A sales funnel is crucial for every business to improve conversion and increase revenue. It helps marketing and sales professionals in understanding the buyer’s journey from the initial awareness stage to the final decision stage.
A sales funnel is a customer-focused sales model that displays the buyer’s journey from the initial contact to the final conversion.
A well-designed sales funnel can simplify the sales process and help you in identifying risks in real-time. It is a smart way of taking the major moves towards fulfilling your sales goals.
You can determine prospects’ requirements and know what you need to do for converting them into paying customers.
The width of each section of the sales funnel reflects the number of opportunities, the top being the widest and the bottom being the narrowest.
Benefits of using sales funnel:
To measure the effectiveness of the sales funnel and achieving success at each stage of sales funnel, Dave McClure introduced the AARRR framework a.k.a Pirate Metrics.
Dave is a venture capitalist and founder of startup accelerator, 500 startups – Originally designed for startups. This framework has also proven to be beneficial for established enterprises.
This sales funnel series is created with an aim to understand each stage of the AARRR framework for businesses of all sizes.
The sales funnel is divided into five Stages- Acquisition, Activation, Retention, Referral, and Revenue.
Let us commence by throwing light on the first stage of the sales funnel framework:
Being the first contact point for customers, Acquisition is one of the most important stages of the Pirate Metrics. As Pierre Lechelle points out correctly in his article:
To ensure that customers go through the funnel stages (to Revenue), you have to make sure that there are enough customers at the top of the funnel. Without those customers, there will be no customers at the end.
Volume matters but the quality of the leads is equally valuable. For achieving the desired sales results, it is necessary to attract the right audience.
There is a simple explanation for Acquisition: Users hear about you and land on your site from different channels. It doesn’t stand merely for that though; it also refers to the users’ first impression of your product.
Along with measuring how many people you acquire in a given time, you will also have to measure how many of them subscribed for a free trial. Also how many got converted into paying customers.
There are several acquisition channels; you need to track and find out which one is best in terms of volume, price, and quality.
This will help you in understanding where you need to place a greater focus on optimizing exposure and engagement.
Example: You are running a handbag brand, and your target audience spends their maximum time on Instagram and Facebook.
Instead of wasting time on Twitter or creating long videos on YouTube, you should try posting on Instagram and Facebook using engaging campaigns.
For instance, Lululemon, a yoga, and sports apparel company from Canada. The brand used Instagram to bring more users on board by posting impressive yoga poses and preaching inspirational wisdom.
According to Simply Measured, Lululemon doesn’t post every day, still, its Instagram results are phenomenal. Their account has an average of 9.4% engagement rate, more than 27,000 likes and 250 comments per photo.
Instead of casting your net wide, spend your budget and efforts on only a few channels that are effective.
The few things that you need to keep in mind-
Let’s assume you have designed a product that makes a certain process/task easier. Customers would like it and willing to pay for it. However, the challenge is to identify the acquisition channel for bringing in those buyers.
For this, you need to create an impactful strategy from scratch. Research and explore various tactics then start experimenting with each to see which one works the best.
Over the years, companies have tried a wide spectrum of techniques to attract the ideal prospect. The acquisition techniques differ per industry.
SaaS and e-commerce companies might use the same technique, but their approaches will be different. One focuses on acquiring business while the other on the customer.
Before moving to the techniques, it would be wiser to look at some statistics that provide major lead generation insights:
The lead generation process starts by finding out where your target market ‘lives’ on the web – Wayne Davis
Below are few widely used acquisition techniques that can help you:
Don’t find customers for your products, find products for your customers. – Seth Godin
Most marketers fail because they target the wrong audience. Unfortunately, marketing budgets are limited; so, you don’t have the privilege to approach everyone.
For increasing conversions, you will have to discover who exactly is your target audience, what matters to them and what are the sources to reach them.
Only when you get a thorough understanding of your buyer persona, you will be able to determine the acquisition channels.
The aim of marketing is to know and understand the customers so well the product or service fits him and sell itself – Peter Ducker
Failure in creating a buyer’s persona leads to the following consequences:
Things that you need to know to create a buyer persona:
Once you gather this vital information, you need to do the following to ensure you are not lost in the wilderness:
Your call to action is extremely important if you want customers to invest in your product/service.
Just having an optimized landing page is not enough, you must have buttons directing them to purchase your products or services.
Continuously test and update your CTAs as per the changing demands
Keep improving your call to action to generate more leads.
The cost of acquisition is the biggest hurdle for a product owner. It is the amount of money you spend on acquiring new customers. Estimate your acquisition cost well in advance to ensure you don’t make losses.
For example. Your customer acquisition cost is $10 and you sell a product worth $60. That means you have a profit of $50. But if you sell it for $4 that means you will have to face a loss of $6 per customer.
Do note that customer acquisition cost doesn’t only include the amount spent on paid advertisements, but also the expenditure of different marketing activities and tools.
There is no one-size-fits-all customer acquisition cost benchmark; it differs on various factors.
Here are a few ways you can try for reducing your CAC:
Which acquisition strategy did Wistia use? Let’s take the example of the acclaimed video platform- Wistia that has over 300000 customers from various industries.
Wistia’s impactful acquisition strategy is one main reason for its success. Like many SaaS companies, Wistia too had optimized the process of converting free accounts into paid.
Instead of concentrating on increasing sign-ups they were inclined towards increasing the right kind of sign-ups. For this Wistia focused on their data and marketing strategy:
Find below the strategy they followed to improve results:
(Source: This example is based on the blog – How Wistia used data to transform its customer acquisition strategy written by Mixpanel)
There is a direct connection between customer acquisition and sales, so you need to use the right strategies and channels to attract quality leads. It is not a one-time thing; your acquisition techniques need to be optimized consistently.
Don’t let potential prospects leave your acquisition funnel. Optimize your customer acquisition funnel to ensure you get the most out of it.
Keep exploring and experimenting with new techniques to boost your customer acquisition. Once you acquire the prospects, your next step would be to activate the users by providing an excellent first-time experience.
As we know, all SaaS sales funnel stages are crucial for winning more sales and they need equal attention. So, explore the next phase- Activation of sales funnel series to get smart tips and tactics on how to activate your user successfully.
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