activity in the sales process. And size does matter. Each member of the sales team needs a steady flow of conversions in their territory to stay productive and hit their numbers.

Conversion Events

Conversions events come at many different stages in the funnel and mark the moment that a conversion becomes measurable. Conversions happen in the mind of the prospect first, and the vendor learns of the change from direct communication or through behavior measured on the web site. Examples of conversion events include:

  • A customer sends a purchase order, converting a forecasted opportunity into a closed deal
  • A sales accepted lead (SAL) qualifies into an opportunity
  • A website visitor becoming an inquirya prospective customer visits a trade show booth
  • A prospective customer requests a product demonstration
  • A name in the marketing database, through automated scoring crosses the Marketing Qualified Lead (MQL) threshold, is passed to sales

The counts for each conversion event are important because they helps to identify bottlenecks and opportunities within the process. You need to know if you have enough lead development personnel in place to qualify incoming leads before they grow cold. Likewise, you need to make sure their is sufficient flow of MQLs for the number of quota-carrying sales staff. Not all conversion events are equally important to the sales process. Each organization needs to decide which conversion events are worth tracking and how various conversions events impact the sales funnel.

Conversion Rate

For each conversion event in your sales process, there is an an associated conversion rate.

Conversion rate =
# of Conversion Events
# of Conversion Event Attempts

The conversion rate for each conversion event is important as a measure of process efficiency. It takes a bit of experience with your lead generation techniques and sales processes to establish the “natural” conversion rates for various events. But once you have a benchmark, the next step is to look for ways to improve the conversion rates along the way.

Conversion rate improvements play a major role in profitability. If a particular ad campaign yields 10% more results, it drove more opportunities for the same budget. Likewise, if the same sales team is able to close 15% of MQLs instead of 10%, a nice percentage of the increased revenue flows down to the bottom line.

Getting  Sales Funnel Conversions Right

We’ve done a bit of math today but don’t forget that the real job is creating conversions. Conversions happen in buyers’ heads and are only counted when they hit the funnel. Defining the value proposition, making repeated offers, executing through the sales process is how you earn sales funnel conversions. The bulk of you investment needs to be focused on reaching out to new audiences and providing conversion-worthy content, products and experiences.

Tracking sales funnel conversions is very important because they often involve hand-offs from one person or organization to another. Hand-offs are an area where there is a heightened risk that something goes wrong. Best practices for hand-offs involve rules (either manual or automated) that ensure 100% of handoffs occur on a timely basis. What’s more, its not sufficient to hand-off a lead to sales to a “sales team;” it needs to be assigned to a specific person, typically based on a territory assignment. Another best practice is to measure the sales rep against a response-time SLA for newly assigned leads, as many kinds of leads get cold very quickly.

Both sales and marketing professionals still need to prioritize creation of new customers. Understanding the mathematics of sales funnel conversions helps you understand how the funnel comes together and where you can generate the most leverage for your business.

What is it Like to be Your own Customer?

By Bill Freedman

Häagen-Dazs strawberry ice cream. Ecco shoes. The New York Times. WordPress blogging software. We all have our favorite companies, products and services. Products that deliver exceptional value, services that are reliably great, and companies that are easy to business with.

haagen dazs strawerry ice cream

Photo credit: Haagen Dazs

Now look in the mirror: is your business as consistently excellent as your favorites? If you’re not sure, then you probably have work to do. After only a brief glance in the mirror, I buckled down and got to work.

Benchmarking Customer Experience

I started by taking stock of what I deliver, my uniqueness and the promise I offer. This was the easy part, because I get to define the playing field. Just as you can’t play tennis without lines and a net, you can’t benchmark your business without a measure of capabilities.

The next step was also easy. I examined my “first impression” touch points: my email footer, my voicemail greeting and my home page. Did they match the benchmark I set for my business? I made a few small adjustments to be more consistent, clear and customer-aware.

Finally I talked to customers, prospects and partners. I asked two direct questions:

  • How did our project improve your business?
  • Would you recommend my company to others?

I listened. I wanted to hear about numerical results. Was there more revenue, more leads, repeatable campaigns? I wanted to hear about problems that are now behind them and a clear path toward their exceeding their goals. And finally, I wanted to hear that they’d recommend me to colleagues and friends.

