The sales funnel or sales pipeline is a short-hand way of referring to the steps you take to generate leads, qualify prospects, and turn them into customers. You need to generate so many leads to find so many qualified prospects to convert them into so many customers. The numbers are different for every industry, of course, but those are the basic steps.

Do you know what your ratios are? I would venture to say that most businesses do not. If you want to transform your business, to take it to the next step, to knock it out of the park, to step on the gas (or whatever other metaphor you want to use), start with knowing your pipeline.

First: Know the specific steps you take. Chances are, they are similar to the “leads – prospects – customers” steps mentioned above, but they will be more specific. Perhaps you generate leads from a lead generation site, you qualify prospects with positioning material, and you convert them into customers with a proposal and follow-up call. (That’s the sales pipeline of a consultant I know). Or maybe you generate leads from people who call a 1-800 number for more information, you qualify them by sending them an information kit, and you convert them into customers with a face-to-face call. (That’s the sales pipeline of several insurance companies).

Second: Know the numbers at each step. Do you need to generate 100 leads to get 10 quality prospects to sell to 1 customer? Those numbers won’t be far off for a lot of people and I’m willing to wager that yours will be higher than you were expecting.

Third: Improve backwards. Using the ratio mentioned above – 100:10:1 – your first thought might be that doubling your customers requires you to get 200 leads and turn them into 20 prospects to get 2 customers. But there is another way. Instead of trying to generate more leads (which is working “forwards” through your pipeline) try making adjustments to your customer conversion process, testing various methods to turn 10 prospects into 2 customers instead of 1. If you hit upon the right method, then you’ll have a much more dramatic impact on your business than if you simply tried to generate more leads. See it in action: The less effective way of getting more clients would be by doubling your lead generation: 200:20:2. The more effective way is to improve your efforts further down the pipeline: 100:10:2. Then, if you do decide to double your lead generation, it will have a greater impact on business: 200:20:4!

Fourth: Use it in decision-making. It can be tempting to jump into new marketing methods because they are popular (can anyone say “Twitter”?), but they are not always the right decision for right now. New marketing methods can be good, but only if they can contribute to your business effectively. When you’re tempted to devote resources (time, effort, or money) to a new marketing method, think about what role it will play in your sales pipeline and how you will use it to nudge people along your pipeline towards conversion. You might find that the latest and greatest craze – whether Twitter, Facebook, Guerilla Marketing, BuzzMarketing, or the zillion other trends, fads, and marketing temptations out there – just isn’t right for your business.

photo credit: Glenn R Carter