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Understanding eCommerce: The Online Sales Funnel

Updated on January 13, 2012

The Online Sales Funnel

The Online Sales Funnel
The Online Sales Funnel

What is an Online Sales Funnel?

An online sales funnel is a marketing term used to describe the sales process of attracting online traffic, capturing leads, nurturing prospective customers, converting leads into sales, delivering goods and satisfying customer demands, upselling customers, and obtaining referrals from current customers. While the online sales funnel may seem like a long and convoluted process, it is actually quite simple: the goal is to generate as many conversions (sales) from prospective customers and online traffic as possible; i.e., to gain the highest conversion rate possible. And, as its name suggests, the online sales funnel resembles a funnel, with traffic located at the outside of the funnel, sales leads positioned within the funnel's opening, and new customers found inside of the funnel's neck. Sales funnels typically employ such tools as landing pages, shopping carts, white papers, social media pages, newsletters and promotional emails to increase sales leads and conversions.

Why You Should Use an Online Sales Funnel

Why should you use an online sales funnel for your ecommerce business? There are several big reasons, including:

1). To separate and understand each portion of the online sales process. For example, you can find out just how much traffic your own sales funnel is obtaining by checking your ecommerce site's analytics. One well-known (and free) analytics program is Google Analytics. Simply submit your ecommerce website URL to Google Analytics, wait patiently a few days, and then check your website traffic. The number of unique visitors to your ecommerce website gives you an idea of just how much traffic you have around the opening of your online sales funnel.

2). To resolve "clogs" in the sales funnel. Once you understand a given portion of your online sales funnel, you can take steps to "unclog" and optimize it. One of the biggest issues any online sales funnel has is insufficient traffic (i.e., a narrow funnel opening), resulting in few sales leads and even fewer (if any) sales conversions. Because of this problem, you might focus very closely on the traffic level captured in your online sales funnel. Obtaining additional traffic may involve placing PPC ads, banners, text links, YouTube videos, articles and podcasts to grab consumer attention (for information on how to generate online traffic, please read my post on 4 Ways to Attract Traffic to Your Website- and the One Way that Works Best). You might also improve your website's search engine optimization (SEO), initiate an email marketing campaign, or create a Facebook page for the website. Once such traffic-generating efforts are underway, you can check your analytics program to find out if online traffic improved. However, if you don't know just how much traffic your website is generating in the first place, you won't know whether any of these efforts are paying off.

3). To improve and test sales landing pages. Once online traffic is present and flowing freely, most ecommerce merchants direct it towards one or several sales landing pages. A sales landing page requires that the visitor take a specific action, such as to provide one's name and email address, to "Like" the brand on Facebook, or to agree to obtain a piece of marketing collateral. Generally, most sales landing pages do not ask that a visitor buy anything (yet). Instead, the call to action of the sales landing page helps move the visitor from being just a part of the general traffic that is located outside of the sales funnel to being a sales lead or prospect.

4). To gauge sales lead or prospect interest and/or site abandonment. Once the visitor fulfills a landing page's call to action, the nurturing and educational process begins. As mentioned previously, most landing pages provide a call to action that is not purchase-based; instead, the intention is to obtain visitor permission to send marketing collateral, emails, product promotions, etc.

Some sales leads or prospects will inevitably unsubscribe from the email list, newsletter, or social media platform that you own. While this is to be expected, it can also be minimized by better understanding why potential customers are unsubscribing and/or leaving. An online sales funnel helps facilitate this process and also provides an account of how much abandonment is occurring.

5). To understand (and encourage) customer spending habits. Customers may or may not purchase from your ecommerce website depending on a number of factors, including: time of day, month or year, holidays, advertised specials, product popularity, product description, etc. Trying to understand the exact impetus for a customer sale or shopping cart abandonment is next to impossible if you don't target this particular aspect of your online sales funnel with an analytics program. It is also difficult to encourage increased customer sales if you don't understand why they are buying one particular item over another, not buying at all, or suddenly buying in excessive amounts from your ecommerce site.

6). To help generate repeat sales. An online sales funnel does more than just help you garner traffic. It also helps you generate repeat sales. Customers who have already purchased from your ecommerce website can be sent periodic emails alerting them of related products, for example. Likewise, customers who have technical issues with your products or shopping cart can be encouraged to contact you about obtaining technical support; this not only helps resolve their issue with the product but reassures them that you will be around to help them even after the initial sale. Such customers are more likely to refer their friends and family members to your website. Providing your current customers with valuable incentives such as white papers, product samples, and special discounts also helps retain their loyalty to you and your brand.

You can track your repeat customers with analytics programs provided through auto-responder programs like AWeber or InfusionSoft, thus differentiating them from new customers. Because repeat customers have already purchased from you and are more likely to purchase from you in the future and/or even become brand ambassadors, they can be viewed as continual sales leads in your online sales funnel.

Do You Use an Online Sales Funnel?

Do You Use an Online Sales Funnel for eCommerce?

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