I got exactly the answers I wanted to hear. Honest answers about what we’d accomplished together. In addition to the good things I wanted to hear, I learned about rough spots and frustrations. In other words, I learned that the core value is solid, but there is room for improvement in multiple areas, as there are many popular business areas now a days like casino games, as sites like woo casino 2 specialize in this.

For me, the greatest take-away from this exercise is that I learned I need to be consistent at everything, not just at my core advantage. My customers want excellence everywhere, from an initial proposal to a final invoice, and from a second campaign to ad hoc phone advice. This makes a lot of sense. My favorite companies have a level of consistency and quality across multiple processes and multiple employees. My goals are not just helping customers succeed, but improving my business across all dimensions.

Walking the Walk

Let me be clear. I’m not advocating for perfect products or over-the-top money-losing service levels. I’m merely suggesting that it’s worth benchmarking customer experience and see if it meets your standards. Creating value is the core of what I do very well. By upping my game, I make my business one that my customers respect, rely on and recommend to others.

How Efficient is Your Marketing?

By Bill Freedman

The famed retail pioneer from the late 19th century (and fellow Philadelphian) John Wanamaker reportedly said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Marketers of all stripes wrung their hands while reluctantly accepting Wanamaker’s findings for nearly a century after his rise to success.

Marketing has come a long way since Wanamaker. With online advertising such as Google AdWords, all sorts of advanced bidding strategies and closed-loop click tracking, the new mantra is “43.745% of my advertising is wasted; but tomorrow’s experiment will give me the insight to improve conversion rates and reduce spend.”

So the question on my mind today is: are today’s marketing expenditures more efficient than a century ago?

The ability to measure digital advertising and customer behavior provides marketers with an extensive array of data on customer behavior and advertising effectiveness. But let’s not kid ourselves: having data is different than using the data to improve outcomes, and few marketers have the combination of quantitative skills to analyze results and creative skills to devise new online experiments that improve outcomes.

Advertising and promotion budgets continue to be a significant business expense. Heck, businesses may even be spending more today than in Wanamaker’s day–but I’ll leave that question to my colleagues in academia.

The paradox is clear. Newly available data enables more efficient promotional spends. But promotional spending continues to rise.

Marketing in the Age of Experimentation

Here are a few ways you can improve your marketing efficiency in the age of experimentation:

  • Data Trumps Gut. Are you really sure you picked the optimal ad copy, keywords and subject line? I used to think I was smarter and more creative than the average marketer. Now I don’t think that at all. I trust the data to tell me, not how smart I am, but which campaign will yield the best outcomes. Gut, or should I say experience, helps your craft experiments. Data helps you make decisions.
  • Fail Fast. Experiments should last just long enough to provide you with a large enough sample to make valid decisions. What is amazing is that a test could be completed by running an AdWords campaign for a few days and costing only a few hundred dollars. This represents a dramatic shift from the the old “reach and frequency” methods of designing ad campaigns.
  • Focus on Outcomes. In Wanamaker’s time, advertising generated awareness, brand preference and (occasionally) immediate revenue. Measuring the revenue contribution from advertising was difficult. In the age of experimentation, advertising generates clicks and conversions. These clicks and and conversions can be tracked all the way to revenue. When you can find a campaign that consistently produces more revenue than it costs to create a customer, you are simply printing money!

Data is a marketer’s friend, but it has limits. Before you start replacing the copywriters and entrepreneurs in your marketing department with mathematicians, remember that translating product features into customer focused benefits, creating messages that resonate with customers and producing images that inspire action are powerful skills. John Wanamaker, if he were alive today, would probably hire the same marketing professionals he did in the past…as long as they traded in their egos for calculators.

What Does a Sales Funnel Look Like?

By Bill Freedman

A sales funnel is an essential management tools for visualizing the status of sales and marketing operations.

Sales Funnel

The funnel is an apt visual metaphor for virtually every sales process. Many inquiries will enter the top of the funnel. Along the way, some prospective customers abandon your solution while others engage more deeply. In the end, a precious few exit the funnel as paying customers.

But because buyer behavior and sales processes vary greatly across industries, companies and product lines, generic funnel diagrams are of limited use. Think about it: are you satisfied by a picture showing that 1,000 inquiries eventually convert into $199 of revenue? Of course not. The funnel needs to begin with assumptions about your business. From there it needs to be validated, optimized and improved against the reality of buyer behavior and the competitive marketplace. It longs to be a beacon of competitive advantage for your business. It needs to be both predictive and believable.

