Bottleneck Breakthrough Audiobook - Chapter 4 - Your Funnel | Ep 25

Speaker A

00:00:01.520 - 00:20:39.880

Lever2marketing Peter Drucker said, because the purpose of a business is to create a customer, the business enterprise has two and only two basic functions, marketing and innovation. Marketing and innovation produce results. All the rest are costs. Marketing is the distinguishing, unique function of the business.

Marketing is the most misunderstood, abused and ignored part of small businesses today.

The speed at which technology is changing how we interact with the world creates more overwhelm for business owners than at any other point in history. Unfortunately, this speed of change leads to costly ignorance for owners as well as the vendors that sell them.

Marketing Solutions without marketing, there simply is no business. Let's start by breaking marketing down into its most simple definition. Communication aimed at persuading someone to take a desired action.

You might think that defines sales, not marketing, and you're close as sales is a component of marketing. Anything you say, do, create, post, print, send or otherwise communicate to someone to get them to give you money is marketing.

The challenge is to figure out which communications are most effective for your business right now, given your time, money, staffing, industry and target market so you can generate growth again. First, define your funnel. This is the process in which future customers find and purchase something from you.

Then dig into the two main levers within that funnel, using traffic pillars and closing to uncover what bottlenecks you can break through. Chapter 4 your funnel W. Edwards Deming said, if you can't describe what you're doing as a process, you don't know what you're doing.

Now, I'm not a symphony buff, but it doesn't take a genius to know that Joshua Bell is one of the greatest violinists in the world. He packs symphony halls everywhere he goes.

He plays a violin that was made in 1713 by Stradivari, and it's now worth three and a half million dollars.

In 2007, he was on tour through Washington, D.C. when he was approached by a journalist to try a social experiment in which he was asked to play as a busker in a Metro station. A few weeks before the experiment took place, he filled the Library of Congress near the station for a free concert.

Surely he must have expected to be mobbed while he played, as more than a thousand people would pass him on their way to work. Not only did he play Stradivari, but he played what many consider the most difficult violin piece of all time, Bach's Chacon, written in 1720.

The only difference between his concert performance and this one in the Metro station was his attire. In the Metro station, he wore street clothes just like other buskers and looked to all the world.

Like an unemployed musician, he played for 43 minutes straight and of the 1,097 people who passed him by, only two people stopped to listen to him. Only 27 people stopped long enough to drop money in his violin case.

He raised a whopping $32 in change for what was no doubt a jaw dropping performance.

The experiment ended up earning the Journey your own list of Pulitzer Prize for the story, and many use it to help you become a better marketer than 95% of business owners today. Think about the details of this story for a minute before we move on.

Someone who played before royalty, made as much as $1,000 per minute and mesmerized audiences around the world was completely ignored without the proper recipe of influence in place.

Also known as Marketing Fundamentals Hoping to not get too heavy on theory, I want to first establish some fundamentals that are important for you to understand when it comes to effective marketing. The first is taught to every university marketing student.

It is referred to as the AIDA Framework, standing for Attention, Interest, Desire and action, and all marketing communication should adhere to it. Notice that it starts with attention. Without attention you end up like Joshua Bell, simply ignored.

Once you capture your audience's attention, you need to create interest and then desire. Bell never got the chance to create interest or desire because he was lost in the noise of the daily commute.

Out of the 1097 people, there were two who stopped and listened as long as they could.

One was a fan that recognized him, they were already aware and interested, while the other was an ex violin player who had an ear for the quality of Bell's performance. Finally, you need to get your audience to take an action. In most cases this is simply to purchase something from you.

In Bell's case, since people could pay what they wanted, he managed to get 27 people to contribute something for his effort.

Taking out the $5 paid by the ex violinist, he netted $27 from 26 people, just over a dollar each, which is about what a homeless panhandler would get if he was just sitting there asking for donations.

Needless to say, Bell's experiment helped show that without the pieces of the ADA framework in place, you won't get paid anywhere close to what your products or services are truly worth.

And it disproves the old myth from the movie Field of Dreams that so many business owners mistakenly believe that says if you build it, they will come Know your funnel if you keep up with marketing trends, you're no doubt familiar with the topic of funnels, which has Become a buzzword since early 2013, there are countless marketing tools aimed at helping you improve your funnel, from landing page tools and email autoresponders to analytics, tracking and full blown marketing automation suites that cost more than your car. In addition to the tools, there are now funnel agencies, seminars, certification courses, training programs, podcasts and coaching.

