Thursday, April 19, 2007

The Sales Funnel Series | Entrepreneur’s Journey

The Sales Funnel Explained

April 9, 2007 on 9:20 pm | Written by Yaro

The Sales Funnel

Fundamental to the success of many Internet companies, in particular information product based businesses, is the concept of the sales funnel. Many of the most well known Internet marketers established themselves in a niche and dominate by crafting a highly refined sales funnel process, guiding consumers through a tested and optimized channel of marketing and sales.

Basic Sales Funnel Structure

The sales funnel begins by capturing the attention of prospects. Some prospects are convinced to become buyers, who purchase an entry level product, demonstrating that they have a need for what is on offer and are willing to invest money to solve their problem. The sales funnel continues to nurture the best customers, filtering out mismatches and refining the specific target customer, offering them more specialized products and services, often at higher prices.

By the end of the process the funnel has identified the ultra-responsive customers who purchase everything on offer and experience the most value and satisfaction from every purchase made. It is from these ultra-responsive consumers that the majority of profits are made.

In the following series I will introduce you to the sales funnel using simple language. I will teach you how to craft a sales funnel, including analysis of the front-end and back-end, and demonstrate why you must continuously test your funnel process to ensure long term success.

To open the series I will relate to you my story of how I was first introduced to the sales funnel online as a customer, which led to further exploration of the funnel by reviewing how other Internet marketers implement the funnel in their business. If you are not sure what a sales funnel is, the story below will clarify things for you. Let's begin…

Experiencing The Sales Funnel

I first heard of the sales funnel about two years ago as I began to study online marketing seriously. Before this time I had participated in many sales funnels, without realizing of course, by consuming products and services online that were sold to me via a sales funnel process.

Double Your DatingDuring my university days I signed up to an email newsletter called Double Your Dating, which proposed to teach any man how to meet and attract women.

I can't remember what first compelled me to search for dating advice, probably as a result of a rejection from a particular girl or a date gone bad, but it didn't take long to come across David DeAngelo, the author and owner of the Double Your Dating Internet business.

I would later find out that David DeAngelo is a pseudonym - not the author's real name - but nonetheless I found his newsletter compelling reading. I recommend any guys reading this (or curious girls…) check out the newsletter if you want to some entertaining "education" about the female species (and yes I recommend this as an affiliate - its a good read - just don't expect miracles and certainly don't take on board everything you read as the facts about women).

I didn't realize it at the time, but when I first came across the Double Your Dating email newsletter I was presented with what I would later learn was known as a namesqueeze page (if you have don't know what a namesqueeze or squeeze page is, read my introduction here).

A year or so after first signing up to a newsletter that "squeezed" my name and email address, I learnt how fundamental the namesqueeze is to Internet marketing, which precipitated my introduction to list building - perhaps the most critical element of any Internet business. Back then I was a typical prospect for an information product business and I lapped up all the free information I could get, little realizing I was falling into the top of a sales funnel.

For many months I read the dating newsletter, enjoyed the case studies, the testimonial stories from satisfied customers who had discovered how to meet and attract women thanks to the advice of within the Double Your Dating ebook (social proof in action!).

Due to my interest in business I looked at the newsletter from the point of view of a prospect AND a marketer, and as a marketer I was blown away by how emotionally compelling the offer was. Here was a product that, based on testimonials, the sample materials and the sale propaganda, presented a "solution" to one of the most significant challenges men face - how to attract, date and sleep with women. It was genius, and I suspected Mr DeAngelo was raking in the profits (I've since learnt that it is a $20+ million dollar business).

Eventually I was persuaded enough by the free newsletters that I purchased the Double Your Dating ebook for $27. I had just converted from a prospect into a customer and fallen a little further into the rabbit hole…err…sales funnel.

Wait…There's More!

Based on the free newsletter I had come to believe that by purchasing the ebook I would receive everything I needed to know about landing the women of my dreams. I read the book, found it as compelling and interesting as the newsletters, and then started to receive a different series of newsletters.

Apparently when I had purchased the book my email address had found it's way on to a new email list. This time it was the email list for people who had purchased the book. Now I received stories from other men who had purchased the book and had some success, but needed a little extra training to really improve their "game" with women.

Conveniently enough, David DeAngelo had recorded a video series on CD of further training including interviews with "players" - guys who had tremendous success with all kinds of women - and real life interactions with women so we could watch the experts at work "live in the field". For $97 I could add the videos to my training and truly become an expert with women.

I didn't buy any more of David DeAngelos products and months later unsubscribed from all the newsletters, but my sales funnel education process had only just begun.

