Flipping the Sales Funnel–Bottom Side-Up: Turn Customers to Advocates to Salespeople– Shift Funnel Priority-Prospective…

Flip the funnel– turn strangers into friends, turn friends into customers, turn customers into salespeople. ~Seth Godin

Funnel: It costs roughly five-to-ten times more to acquire a new customer than it does to retain an existing one, and yet companies continue to disproportionately spend their budgets on the ‘wrong’ end of the funnel, e.g., the mass media, awareness side…

According to Joseph Jaffe; we haven’t paid enough attention to the ‘right’ end of the funnel, the word-of-mouth component that essentially acts as a multiplier for future business. The economic impact of an active, engaged, and loyal customer is tremendous. When you consider customer acquisition for your business, think about this question for a moment: How much of your sales come from repeat business versus first-time customers?

Now contrast that against how much money you spend against each segment. If you are embarrassed by the gaping disconnect, don’t worry; you are not alone. But, what if you did something about it? What if you turned everything on its head and instead of ending with a customer purchase, you began with it? What if you focused the lion’s share of your effort, energy, and budget on keeping customers versus attracting them? What if you could correct this imbalance and, in doing so, not only get your customers to keep coming back for more, but they tell others to do so as well?

According to Joseph Jaffe; do 180 on everything you thought you knew about sales and transform your existing customers into your best salespeople…  Selling is a funnel: You put undifferentiated prospects in the top… some of them hop-out; unimpressed with what you have to offer… others learn, hear from peers, compare offerings, and eventually may come out the bottom; as customers. If you’re like most salespeople, you’ve been trying to shovel more and more attention in the top of the funnel…

Here’s a different idea: What if you flip the funnel and turn it into a megaphone? What if you could figure out how to use the Internet to empower the people– who like you, who respect you, who have a vested interest in your success…The re’s little doubt that technology has changed things, the way we are influenced and how we influence others. Social media isn’t old-time marketing– it’s different… Here’s what you need to know…

Successful businesses understand that customer engagement does not end with the sale, but rather it begins with the sale (i.e., bottom of traditional sales funnel)… Traditionally, we prioritize limited resources and time on trying to find and convert new prospects (i.e., top of the funnel), whereas keeping those hard-earned customers (i.e., bottom of the funnel) has often been an afterthought. That’s because, until recently, there was little we could do to keep existing customers that was drastically different from the tactics used to attract new ones.

Historically, the best you could do after turning a prospect into a customer was to provide a great customer experience and just hope they come back to buy more– and, bring their friends with them. However, technology, e.g., social media, email… has changed the game. Social media is about recognizing that existing customers are your best assets. Also, technology enables us to influence consumer behavior, both before and after the sale by reaching out to existing customers… as easy as clicking– share or tweet buttons…

In the article Flip the Funnel: Are Your Existing Customers Working for You? by Bienalto writes: Companies must see existing customers in new light, and turn the old model of customer acquisition on its head. For example, instead of focusing all energy – and budget – on acquiring new customers, spend more time nurturing existing ones… Too many organizations under-serve existing customers– using automation, offshore call centers, technical solutions… as quick-fixes that don’t ultimately satisfy customer needs.

These organizations become complacent once a customer has jumped on board, and leave them to fend for themselves. However, the buck doesn’t stop once the sale is completed; rather the work is only just beginning. There must always be room for both; acquisition and retention… It’ about having conversations with customers, getting involved in community hubs, boosting customer referrals… call it– commendations, contents, conversations…

According to Joseph Jaffe; flipping funnel expands the number of customer connections, conversations, potential conversions– through repeat purchases and referrals– due to new shape of the acquisitions process that widens instead of narrowing at the bottom of the funnel …Retention-New-Acq_08-23-11_b

In the article Magical Marketing Funnel by Peter Cervieri writes: Companies spend a lot of time and money to acquire new customers, as evidenced by the hundreds of billions of dollars spent each year on print, radio, TV, billboard advertising… Once a customer is acquired, however, the company pleads poverty, and not much time or money is spent on servicing a newly acquired or lifelong customer.

However, over the next decade, business will be held accountable and judged no longer by ‘what they say’, but in fact ‘what they do’; no longer by ‘promises they make’, but by ‘promises they keep’. And this scenario, marketing’s role is one of collaboration, partnership, unificationThere is a shift from campaigns to commitments and flipping the funnel, and transforming sales from an uninvited guest to a welcome and invaluable one.