All of them are ready to serve you and charge you a princely sum, but the majority of them have no track record or performance guarantee. The reality is that funnels have existed since the dawn of ecommerce. They have just come into vogue right now because of two factors.

First, the cheap flow of prospects from once new channels like Google AdWords and Search Engine Optimization has become more costly.

Like any medium, competition causes an efficient market to be created around it, raising the price for everyone until only the most profitable or wasteful are left to use it. So having a more efficient marketing funnel is necessary to compete in those channels now.

Second, the capabilities of the Internet and the software running on it continue to grow exponentially.

The free version of Google Analytics available today can do more than enterprise level analytics solutions that were priced at $20,000 per year just a decade ago. To clarify, a funnel is simply the steps you take a prospect through to make them a customer. Every business has one.

You just need to define yours so you know how to improve it if you've never paid attention to it. If you look at the ADA graphic in the book, you'll notice that it's shaped like a funnel.

That funnel graphic has been around since the early 1960s and the framework has existed since 1898. Yes, more than 100 years ago. Again, this stuff isn't new, but it's vital to get right.

Funnel Stages when we look at the entire funnel, we see there are three parts that create revenue for every business, generating leads, closing them, and then fulfilling them as clients. Lead Gen as outlined above, the beginning of any funnel starts with attention.

Every potential customer in every market is exposed to over 30,000 ads each day. Your job is to create a way to cut through that noise and be noticed. This is easier said than done.

As you're well aware, the best framework I've found to consistently capture attention and generate qualified leads is message, Market, and media.

I've learned this from the famed copywriter and author Dan Kennedy, and he created his marketing triangle, with each side representing either the message, which is what, the market, which is who, or the media, which is the how, so the message. What are you saying?

Marketers define this as your copy, which is the communications used to persuade prospects back to Joshua Bell, he was relying on his music to do the communication. This is the classic mistake that most business owners make.

They think that just because they deliver a great product or service people will tell others about may happen, but it's unlikely to cause fast growth.

And you can pull out the extreme cases to build your argument around, like the Cheesecake Factory, which is a restaurant with such amazing and affordable menu that they've never had to advertise to generate customers. The food is so good that everyone comes back for more and tells their friends and family about it.

But it's much easier to create demand by learning how to tell others how well your product or service meets their needs. Let's start by building off your message from your big idea in Chapter two the Market who are you speaking to?

Marketers define this as your customer avatar or profile. These are the details defining who you want to attract to buy your product.

As with most experiments, researchers would be quick to dismiss the commuters as people uninterested in classical violin music.

They may not all be Bach or Beethoven buffs, but this particular Metro station was used by people of all ranks in the federal government, from a lawyer for the U.S. postal Service to a consultant for the Department of Transportation to an IT specialist at the Department of Housing and Urban Development.

They may not have forked over $100 for decent seats at one of his concerts, but they were sophisticated enough to be able to recognize impressive classical music. You probably have an idea of who your ideal customer type is by now. If not, this is a must do.

Use the guide at BBG Li profile to develop your ideal customer type, and here's a A great shortcut to growth is to pursue higher quality clients.

It doesn't require rebranding or retooling your entire business to get them either, just a willingness to intentionally go after them and even be willing to say no to future prospects that might prevent you from being able to serve the larger clients media. How are they receiving the message?

This is the means of delivery, whether delivered in person, over the phone, printed and mailed, broadcast on TV or radio, put online somewhere, or any of the seemingly countless options available today. It is where most of the marketing activity exists because there are always new media being developed.

Plus there are sales reps and training programs tied to so many media. So business owners fall for the silver bullet promise that comes with each one. In Bell's case, the medium was in person in a Metro station.

Definitely far from ideal. The complexity of the message Market media framework is that it works more like a recipe than a checklist.

Your goal is to get all three right in any marketing campaign. When you do, it works almost like magic, driving in clients unlike anything you've ever experienced before.

But it doesn't guarantee that you can just swap pieces around and keep getting the same results.

So many businesses try to keep two pieces in place, most commonly done with the message in the market, and expect it to work with any option for the third piece, most commonly swapped with media.

Just because the combination of peanut butter and jelly works great on wheat bread, it doesn't necessarily mean it will work as well on sourdough or cheese biscuits, messing with the recipe A great example of this is a company with a direct mail campaign that generates great leads that wants to try something online.

