by Andre Sanchez

If you understand the importance of a sales funnel in your business, then you will have a good tool at your disposal to enable you to analyze your sales procedures.  Those of you who do not know what a sales funnel is are missing out on a technique that is commonly used in business, both online and offline, to indicate where in the sales procedure prospects are being lost, and where bottlenecks are occurring.

Visualize a funnel, wide at the top and narrow at the bottom.  Into the top you pour all of your leads, wherever they have come from.  At various stages in their progress down your funnel, these leads become more and more qualified until at the end those falling out of the bottom of the funnel are completed paid for sales.

At various stages in the journey through the funnel you should have certain qualification stages for your leads, and you should know exactly how each stages qualifies them.  Thus, you should know at what point the leads are contacted directly, when samples are provided, when quotations are given and even where offers are turned down.  Sometimes you will find some leads spending too much time in the funnel and decide to eject them yourself, but the most important aspect of the funnel is that you know what is happening at each stage.

You should manage the flow through the funnel so that it proceeds smoothly without blockages.  Perhaps it slows down because it full of slow moving leads, and you need to give it a clean out.  You do this by re-qualifying some of the prospects out of the funnel, and either discard them permanently or put them aside for a while until the funnel is moving smoothly and there is more room for them.

If you can identify a delay, you can normally deal with it. If you can identify a deal that is taking to long to close, you either accelerate it or clear it out permanently. A funnel can be lubricated to improve flow by training the sales force, or improving communications between sales and marketing. As long as you know the state of qualification at every stage in the funnel, you can tell how effectively your sales and marketing processes are working.

It might be that you are pouring too much into the top and the funnel is getting plugged up.  Perhaps you need to improve your qualification criteria to improve the quality of leads, so that only leads that have been through the initial contact procedure are allowed in rather than just everybody that expresses an interest in your products.  This would change the shape of the funnel by narrowing it.

If you use your sales funnel properly, you can identify levels in it at which major changes in its diameter occur and take action to lubricate it at these points by concentrating your sales efforts on them, or devising and implementing procedures to increase the flow.  The whole concept of a sales funnel is to analyze the differentials between diameter and flow and gain a better understanding of what is happening at each stage of your sales process. 

If you identify each stage of the funnel with a specific sales function, then you can identify each with a set of criteria that allow you to note the state of qualification of the leads at each stage. As they become more qualified they pass farther done the funnel.  If the tunnel gets blocked at a specific place, the efforts required to clear it can be identified and not only will the bottleneck be cleared, but its causes will be known and procedures put into place to widen the funnel at that point.

A sales funnel can be used to identify the areas of your marketing and sales efforts that need improved, and also those leads and prospects that are dead wood and should be removed.  It might be that not enough are going into the funnel to keep it viable, and so a sales drive is needed, or too many are being stuffed into it in which case they have to be better qualified before being regarded as prospects.

You can use it to track your sales against budget, and whether or not the flow through the funnel is fast enough to meet budget.  If it is not, the department causing the deficit can be identified and a decision made as to whether any major changes are needed for a required sales budget to be met.  If a realistic budget as determined by the funnel is insufficient then what changes are necessary to the funnel to allow more flow through it. 

The importance of a sales funnel in your business cannot be overemphasized, and once you have learned how to use it properly, you will never want to be without it.

The Importance of a Sales Funnel in Your Business was originally published at http://www.businessmannow.com