160. How to Use Sales Funnels to Monetize Your Business
(Episode 1 of 2 with Dave Woodward)
Dave Woodward is the CEO of ClickFunnels, a premier sales funnels platform that generates more than $100 million per year (This page contains affiliate links and we may earn a commission if you click on the links and buy). In addition to his CEO duties, Dave is the energetic host of the wildly popular podcast, Funnel Hacker Radio.
In today’s episode, we’re going to discuss the benefits of a sales funnel, and how we can leverage them to increase our conversion rates and monetization.
ClickFunnels
During Dave’s entrepreneurial journey, he experienced frequent ups and downs. He started at an employee benefits company right out of college, took the company from Texas to California, and then sold it. Afterward, he started a few other businesses where he fell flat on his face a few times. He started a marketing agency business, which grew well in the mortgage and real estate industries, but he eventually lost it in the crash in 2008 which led him to finally realize his passion for online businesses.
Dave and his partner, Russell Brusson, started ClickFunnels because they had a need for the services themselves. There was nothing more frustrating than not being able to get their sites up and running, so they wanted to create software that would allow them to do it themselves. After about six months of design and development, they launched the software, which became incredibly successful, having processed over $11 billion (Source: ClickFunnels).
ClickFunnels is the platform we use at Monetization Nation, my Adoption.com business, and with many of my consulting clients. It is software that lets people design and creates sales funnels, landing pages, order forms, and membership sites to help businesses with their sales funnels and customer journeys.
Over 110,000 entrepreneurs actively use ClickFunnels to get their products and messages out to the world while converting visitors to leads and leads to customers (Source: ClickFunnels).
ClickFunnels has helped my business grow and made my job easier. For a limited time, if you sign up for an annual plan you can get two months for free. You can sign up on ClickFunnels.com to join today.
What is a sales funnel?
A sales funnel helps direct a customer to a purchase decision. It often starts with building awareness, providing value, and eventually leads to customer loyalty.
“If you’ve got anything to sell online or a lead you’re trying to generate online, that’s what ClickFunnels is for,” Dave said. “A sales funnel takes you through a customer journey, solving one problem after another with a product or service that you provide.”
One of the biggest challenges Dave finds digital businesses run into is cart abandonment. A visitor will land on our website, see a hundred different product options, and start adding products to their cart. When the visitor gets to the checkout and sees the price, instead of making a purchase, they leave their cart.
Dave said, “The whole idea behind a sales funnel is you solve one problem at a time.” Once one problem is solved, we can offer something else to solve additional problems. This will help prevent cart abandonment as customers don’t get overwhelmed by all the different options at once. Instead, they can effectively solve one problem at a time, making one purchase at a time so they don’t have to make such a large spending decision right at the beginning. Once we build their loyalty by providing free to low-cost value, we can eventually lead them to our higher-cost products.
Dave explains we can start by offering one-time offers (OTOs) such as books or events. For example, Russell, Dave’s business partner, has written three different books on the sales funnel. They offer this OTO product and then use an order form bump, an offer for a related product, to earn additional revenue. `
“An order form bump is very similar to if you were walking through checkout in a grocery store, and you pass by all the candy and all the magazines and everything else. It’s the impulse buy. That’s the idea behind an order form bump,” Dave said.
A sales funnel helps create a step-by-step process for the customer. Instead of having to know everything all at once, we start them with our free value, lead them to our OTOs and order form bumps, and then eventually to our main product or service.
Benefits of the Sales Funnel
As we build effective sales funnels, our business will see multiple benefits.
Dealing with a Customer’s Low Attention Span
The biggest problem a sales funnel solves is the attention deficit of consumers. People can get too distracted on a website, but a sales funnel aims targeted messages to our customers, solving one problem at a time. Consumers have very short attention spans, and if they can’t get an answer to what they’re looking for right away, they will move on.
“What happens is that people go to a website and they just get distracted too fast,” Dave said. “There’s a ton of different things, like products, [and they have] no idea where to go. The whole idea behind the sales funnel is to get very targeted ads to drag people to it and then most importantly, once they’re there, to solve exactly what they’re trying to do.”
Establishing Relationships
Relationships are key. The better the relationship, the longer the customer continues to buy and if we can create a successful sales funnel, we can monitor our customers in each stage of their journey to find better ways to strengthen our relationships with them.