Their campaign consists of a simple postcard, the medium that makes an offer for a free consultation, the message allowing the prospect to call their office or fill out a consultation request form on their website.

The company as a list broker has found a great list their market that responds to their offer, getting them qualified appointments with prospects at an average cost of $120 each. They close 20% of the leads that come in at a total cost of $600 each, which is $120 divided by 20%, which is very profitable.

Since their average sale is $4,000, they decide to try out Facebook ads uploading their past client email list to let Facebook find more people just like them through the custom and lookalike audience functions. They make an ad with the same image on the postcard along with the copy and send people to the same webpage with the consultation request form.

But it doesn't work. They get clicks and Facebook charges them for each one.

But after 1000 people click through at a cost of $1.25 per click, not a single one fills out the form.

This doesn't mean that Facebook can't work for them, just they need to figure out if their targeting filters need to be changed their market and then adjust their offer on the landing page their message since it's obviously not working. It's a great example of creating a peanut butter and jelly sandwich on cheese biscuits.

We'll tackle developing the right recipe for your business in the next chapter on traffic, which is all about generating qualified prospects in a controllable and scalable method. Closing Sales the next stage in the funnel after generating a lead is to determine the prospect's need and solve them.

If you're the best provider to do that. We all know this step as closing the sale, and it's the most neglected part of the funnel that I see in businesses of all sizes.

Most clients I work with have little to no structure to their closing process. This often causes the owner or sales staff to follow the prospect's lead, fielding whatever question they throw at you.

Or they end up winging it, reinventing the wheel every time and getting inconsistent results. Or worst of all, they end up turning into an order taker only providing pricing and terms without any effort to qualify or or persuade the prospect.

Yes, persuasion is needed and even welcomed by prospects Pre Qualifying One of the biggest levers in the sales process is to pre qualify leads before spending any time with them.

A great case study on the power of pre qualifying is from the Mountain Training School which is a four year intensive mountain guide training program. Like a high quality university, it requires a significant investment and the interest in it is very strong.

With such a specialized market, every interested student had a mountain of unique personal questions based on their individual situation.

The founder would personally handle every inquiry, acting as the de facto admissions department, Each prospective student would fill out a short questionnaire and they get up to a half hour call from the founder to discuss their specific issues.

This would eat up 20 plus hours a week and the number of potential students who were actually qualified and could cover the cost and make the commitment was low and in the 5% range. To improve the system, I looked at how we could improve the quality of leads as well as the quality of the discussions.

We looked at follow through as well as how to improve the onboarding process so that more students actually paid and committed to the program. The school only wanted to take on 24 new students a year at the time because it was the sweet spot for profitability and logistics.

To help them remove this bottleneck, we made the application process much more formal, similar to an application to a traditional university.

We added a fee for the application and the questionnaire was expanded to approximately 60 questions, many of which were open ended, making it much more time consuming to complete. This new forced compliance application helped weed out students who were not committed to the process.

This was very similar to the red velvet rope technique used at exclusive venues where people line up and wait with anticipation to get in. Since we were using Typeform for the application, we're able to include some conditional logic in it.

This meant that based on the answers to certain questions, applicants that answered in a way that demonstrated they were highly qualified would automatically get access to the Founder's calendar. To schedule a more thorough application interview call.

For that calendar, we use a tool called calendly you can find out more at BBG LI Calendly C A L E N D L Y if the questionnaire analysis did not highlight a potential student for the program, the student would get a message saying saying, we'll follow up with you after the submission. Later, an email would be sent to the potential student stating that it doesn't appear to be a fit right now.

Feel free to reach out in the future if your experience changes.

At the end of the new application interview calls, the Founder would know with certainty who was a worthy applicant and who wasn't, allowing him to grant acceptances on the spot. In the end, this automation ensured the founder's time wasn't wasted on potential students who were not appropriate for the program.

These improvements saved the founder approximately 20 hours a week in calls, and it also improved his close rate from 12.5% to just over 80%.

And after this application funnel over the next few months we tackled two additional bottlenecks, a traffic pillar and a pricing adjustment which resulted in 324% revenue growth over the following two years, 70.7% in year one and 90.3% in year two. Nurturing an offshoot of the funnel is the holding pin where you put everyone that doesn't buy from you.

