In a tough sales environment there’s a tendency to throw more of the same procedure at a problem. Sales teams are urged to increase their prospect lists and ramp up the number of the people they speak to every day. By casting the net even wider companies hope to make even more sales – but often what they end up doing is simply spending more money, resources and time without any great return on investment.
Bruce Mayhew, strategic marketing consultant and trainer in Toronto, Canada, provides insight into how to do it differently – by inverting the traditional sales funnel.
What’s wrong with the traditional sales funnel? Why the need to turn it on its head?
In a traditional sales funnel you may speak to a huge number of prospects, irrespective of whether you think they might need your product or service – all of your current customers as an example. Sales teams spend the short time they have with these customers (now prospects), trying to convince them to buy something most of them probably don’t need or want. Essentially, you’re throwing product at people and hoping something will stick. It wastes time, energy and resources and doesn’t result in a particularly high hit ratio.
How does inverting the sales funnel help?
If you invert the sales funnel and concentrate on selling to fewer people who you know are very likely to need or want your product or service, you’ll spend less time and fewer resources to close the deal.
Some might argue that contacting fewer prospects will lead to fewer sales. Can you explain why this won’t be the case?
It is indeed an idea that makes sales people nervous because they automatically think they’ll end up with fewer sales. But consider this. Say you usually contact 1 000 prospects to make 20 sales. If you invert the sales funnel and contact 50 targeted prospects in a knowledgeable and personal way, you can still make 20 sales. Even if you lose one and only close 19 deals, which is what companies worry about, you need to consider that you’ve saved the time it would have taken to talk to 950 additional prospects. And if you use this time properly for further niche marketing and selling, you can significantly increase your sales overall.
Does the approach work best with new or existing customers?
It’s equally effective for both. When launching a new product it’s more effective if you market to a niche audience first instead of trying to sell to everyone initially. Choose those people who will best understand and appreciate how your new offering is unique and will meet their needs. Doing so will help you develop credibility and a reputation among early adopters, which you can then use to extend your marketing to a wider audience.
It also makes sense when it comes to existing customers. For example, a telecommunication company that cold calls its entire customer base in an attempt to sell a new out-of-country long distance plan, regardless of whether they’ve made out-of-country long distance calls, is wasting its time and financial resources. They’d do better to use the information they already have on their customers and target people who make out-of-country long distance calls.
What are the key ingredients for getting it right?
The success of niche marketing begins by having a clear sense of what sets your company and your product or service apart from the competition. Only when you are able to identify and articulate what this is are you able to go to the next step, and that is to define who your best customers (or prospects), are. Once you know this, you can build a very targeted and personal sales and marketing strategy to sell to this group while also building valuable relationships.
Another key ingredient is for sales and marketing teams to work more closely together, with marketing activities supporting the targeted approach that sales teams will take. Advertising, promotions and other marketing tools should speak directly to the same targeted niche market that the sales team will be canvassing.
Apart from considerable cost saving and resource optimisation which in turn can lead to an increase in sales, are there any other spin-off benefits to inverting the sales funnel?
There’s an important additional benefit worth mentioning – one that involves the reputation of your brand. Consider how much damage you do to your reputation every time you annoy someone with a cold call or junk mail that involves trying to sell them something they don’t need. And it’s even worse if you’re doing that to an existing customer, whose needs you should understand better.