Eventually, you’ll be able to use your funnel as a model for sales and marketing investments such as sales staffing, lead generation and product roadmaps. It can also become an early warning system for changes in the competitive marketplace, buyer behavior or operational effectiveness.

So what does a sales funnel look like? It looks like your business.

Ideas in the Social Media Era: I’ll Get It Right the 5th Time

By Bill Freedman

I love this chart. Not only is it funny, it gets to the core of how the social media era is disrupting creativity.

The chart puts its focus on article length (and perhaps the quantity of postings and/or impressions). The chart is silent on quality.

Great ideas have always been distilled to their essence through pity catchphrases. With social media, any idea, even before it’s refined (let alone great) is distilled for social network impact. The network for disseminating ideas is becoming more powerful than ideas themselves.

This is a new challenge for the creator and innovator. When is an idea ready to be published? What are readers’ expectations for quality and accuracy of new ideas? Does it help or hurt your reputation to publish many unrefined ideas? Is your idea sharing risk tolerance dependent on the size and nature of your social network? Are facts and accuracy destined to become endangered species during the social media era?

I don’t know, but I’m going to publish this now and refine it later. My sense of optimism suggests that we’ll muddle through.

Earning a Handshake 2.0

By Bill Freedman

Building trust starts with the first web visit and with the first impression of your brand.

Such is the idea behind “2.0” thinking. Products, services and brands now have “online,” “interactive,” and “collaborative” elements so that consumers and users play an active, anonymous and early role in creating relationships with vendors. Twitter, Facebook and Wikipedia are halmarks of Web 2.0 success.

handshake 2.0In the olden-days of Handshake 1.0, a handshake was a precursor of bilateral communication. A protocol of acknowledging a peaceful relationship and mutual trust with the idea of building upon the status quo. An initial meeting between a vendor and a prospective customer. A politician building a coalition. A suitor wooing a debutante. Two or more people carve out a sacred space for a live interaction in the hopes of a mutually satisfactory outcome. Stakes are reasonably low with a first handshake; and the budding relationship can quickly go in any direction. Compare this to two people who pass in the street with nothing more than a glance. No rapport. No communication. No goals for advancing an agenda.

The Internet meets Humanity: Handshake 2.0

With that introduction, I’d like to introduce the new concept of—taa daa—Handshake 2.0. As we have more and more interactions online (defined and measured through web visits, cookies and registration forms) there is a new process for establishing bilateral communication. No outreached hand. No touch. No real-time conversation. No progress or even an action plan. Just a web site that seeks rapport and a visitor who is willing to offer personally identifiable information. It’s easy for users to navigate away. But it’s also human to hope that each visited site succeeds at fulfilling the information hunt.

What is interesting is what happens next: a fast exit or an attempt at rapport building. Credibility and effective design by the site owner conspires with desire and perhaps laziness by the visitor to earn a second and a third click.

Like with off-line interactions, there are false-starts and bad first impressions in the online world.

At this point the the user (and laser-focused vendors) chooses whether s/he will try to extend the anonymous glance into rapport and ultimately into a Handshake 2.0. This is so very different than the past. Information collection required numerous human interactions. Now, anonymous web surfers can learn and make some initial decisions without consulting another human. Likewise, the human managers of web sites can look at analytics reports, IP addresses and email domains to determine if the prospect warrants attention.

Creating The Conditions for Handshake 2.0

I argue that earning a Handshake 2.0 is the first job of a web site in the Web 2.0 era. It may not happen on the first day you launch a web site. And the web presence frequently need to be forged with the help of outside forces…reputation, brand, economic forces and individual behavior. So what attracts (and alternatively repulses) visitors from choosing to grant a Handshake 2.0:

Earning a Handshake 2.0 Raising Doubts
  • Hygienic design
  • Empathy
  • Relevance
  • HTML accuracy
  • Browser compatibility
  • A way to offer a Handshake 2.0
  • Jarring or amateurish design
  • Out-of-date information
  • Breaking web conventions
  • Overstepping trust
  • Any of many kinds of errors
  • Asymmetry…asking but not giving

Following the principles above will result in more and faster Handshake 2.0s. Supplementing your web site with other rapport-building tactics makes sense too. This is why marketers are looking for any and every way to build relationships. Facebook, Twitter, MeetUps are the new tools which have earned a place beside reliable standards: press releases, trade shows, advertising and good ole salesmanship.

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