I call this the lead incubator as it allows you to nurture and care for them over time until they mature to a point that it makes sense for them to buy from you.

Their decision not to purchase from you yet could be due to any number of reasons such as timing, trust building, budget, prior obligations with other vendors, and so on.

The reason doesn't really matter at this stage, you just need a place for them to be captured so you can communicate with them and keep them from falling through the cracks.

All customer relationship management systems are capable of segmenting leads into this bucket, so it's simply a matter of placing them in it after they decide not to purchase from you.

Right now you can get fancy with how the system organizes them and what communications you send them over time to each segment, but for now just make sure they're captured and stored somewhere accessible, even if it's just in a spreadsheet somewhere. There's a gold mine in unconverted leads for most businesses.

Don't worry about where your company is on the spectrum yet, as we'll dig into it in more depth in a couple chapters. On closing. The key is that you just want to write out your closing process so you have something to review and use as a baseline for improvement.

If you have multiple client segments.

Be sure to write out the closing process for each one so you can review it later to determine which one offers the most upside to any improvement efforts. Fulfillment if you've been in business for more than a year, I'm guessing that your client fulfillment process is operating at a satisfactory level.

You deliver the product or service with sufficient quality that the client is happy enough with it.

This may seem obvious to point out, since no business survives very long without delivering a quality product, but it's important to be aware of the steps in your fulfillment process as you review ways to dramatically grow your business. You may have fulfilled thousands and thousands of clients by this stage in your business.

You can likely do it as effortlessly as you brush your teeth or drive to work every day. This is a blessing and a curse when it comes to writing out what you do.

You know the process cold, but it also means you're likely to miss certain steps when writing it out because your brain fills in the gaps for you. This is also the reason that so many of my clients have such obvious and simple improvements to make with fulfillment.

They stopped thinking about it a long time ago once they mastered it in its current format. Umabi and Horn Engineering had been in business for over 30 years, successfully servicing local municipalities and developers.

The senior engineers had completed so many projects that they could instantly visualize every step. A new project would require mentally mapping out the entire project over the next six to nine months.

They were so skilled at delivering great projects that the volume of change requests from the contractors building out their plans was well below industry averages. They saw ahead and handled potential problems before they ever happened.

Their challenge came when they were going through significant expansion after we optimized their closing process that we'll outline in Chapter six, and they gained new engineers and support staff that weren't as experienced. This caused them to start missing things and having to redesign parts of the project late in the process, which is very costly.

Their deep experience had become a weakness as they grew with all the knowledge locked up in the heads of the senior engineers.

The solution was to actually define their project kickoff process and how projects would be planned in a team environment so everyone would be on the same page. Having me as an outsider involved to draw out their entire process and document it was a necessity.

Regardless of how hard the senior engineers tried to write it all out. They didn't realize how many steps they missed in the documentation process.

Any one of those missing steps would have been ruinous for a less experienced team member not to have in their design process.

Now your client fulfillment process may not be as complex as a civil engineering firm that builds roadways and waterways, but I guarantee there are many benefits to writing it out. Like everything else in this book, it will help you improve upon your process, making it more efficient and effective over time.

Another bonus of documenting it is that you'll be able to better set the expectations of your new clients, making them more secure in their decision to purchase from you. By showing them all the steps you take to serve them, you put them at ease knowing that you're working hard on their behalf.

Action Steps Draw your funnel every single step. You can get fancy new software like LucidChart.com or you can do what I do and just grab a piece of paper and pencil and start writing it out.

You're not submitting this to an art gallery, so beauty wins no awards here. Getting it out of your head and into a format that can be reviewed is the goal. Here are some questions to help.

First, where are all the places prospects find you? Referrals, searching, Google Ads you run, trade shows, outbound efforts, and so on? Second, how do they reach out to you? Is it a web form? Phone?

In person? Social media? And on third, how do they get a quote? Is there a pricing table on your website? Do you send a proposal? Do you send a price sheet?

Phone quote? Fourth, how do they sign up? Do they order from you online? A printed order form? A contract? Fifth, how do you provide them with what they paid for?

Do you ship it? Create it, meet with them regularly? And so on? If you get ideas on how to improve what you see as you document your funnel, jot them down.

Prioritizing them is key, so hold back and avoid the temptation to go down every rabbit hole you find. We'll go through how to prioritize and tackle the most valuable bottlenecks in chapter 13.