There are a number of variations of the ‘sales funnel’. To keep it simple, the sales funnel is a visual representation of the sales cycle – how customers find you (or are drawn to you) and then how they work their way from the initial contact to becoming a paying customer.
Many large companies spend vast resources measuring each step of the funnel and determining why prospects/leads/etc. stay in or drop out. As a small business owner, the important thing is to understand where your paying customers are coming from – and link that to your marketing investments (see my earlier post: ‘Understanding Your Marketing Mix’).
You should be collecting customer information:
At some time during the transaction (sale), ask your new customer how he/she heard of your business.There is no right or wrong way to do this – the key is to collect the information and get it into a standard format (spreadsheets work nicely). Note that for many small businesses a lot of customers come from ‘word-of-mouth’ – ask these clients who referred them to you. You may be able to work backwards to tie this new business to one of your marketing efforts.
Organize the information in a spreadsheet. It could be as simple as listing the customer name in a column and then in the next column noting how the customer heard about your business (what brought them into your sales funnel).
In my next post, I will talk more about linking this customer information with your marketing investments.
