Sales Funnel: On Its Side, Upside Down, Dead Or A New Reality?

The other day I got caught in an online rabbit hole on sales funnels and I came out the other side with a totally different attitude.  Perhaps you will too.

What is the Sales Funnel?Sales Funnel

As a long-time marketer, I am well familiar with the traditional sales funnel.  Historically, marketing’s role was to create a flood of warm prospects into the funnel while it was sales’ responsibility to convert as many as possible into customers.  Hence the age old tension between Marketing and Sales.

For those of you who are too young to remember, the traditional sales funnel process was created in the heady days of the 50’s and mass markets.  Then people were ready, willing and eager to purchase all of the consumer goods they could.  Media options were limited so marketing dollars could spent by spraying and praying to reach interested bodies.

Once a consumer purchased, sales received its reward and moved on to convert other prospects.  Yet, the consumer was left alone. They did their part – they purchased.   But that is all the company wanted them to do.  If the customer wasn’t satisfied with the product or unhappy with their experience, it was just too bad.  Buyer Beware.

The old model worked in the old days.

Then came social media and the game has been dramatically altered.

New Sales Funnels

In ’06, Seth Godin presented the idea that given the trans-formative power of social media, it was time to turn the sales funnel on its side.   He promoted using it as a megaphone for fans (satisfied customers) to promote the products and brands they loved through referrals and word of mouth or WOM.  He cheered on companies, non-profits and political parties to try out the concept and pointed them to tools to help them do just that.

John Jantsch of Duct Tape Marketing was on the same page with Seth, but he preferred the more feminine hourglass shape Sales Funnelto the megaphone.  He must be a romantic at heart.

Sometime later, Joe Jaffey, Chief Interruptor of Powered, a full-service social media agency, wrote his book – Flip the Funnel: How to use existing customers to get new ones. I haven’t read his book, but did review his website, listened to his videos and an interview.  His argument seems to rest on the old 80/20 principle in that there is a giant disparity between what companies spend to capture new customers and what they spend to retain them.  He suggests, rightly so, that this spending priority needs to be reversed.

It has been known for a long time that the cost of finding new prospects is somewhere between 5 and 10 times as much as it costs to retain and sell more products to existing customers. This isn’t a revolutionary new idea, but if this message ever made its way into company board rooms, it could dramatically change the marketing and sales conversation.

Kill The Sales Funnel

In December 2012, Steven Nobel, senior analyst at Forrester Research, wrote a piece for Forbes.com titled: It’s Time To Bury The Marketing Funnel.  Steven wants to give the sales funnel the old heave-ho and replace it with a customer-centric life cycle model.  His, Forrester’s model consists of four cycles:  Discovery, Explore, Purchase and Engagement.  Again, his argument is based upon customer retention.

While tossing the sales funnel out the window is refreshing, I don’t know that it needs replacing.

Based on my experience with the old sales funnel model never worked all that well.  Tracking how many prospects went into the funnel was a nightmare and having the vagaries of sales performance, left companies often clueless as to what was or wasn’t working. This may be different in large corporations with the resources and technologies to better track performance, but who cares?

So what do all of these similar, yet slightly diverse sales funnel discussions tell us?

Yes, you can lay the sales funnel on its side, flip it, alter its shape and it really doesn’t matter.  The concept is dead.

Yes, customers can become the company’s sales force.

Yes, customer retention is and has always been important.

The New Reality

However, I think focusing on these models veils the real critical message for companies – big and small – the elephant sized reality that should get companies to quiver in their boots and change how customers are viewed and treated.

In short, what has been justifiably been flipped is marketplace power.

It is the customer who truly rules the marketplace roost.

Social media has turned their weak little bodies into pulsating muscle.

In today’s marketing world, they really do matter and, most importantly, they know they matter.

They will readily flex their networking muscle to give to companies who treat them right and to take away from companies who demonstrate disregard.

No longer are they little cogs filling a funnel or an hourglass or to be ignored once they passed the purchasing threshold.  They are flesh and blood people who have opinions and the social media soap box with which to express them.  And they will.

Marketing has also been transformed.  From the days of saying “anything that works” to pull in crowds of people to micro-targeting people who already want what the company has to offer.

Sales has been transformed as well.  From the old-time hucksters into people who listen first and know when it is time to move on.

Today’s new watchword is: Company Beware!

Companies that haven’t received this memo and continue with sales funnels and hold on to their old concepts and behaviors toward customers will pay the ultimate price.

Companies that do understand this power shift have already tossed out the old models.  These companies are already stepping up their game and doing what needs to be done to satisfy all of their customers – new, existing and the most loyal.

They don’t need a model telling them to listen to their customers.  They already do because it is the right thing, the smart thing to do.

They don’t need megaphone instructions telling them to engage.  They already do engage and often, because they genuinely want to engage with their customers.

They don’t need to be told the value of existing customers.  They already recognize their value, benefit from it every day and are genuinely grateful.

These are the companies that will grow, prosper and thrive in the future.  And they should.

Will you be one of these companies? Are you already?

Which companies reflect this understanding of customer power for you?   What additional steps do companies need to take to demonstrate value to their customers?  Put your comments in the box below.

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Sheila Hibbard

Sheila Hibbard takes the fluff, hype and confusion out of marketing and social media. She provides small business owners with straight forward, no nonsense marketing guidance and techniques that produce results based on her 35 plus years in advertising, communications, research, strategic planning and social media. Author of Marketing Online Made Simple - WHO.

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