My interest in dating training was diverging (probably because I had a girlfriend at the time) and I no longer was as compelled by the Double Your Dating premise, but I still admired the sales process from a marketing point of view and began to investigate what other "dating trainers" offered. I found out that beyond the video series, it was also possible to attend live seminars and even, if you had the financial reserves to spend thousands on your dating education, take private coaching in small groups with a professional trainers. Some experts offer over the phone consultation and travel around the world presenting to groups of men and conduct "field work" at clubs, bars and bookshops.

Putting The Pieces Together

Although I didn't purchase anything else from David DeAngelo, I certainly came to admire his sales process. I credit my experience with him as my very first motivation to endeavor to become an online Information marketer.

It made so much sense to lead in with a quality free newsletter, then sell a book, then a more expensive product and so on.

It made sense that people would be much more likely to buy after enjoying free materials, which demonstrated the expertise of the author and created credibility.

It made sense that for those who become real customer evangelists, and in David DeAngelo's case I assumed there were many rich and single lawyers and doctors and accountants and other working professionals, who would lap up everything they could that might help them finally realize a lifelong goal - the woman of their dreams - whether it would in fact help them or not. That is such an emotionally compelling offer.

In more recent years I've gone on to study the exact sales process that Internet marketers like David DeAngelo implement. The term used to describe the process is called a "sales funnel" and it was clear to me that having a sales funnel was the way I wanted to go.

The Sales Funnel Is The Key To Successful Internet Business

In 2006 I joined a 12 month high-end Internet business coaching program led by Rich Schefren, which further cemented my devotion to a sales funnel focused Internet business model.

As I have written about previously, going deep, which essentially means to create a sales funnel, is the key to long term success as your marketplace becomes increasingly competitive. The companies without a defined sales funnel suffer as they are unable to compete with companies that know what a customer is worth to them long term, thanks to refined metrics calculated at each point as a customer moves along the sales funnel.

However before we can consider the metrics of a sales funnel we must understand the two critical components, the front-end and the back-end. In part two of this series on the Sales Funnel I will introduce you to the top of the funnel - the front-end. In part three we look at the back-end and in the final section I will discuss the specific advantages the sales funnel creates and how you can leverage these advantages to increase your profits and remain ahead of the competition.

The Sales Funnel Part 2: Generating Leads At The Front End

April 11, 2007 on 3:47 | Written by Yaro

The Sales Funnel - Front EndIn part one of this series on the Sales Funnel, I related my story of becoming a customer of the Double Your Dating information product business, and how I experienced the sales funnel used by David DeAngelo, to sell his dating products.

The sales funnel is a systematic marketing process where you progressively filter your prospects into customers and further refine them into hyper-responsive customers. Your customer base becomes smaller and your profits increase as you sell higher priced items to your hyper-responsives in the back end of your sales funnel.

Before any of this can happen, at the top of the funnel you need to attract prospects, and it's at this point where your marketing creativity can really shine.

The Front-End

The front-end is the most dynamic aspect of the sales funnel and the area that requires continuous experimentation. There are literally endless techniques available at the front-end, limited only by your resources and imagination.

As the Internet changes and evolves, new methods to market and capture leads surface thanks to advances in technology and ideas from Internet entrepreneurs. In the "old days" leads were generated via methods like banners and newsletter advertising, which are still common marketing tools today, but are now joined by more sophisticated options such as pay per click advertising, social media, blogging, podcasting and other Web 2.0 tools and toys.

The focus at the front-end is to attract and qualify people who may have an inclination to purchase your products further down the sales funnel. At this stage you begin the process of refining your target customer and educating them of the possibilities you and your products present.

In most cases the qualification occurs when a person opts-in to receive something from you. It's this opting-in step that transforms your everyday web surfer into a prospect, since they have just taken an action that indicates they have at least some desire for what you offer.

Lead Generation

The first step of building your sales funnel is to create front end mechanisms that capture the attention of people. You then give them the option to opt-in, which can occur in many ways.

The Sales Funnel - Lead Generation

Here are some examples of how marketers attract and draw people into their sales funnel. These are all front end marketing tools.

* Signing up for an email newsletter, for example my own Blog Traffic Tips email newsletter or the Double Your Dating newsletter.

* Subscribing to a blog via RSS or email notifications.

* Opting-in with your name and email to download a free report, white paper, ebook, audio download, video file or any media. A great example is Rich Schefren's Profit Vault.

* Registering for a free online service, for example MySpace, Facebook, LinkedIn, Yahoo! Games, Flickr, Skype - pretty much anything where you have to register with some form of contact details.