According to Joseph Jaffe; we funnel all these people down to handful who might purchase our product/service, but we never ask: What the hell are we doing? That is, why do we spend all of our time with people who; a) don’t know about us, or b) don’t care about us knowing about them? Its nuts because it’s not only outmoded, it’s actually doing us harm. Instead of spending millions trying to funnel the universe down to a handful, we should focus on that handful and use our creativity to figure out how to make the most of them.

A successful business today isn’t built on idea of one transaction per customer. It’s built on idea of multiple transactions from multiple customers. This may sound insanely obvious, but how many companies operate that way?

In the article Flip Traditional Marketing Funnel by Stan Phelps writes: If you subscribe to the principle that, 80% of your results are generated by 20% of your efforts, then I respectfully posit the Phelps corollary: 80% of traditional marketing efforts will net you 20% of the results. According to Joseph Wanamaker; half the money spent on advertising is wasted… the problem is that we don’t know which half.  

However, I think 50% is an understatement… however, there is a huge flaw when you focus the majority of your sales efforts on the purchase funnel: That flaw is ‘the revolving door effect’. If the majority of sales are mainly focused on prospective customers, you may only be adding 10% to 25% of new customers per year: But, many companies might say, well that’s great; sign me up right now for an increase of 10% to 25% of customers per annum.

But, the big issue is that most businesses have huge problems with retention: It may not be uncommon to lose 10% to 25% of the customer base in a given year. The net effect is that you might negate all of your gains, and in essence create a ‘revolving door’ by ignoring existing customers. The overwhelming traditional view of sales is mainly about acquiring new customers. Eighty to ninety percent of marketing budgets are aimed at getting new customers in the ‘purchase funnel’. We’ve become so preoccupied about generating ‘awareness and interest’ that we forget about our most important asset– existing customers.

We must be change; ‘flip the funnel’, but first heed Pareto’s Law and ensure that the existing 20% is generating a strong ROI. Once you’ve earmarked that vital 20%, it’s time to put the other 4/5ths to work by ‘flipping the funnel’ and putting the focus squarely on existing customers. By putting the focus on existing customers, you can generate three benefits: Reduce attrition, Increase profit, Promote loyalty.

In the article Purchase Funnel is No More by Robin Grant writes: The ‘purchase funnel’ is one of the main tenets of marketing theory, but we’ve intuitively known for a while that it no longer holds true– if it ever did. According to McKinsey Research; examining purchase decisions of almost 20,000 consumers across five industries and three continents, and came-up with what they call the ‘consumer decision journey, which says: The funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer.

A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the ‘consumer decision journey’. Because of the shift away from one-way communication– from marketers to consumers– toward two-way conversation… marketers need a more systematic way to satisfy customer demands and manage word-of-mouth.

The most important thing is to make sure that marketing activities– are aligned with consumer’s behavior– how they research and buy products… companies need to look at their messaging in light of where they have the greatest opportunity. The key touchpoint that most influences consumer’s decision is consumer driven– word-of-mouth, e.g., talking to friends, internet searches, third-party sites…

Most businesses spend roughly five-to-ten times more to acquire a new customer than it does to retain an existing one, and yet companies continue to disproportionately spend on the ‘wrong’ end of the funnel, e.g., the mass media or awareness side. What they haven’t paid enough attention is the ‘right’ end of the funnel, e.g., the word-of-mouth component that essentially acts as a multiplier for future business.

The economic impact of an active, engaged, and loyal customer is tremendous… same is true of opposite scenario, namely, the impact of angry customers and negative word-of-mouth or referrals. Using the flipped funnel model… transforms existing customers into your best salespeople.

According to Steven Noble, Forrester; the funnel model’s value as a framework for sales is finished and a new model; the customer life cycle provides a better fit: It puts customers at the center of effort, involves the entire brand experience, and describes an ongoing relationship… The customer life cycle transforms how you talk and think about the digital world…

According to Seth Godin; Every business has its 1%: Every business has a group of customers so motivated, so satisfied, and so connected that they want to tell the rest of the world about  you and what you do. Your challenge is to give these people a megaphone. To switch your view of the market from a vertical funnel (i.e., attention at top–sales at bottom) to a horizontal one, in which ideas spread from each customer to another… it’s the funnel for the digital age…