The first exchange with a customer is critical. When they make that first purchase decision, we need to follow up and build that relationship so they will continue to buy from us. “There’s a huge difference between a lead list and a customer list,” Dave said. “I will take a customer list any day over a lead list. Because they’ve already exchanged that relationship, there’s monetization. There’s an investment in that relationship. And because of that, they’re willing to go ahead and take a look at your next offer.”
We can follow up through email, text, Facebook Messenger, desktop notifications, or a voicemail broadcast. The goal with our sales funnel is to help our customers ascend our value ladder. The follow-up sequence helps us continually nurture our customer relationships to help them climb the value ladder.
“The whole idea behind that follow-up sequence is to reach out to [customers] on a frequent basis. Continue to nurture that relationship,” Dave said. “I think the real big thing we look at is this online community right now and the relationship is the most important part. People are very quick [to] bounce from one offer to another, and the key really comes down to how deep that relationship is. The better that relationship is, the more they may continue to buy products and services.”
Optimizing Conversion to Monetize
Sales funnels are a great way to optimize customer conversion to monetize.
A company I follow had a 0.15% conversion rate on their site. Most visitors that came to their site never bought anything, so they implemented an effective conversion funnel, and they increased their conversion rate to about 3%. If we can go from 0.15% to 3%, we’ve converted thousands of dollars more just by optimizing the conversion of the people that are already paying to get to our website.
In ClickFunnels, more than a thousand people have generated more than $1 million in their sales funnels because they have been able to increase customer conversion.
Dave gave the example of a designer. A graphic designer had three kids and realized she needed to be a full-time caretaker. She started looking for a way to be artistic during her free time and found a way to design sugar cookies with an airbrush. While it started as a hobby, friends and family began noticing her designs and started purchasing her cookies. Her kitchen became overcome with her orders, so she decided to create a business to teach people how to airbrush the cookies themselves. She used ClickFunnels to create a sales funnel and ended up having a revenue of over $1 million in just nine months.
Covering Customer Acquisition Costs
A sales funnel is a great tool to use to find ways to cover customer acquisition costs. Any time we are trying to build a business we need to look at the cost to acquire customers.
If we can create a breakeven funnel where the cost to acquire a customer is the same as the average cart value or the amount of money we bring in, then we’re getting free customers. The question is, how do we create a breakeven funnel?
We need to carefully watch our customers at each stage of the buyer’s journey in our sales funnel. With that data, we can look at how much money customers are willing to spend on their first purchase. If we can effectively use free value to direct our leads to make a purchase that covers the cost of our marketing or acquisition costs, we have a money machine. If we can put $1 in and get $3 out, we have created an endless marketing budget. We can also use an order bump form to increase the revenue as well.
“Most software companies will spend anywhere from $100 to $160 [to acquire one] customer,” Dave said. “We have to find a way of acquiring those customers for free. . . . One of the things we’ve seen is that for every dollar that comes in the front end if they’re successful in their follow-up funnels and all their follow up sequences, we typically see anywhere from $15 to $17 on the back end.”
If we create a successful sales funnel that offers value at each step of the buyer’s journey and successfully use follow-ups, our sales funnel can make our businesses extremely profitable.
Key Takeaways
Thank you so much Dave for sharing your stories and insights with us today. Here are some of my key takeaways from this episode:
1. A sales funnel takes us through a customer’s journey, solving one problem after another with a product or service that we provide.
2. The biggest problem a sales funnel solves is the attention deficit of consumers. People can get too distracted on a website, but a sales funnel aims targeted messages to our customers, solving one problem at a time, so they don’t feel overwhelmed.
3. The follow-up sequence in our sales funnel helps us continually nurture our customer relationships to help them climb the value ladder.
4. Sales funnels are a great way to optimize customer conversion to monetize.
5. If we can effectively use free value to direct our leads to make a purchase that covers the cost of our marketing or customer acquisition costs, we have a money machine.
Connect with Dave
If you want to learn more about Dave or connect with him you can:
1. Connect with him on LinkedIn
2. Visit his company’s website at ClickFunnels.com, or go to SecretsTrilogy.com.
3. Join ClickFunnels today to get two months free.
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