* Ticking a box to receive further information about a topic/product when registering for something (co-registration).

Strictly speaking, for someone to have entered your funnel as a prospect, to stick their hand up and say "I'm a lead", they must have agreed to receive some form of communication from you. This is permission marketing, where your prospects give you permission to contact them with further materials, all of which is part of your marketing and sales funnel.

In today's online marketing world, I prefer a looser definition of a lead, where a user doesn't necessarily have to opt-in to your marketing stream, they just need to pay attention to you.

Perhaps they are reading your content via RSS or directly from your blog, or are listening to your podcast or watching your video. The point is that you have their attention. You don't necessarily have permission to continue to market to them, however because you are providing value you have their attention, so they choose to receive more from you. This is a subtle difference, but a key point for marketing online today. Your relationship with prospects counts more than whether they gave you their email address or not.

Of course there's no reason why you can't take the people currently paying attention to whatever you do and funnel them into an opt-in list of some kind, which essentially asks them to create a stronger relationship with you, since they now offer you both their attention and permission to contact them in the future. That is what the front end is all about.

The Price You Pay

Since email marketing is the most prevalent communication tool to do business online, often the process of handing over your email is the initial "price you pay" when you enter a sales funnel. From that point onwards you feed prospects value, disqualify those prospects who are not ideally suited for what you offer, and start to offer front end products.

Disqualifying leads is a very important process that must occur at all points of the sales funnel. If someone doesn't receive value from what you offer, then they won't continue to purchase more further down your sales funnel. Assuming of course that there IS a group of people that love what you provide, it's your job to focus attention on them and filter away everyone else. If no one likes what you do or it's a very small group, then perhaps you need to refine your target market or the offer you present.

Profits Are Not In The Front End

A common focus for many Internet business entrepreneurs - and I've made this mistake myself - is to think about launching your first product as the big ticket to wealth. You focus so much energy on releasing your ebook or program or course, thinking it will make you rich, that you don't realize that the real profits are made at the back end.

Double Your Dating is a fantastic example of this principle. You may not realize this, but the Double Your Dating affiliate program pays out 200% to affiliates. Yes, that's right - they pay out $40 to affiliates for every $20 sale of the front end ebook they refer. They can afford to lose $20 because they know how much they will make on the back end.

I'll go into more detail about how they can do this in the next sales funnel article, so for now just remember that your front end products are lead generation tools - they are not necessarily your profit centers.

That's not a hard and fast rule, there are companies that make their money strictly from front end sales, but in most cases by adding a back end, the profits of the business will explode.

Dynamic Marketing

The front end is all about capturing attention and drawing people into your sales funnel. Since there are many ways to capture traffic online you should never run out of options for generating leads.

The key is to know your numbers. Once you know how much a lead is worth to your business, and you can only really know this once your back end is refined, then you go to work building front end marketing tools. This is a process that literally should never stop. As long as there are methods to market you can be out there testing them, see which bring in the most qualified traffic and tweak the process until your conversation rates are sky high.

Obviously the size of your organization dictates how much you can do, since resources are limited. In most cases you will discover a "best" solution that works well for you, which might be writing and publishing free articles or ebooks, or using affiliates, or running teleseminars, or encouraging word of mouth referrals, or posting to a blog or any combination of these tools, or other methods, both online and offline.

Your front end helps to qualify prospects and convince them that your business is worth forming a relationship with. That relationship becomes stronger as customers consume more of your free marketing resources, purchase front end products and learn to trust and appreciate what you do. From there, they enter your back end and make big ticket purchases with high margins.

In the next article in this series on the Sales Funnel I will review the back end process and why it's the most crucial element for long term business growth and beating the competition.

The Sales Funnel Part 3: Back End Profits

April 15, 2007 on 10:03 am | Written by Yaro

The Sales Funnel Back EndNow we head into the meaty section of the Sales Funnel, the back end, where the big profits are made. If you haven't read the first two parts of this series make sure to catch up, starting with the sales funnel explained and a look at front end marketing.

As I discussed in the last article, the front end of your sales funnel is all about capturing the attention of prospects, people inclined to desire want you provide. Potential customers are called "leads". The expectation is a certain number of your leads will convert into customers and a small but very responsive group, will buy up everything you offer. This last group are called your "hyper-responsives" and it's this group that is responsible for a significant proportion of your profits because they fuel your back end sales.

