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This is the fifth episode in our series about selling without being fake. In this episode, we talk about how to create a sales funnel for your business with clear illustrations and examples.

Podcast Transcript:

Joshua MacLeod:
Business owners become a little bit, I hate to say it, but lazy when it comes to marketing. They want to hire somebody else to just take care of that because it takes too much work to really do a deep dive of understanding my customer.

Bernie Anderson:
Yes.

Joshua MacLeod:
If I can get business owners to stop complaining about their problems and put all of that energy into understanding their target customer, most of their problems would evaporate because they would know automatically what to do because “I started thinking about my customer.”

Podcast Announcer:
Welcome to The Growability Podcast, teaching business and nonprofit leaders a more excellent way to run a business, visit growability.com for your leadership, coaching, consultation, and business collaboration needs. This is the fifth episode in our series about selling without being fake. In this episode, we talk about how to create a sales funnel for your business with clear illustrations and examples. Here are your hosts, Joshua MacLeod and Bernie Anderson.

Bernie Anderson:
I think a great question for us to answer today on this conversation, Joshua, or in this podcast is, how do you build an effective sales funnel?

Joshua MacLeod:
Business owners are way too quick to spend money on marketing.

Bernie Anderson:
Yes.

Joshua MacLeod:
Way too quick. A business owner will give money to a website designer, photographer, or a filmmaker, a print designer, or a mail agency, or a phone agency, or anything like that, they give money to those people without having even designed a customer persona. You have a conversation that’s like 10 minutes with the website designer like, “I want our website to do this. I want our website to do this. I want our website to do this.” The website designer is like either a graphics designer or a programmer, neither of which has any concept of who your target customer is.

Bernie Anderson:
That’s right.

Joshua MacLeod:
When we work with clients, we’re like, “Whoa, whoa, whoa, whoa! Don’t spend money on marketing before you’ve really defined exactly who your target customer is.” When you build your website, you’re not building your website based on what you think you should put on your website. You build your website based on what is your client asking for and what problem do they have and how can you solve that problem? Never spend money on marketing until you have a clearly defined customer persona.

Joshua MacLeod:
The only person who benefits is the web programmer or the designer or the advertiser that’s taking your money. Additionally, never work with any kind of marketing company that doesn’t ask very specifically right at the beginning, who exactly is your target customer? What does your target customer value? What is the pain that they face? How do you help them in their life circumstance? What makes you different than any other person? This is a really important thing for every business owner to understand.

Joshua MacLeod:
I think business owners become a little bit, I hate to say, but lazy when it comes to marketing. They want to hire somebody else to just take care of that because it takes too much work to really do a deep dive of understanding my customer.

Bernie Anderson:
Yes. And actually Joshua, the little like we’ll call it a rant, but it’s good. It’s a good rant. I mean, people that we talk to that are like, “Yeah, I’m like going to go spend all this money on the social media thing. Social media is like the magic bullet that’s going to help me win friends, influence people, and make a million dollars.” And it’s like, okay, not. No. Who is your customer? Who is the person that you are going to… What is the problem you’re solving? Who are the people that you are solving that problem for?

Bernie Anderson:
The hard work of doing a customer persona is more than just coming up with a cute little name and actually defines what it is that you’re doing principally as a business. You got to know this. We think we can get a magic bullet. And if you don’t know who your customer is, then you’re just shooting in the air. Magic bullet or not, it’s not hitting a thing.

Joshua MacLeod:
In the Pareto principle, it’s generally 20% of what you do that produces 80% of the result for your business. But the other way, oftentimes 80% of what you do in a business is ineffective. It may not be overstating to say that 80% of marketing dollar spend is actually inefficient because 80% of marketers will start charging you money, whether or not they understand who your target customer is. They’ll say, “Okay, let’s come up with a good jingle,” without making sure that that jingle is pointed at a very specific audience.

Joshua MacLeod:
If I have three target personas and one of them represents 80% of my income and I create marketing for either of the two that aren’t representing my income, I’ve wasted my money. Marketing without a comprehensive business strategy and marketing that is not fully integrated into your business strategy is really not marketing. It’s getting sold.

Bernie Anderson:
This is so good. Let’s say we’ve done the hard tedious work of creating customer personas. We’ve got a whole list of tools that we provide for people to help them figure this out. But now you need to put them into some kind of a sales funnel. How do we do that?

Joshua MacLeod:
Once you have the question of who figured out, who is my target customer, now I’ve got to ask the question, okay, when does that target customer buy? I want to build what we call a sales funnel. If you Google sales funnel, there’s going to be lots of different names that come up for how people characterize sales funnel. The general idea is at the top of the funnel, this is the very widest reach with the lightest interaction. Widest reach. I might sign up for a free PDF download. And then the next thing is, well, I might have a phone call with you.

Joshua MacLeod:
And then the next thing is, I might ask for a contract. I have the yes or no decision. And then ultimately, if I become your client, I might sell again. Your sales funnel kind of takes that lightest interaction to deepest interaction with a client in terms of the whole process of the sale. I like to break down a sales funnel into four different names that characterize the different part of the process that your customer goes through. The four names that I use on a sales funnel is first, SUSPECT, second, PROSPECT, third, LEAD, and fourth, OPPORTUNITY.

Joshua MacLeod:
A SUSPECT is someone who is potentially motivated to buy my product. A SUSPECT is somebody who is potentially motivated to purchase an expensive car. A PROSPECT is somebody who is actively looking to purchase an expensive car. A LEAD would be somebody who has actually reached out and been in contact with you or somebody from your organization. And then an OPPORTUNITY would be somebody who has purchased from your organization in the past and now has another opportunity to get another service or to get an extended warranty or some kind of thing like that.

Joshua MacLeod:
Let’s say that you are an air conditioner repair company or an air conditioners sales company. You sell heating and air units. As I’m doing my research and data, I defined three target customers or three target customer personas. The first is Best Price Benny. Best Price is just looking for a deal. And then I’ve got Most Features Mary. Mary is looking for specific things on her unit that she wants to have. If she ever gets a new unit, I wanted to do this. And then I’ve got Fix It Today Fred. I want you to come out. Fix it right now.

Joshua MacLeod:
It’s broke. I Best Price Benny, Most Features Mary, and Fix It Today Fred. Now I’ve got to think about, okay, each of these people are the type of customers that I’ve had in my business. These are the type of customers that I will have in my business. But the question now is, when are they going to purchase from me? The SUSPECTS are people who are someday maybe going to purchase an AC unit from me. The problem is right now their AC unit is not broke. So nobody’s going to go buy a new AC unit if their current AC unit is not broken.

Joshua MacLeod:
My challenge as a company is how do I keep my name out in front of my target customers, so that when their unit breaks, they remember me? What I might do is I might have little radio spots that just say, “Hey, we are the community’s best AC repair? And when you need your AC repaired and you get into trouble, call us.” With SUSPECTS, you have to figure out a way to get in front of them where they already are. The question is, how do I grab the attention of somebody that one day will be my target customer, but isn’t currently looking?

Joshua MacLeod:
Now I move on to a PROSPECT. A PROSPECT is somebody who is actively looking for a solution to their problem. The AC broke. I wake up in the morning and it’s really hot in my house. What am I going to do? I need this AC fixed. A PROSPECT is actively looking. They’re not only potentially motivated like a SUSPECT. They are actually motivated. They are a PROSPECT. What does the PROSPECT do? Well, a PROSPECT goes to Google and types AC repair near me, or best AC repair in my town.

Joshua MacLeod:
With PROSPECTS, my marketing is different because now I’m not just putting out, “Hey, remember, we’re out here.” Now I’m paying for SEO, like search engine optimization. I’m paying for advertising, that is whenever somebody clicks best AC by me, my name is going to show up. I’m trying to solve a problem for that day. Now remember, Best Price Benny is looking for cheapest air conditioner repair near me. Most Features Mary is typing through whatever that feature that she’s looking for. Fix It Today Fred, I’m looking for immediate service air conditioning, right?

Joshua MacLeod:
As a company owner, I have to think about, okay, what am I doing for my three target customers that is allowing me to be found when somebody is searching for a problem to their solution. Hopefully when the SUSPECT heard my ad on the radio, then they’re automatically thinking about me. And when they’re typing in Google, they’re typing in my name because they heard me on the radio so many times. The next piece of this is the LEAD. The LEAD is that person who actually called your office. Are my salespeople really good at returning their call immediately?

Joshua MacLeod:
Is the person that talks on the phone an excellent sales person that understands personality differences? If it was a web form that came in, how fast does my web form respond? Does my website actually have a live chat button? So if somebody searches, they go to my website, here’s the live chat. When I’m thinking about LEADS, these are people that have actually been in contact with me. And then finally, I’m looking at, okay, how many people bought AC units from us in the last year?

Joshua MacLeod:
And what are we doing to continue those customers to get a maintenance program on their AC unit or anything like that? When I build a sales funnel, I’ve got to ask myself, okay, what is the amount of money that I’m willing to spend as a company to facilitate serving SUSPECTS, PROSPECTS, LEADS, and opportunities.

Bernie Anderson:
This is so critical. How am I going to actually reach these customers and set up a system? Your customer personas, you have to build a funnel for each of them. That’s going to just work.

Joshua MacLeod:
If you have really good customer personas and you have really good sales funnels, those are the two necessary ingredients to build a really good marketing strategy. If nobody is ever coming in the doors, we haven’t done a very good job as an organization of creating SUSPECT marketing strategies. If we’re not easily found in the market, we’re not doing a good job of having good PROSPECT strategies. If when people contact us, we don’t close the deal, we’re not doing really good on our LEADS.

Joshua MacLeod:
And if we have a huge existing customer base that isn’t re-buying anything that we sell, we’re not really doing good on our OPPORTUNITY base. You can look at, okay, which stage of the sales funnel do we excel at? Which stage of the sales funnel needs work? You can literally just go down each stage and say, “Okay, great. Good. Okay. Bad.” That helps me understand, well, where should I spend money in the next quarter to do my sales funnel needs?

Bernie Anderson:
Yeah, it’s hard work, but this is how you actually make money. There’s no magic bullet here. But if you understand your customer and you get a great sales funnel that you’ve tweaked and you’ve thought about and you’ve tested, you’re going to end up making money this way. Your business is going to succeed. We need to recognize that this is going to be better than buying a bunch of advertising on Facebook or whatever.

Joshua MacLeod:
I want to spend money on the customers that are actually my ideal customer. If I understand my business as solving a customer problem…

Bernie Anderson:
That’s so good.

Joshua MacLeod:
…a marketing strategy and a marketing spend is serving that customer to help them solve their problem. But if I haven’t defined who my customer is, I’m trying to solve everybody’s problem. If you try to solve everybody’s problem, you’re never going to solve anybody’s problem. Selling without being fake is knowing exactly who it is that your customer is and helping to solve their problem and using your marketing spend to help solve their problem.

Bernie Anderson:
And at that point, marketing becomes generous, which is super weird when you think about marketing. You don’t think about marketing as being generous. But if you want to be a generous company, a generous organization, you need to do generous marketing, and generous marketing is about understanding how you solve your customer’s problems. So that at the end of the day, it’s not just somebody giving you some money and you getting richer.

Bernie Anderson:
At the end of the day, it’s I’m paying for something that I would gladly pay two times over for because you are solving a problem that I could not get solved otherwise. Joshua, I used to work in the nonprofit space, and we used sales funnels in the nonprofit space, which seems a little strange because you’re not selling anything. How do we use sales funnels in the nonprofit space? How do we apply this there?

Joshua MacLeod:
Let’s say I have a nonprofit and we do clean water wells. People are dying of thirst. We can actually do something about this. So now I’m going to take this whole sales funnel approach. I’m going to say, “Okay, SUSPECTS, PROSPECTS, LEADS, or OPPORTUNITIES.” A SUSPECT, who’s a SUSPECT? A SUSPECT is someone who someday maybe wants to be engaged in doing a valuable service, like giving people clean water. So right now they’re not thinking about that. They’re stressed out about work. They’re on social media. They’re getting entertained.

Joshua MacLeod:
They’re doing whatever. But they’re the type of person that would want to help, but they haven’t been given the opportunity to help. A PROSPECT would be somebody who is actually already looking to help, particularly somebody that’s already fascinated in clean water. This person might be researching what are the needs of clean water, what are the ways that people serve with clean water. A LEAD is somebody that is actively looking to stroke check. “Hey, I want to do something impactful about clean water, and I heard your organization is the organization to go to.

Joshua MacLeod:
You’re the best way to get this done.” An OPPORTUNITY is somebody that has already made a small donation to your organization to do clean water, and now I’m going to present them with an additional opportunity to do something meaningful with their organization. So as I think through that process, what are my SUSPECTS? When I’m trying to define like who the SUSPECTS are for this nonprofit, what I might think about is somebody who’s bored and depressed.

Joshua MacLeod:
Here’s somebody that the board and depressed and they want to do something that’s meaningful, or they want to do something that’s fun, or they want to do something that really makes a difference. I might start posting on social media like, are you bored and depressed? Here’s an opportunity to do something meaningful. But then the PROSPECT would be somebody that is actively looking about that particular interest that they have.

Joshua MacLeod:
What I might do for a PROSPECT is I might write 10 blogs that talk about the entire challenge of clean water projects, what people have done in the past, what has worked, what has not worked, why is clean water important to education, why is clean water important to governments, why is clean water important to health and safety, why is clean water important to medicine.

Joshua MacLeod:
What I’m doing is is that anybody that’s already past the state of just bored and depressed and not doing anything, but they’re actually like, oh, maybe I can get involved with this, now I’m building an engine within my social media sphere, within my websites, sphere. That is actually when somebody comes to research or find information, they’re going to find information. I’m serving with that piece. And then anybody that’s already a client, well, we built three wells. This is the benefit of what these wells did in the community.

Joshua MacLeod:
This is the impact. Our next project, we want to build 10 wells. This is going to be the cost. Here’s the opportunity. And you go through that. There’s nothing, I guess, salesy about a sales funnel. It’s not about like, here’s the top ways to manipulate somebody. What a sales funnel does is it simply clarifies how do I communicate to people that are already interested or will someday be interested in my product or service in a way that’s meaningful to them and is helpful to them and our organization.

Bernie Anderson:
I think it’s too important for the nonprofit to recognize that your customer persona is also absolutely critical here. With all of the sales funnel that we just went through for clean water, so who are the people that this is going to serve? Okay.

Bernie Anderson:
Obviously people with clean water, but we’re talking about donors here and you serve your donors by making sure you’re connecting with the right people, both from a demographic perspective of with someone who’s got means and they are interested and they want to do this, but also from a psychographic perspective of this is someone who’s going to really find fulfillment and doing something meaningful that is around your nonprofit organization.

Bernie Anderson:
Again, this whole customer persona sales funnel is just so critical. So critical. For those who are listening to this either live or later on, we really would love to have the opportunity to talk to you about how we could help you, your organization, develop customer personas and sales funnels. If you want help with that, please go to growability.com, reach out to Joshua or myself. We would love to talk to you about how to help you do that, because this is so critical.

Bernie Anderson:
It actually puts you in a place of selling without being fake, of being a generous marketer, and that really makes our day.

Podcast Announcer:
Thank you for listening to the Growability Podcast. The mission of Growability is to equip leaders to flourish in their life and work by developing vision, rhythm, and community. To discover if there is a more excellent way to run your business, visit growability.com and speak with a certified Growability coach. Bernie and Joshua are also available for speaking engagements, workshops, and conferences. Subscribing to this podcast helps Growability equip leaders throughout the world, and we appreciate your support.