Pricing Points

Your back end is made up of your higher priced items, products and services that present significant value - or at least perceived value. Essentially we are talking about meeting the same need (or needs within a niche), just with different media. This might include information distributed via audio (CDs/DVDs/MP3s/Podcasts) or visually (Video/Movies) or live (Conferences/Seminars/Workshops/Retreats) or privately (Phone Calls/Coaching) or even common front end media such as ebooks, newsletters (electronic and print), subscription services and teleconferences.

The specific distinction between the front end and the back end is all about the type of customer and the price paid. In the back end all your customers have traveled through your front end, sampled your free materials, purchased an entry level product or service (or several) and have enjoyed significant value from what you offer, so much so, that they are eager to buy more from you.

At this point it becomes much easier to make sales, although since the idea behind a sales funnel is to filter prospects to find hyper-responsives, you don't have nearly as many people reaching your back end as you do entering your front end. In many cases it's common that only a small percentage, say 1-2% of the overall people entering your front end make it through to the back end. That's okay because that small group are spending big bucks.

While front end products might cost under $100, back end products are usually priced in the several hundreds or thousands. There is no strict formula for pricing a back end product, or a front end product for that matter, but in nearly all cases the profit margin is significant at the back end.

The Sales Funnel - Back End Sales

Taking the Double Your Dating sales funnel again as an example model, we can look at their pricing structure. I can't remember specifics because it has been a while since I was in the Double Your Dating funnel, but as I recall, it went something along the lines of this:

1. Free newsletter

2. $19.95 eBook

3. $97 CD Video Series

4. $19.95/month Interview Series Subscription

5. $997-$2,997 Live Bootcamp

6. $2,997-$9,997 Small Group/Private Coaching

I'm not certain of the bootcamp/private coaching product pricing points and all the numbers above are rough guesstimates. I'm also pretty certain there are additional products available from Double Your Dating, but for the purposes of demonstrating the pricing structure of a sales funnel, I think you should get the idea.

The back end - the high priced items - are bought only by the hardcore, well-matched, target customer group. These clients have the funds, time and inclination to attend events, spend big and care enough about their specific problem to justify the expense in time and money. The end justifies the means, and the particulars - including how much it costs - are not a significant concern. It's all about solving a problem and consuming as much of the proposed solution (information/education in this case) as required.

Stable and Predictable

The back end is the core profit center for business because it is stable and predictable. Most problems occur in the front end because the customers are more price sensitive, they are not "perfectly matched" and may grumble, ask questions and generally cause greater customer support issues. As I mentioned in part two, the front end is the dynamic area of your marketing, hence you are more prone to unpredictable results.

The entire sales funnel is about numbers - opt-in rates and conversion rates. How many people sign up to each of your opt-in mechanisms, like landing pages, newsletter sign-up forms and free report downloads. How many people buy your entry level products and then go on to buy higher priced products in the back end.

Once again, the back end proves reliable and predictable and this is the main reason for establishing a back end in the first place. If you knew, with relative consistency, that for every 100 people you brought into your front end, two of them would make it all the way through and buy your back end product(s) you would know how much each customer is worth to you.

If you knew, with reasonable consistency, that your back end offers convert at certain rates then you could go to work testing as many front end mechanisms as you can handle in order to drive as many leads through your funnel as possible.

Losing Money On The Front End

You should recall in my discussion of the front end I mentioned that the Double Your Dating affiliate program pays 200% commissions on each ebook sale. That means they pay out $39.95 to affiliates for every $19.95 book they sell.

The only reason they can do this is because they know the numbers. They know that a certain percentage of ebook buyers go on to buy higher priced products and what percentage go all the way through the back end, buying the big margin products like boot camp attendance and private coaching. If they didn't have a stable and consistent back end, they could not afford to make a loss on the front end.

Long Term Competitive Advantage

In Rich Schefren's Strategic Profits coaching program, which I am a member of, Rich explores the front end/back end combination and strongly recommends all of his students consider a back end as the true path to business success long term.

I've never owned a business with a significant back end (I'm building one now in the blogging world), but what I've learnt from Rich Schefren, who has ample experience from his own businesses and coaching his many clients, is that in order to compete long term you have to know your metrics at every point along the sales funnel.

With a stable and predictable back end you can strategically beat the competition and dominate your market through initiatives similar to the Double Your Dating 200% affiliate program. Imagine what your affiliates would do if they were paid 200% commissions? Do you think they would chose to promote your products over those of your competitors?

Do a search now for Double Your Dating and you will see there are literally thousands of affiliates, and I expect the front end of David DeAngelo's business is driven mostly by affiliate marketing.

How about if you conducted some competitive intelligence (Rich's course has GREAT stuff on conducting competitive intelligence by the way), found out the significant affiliates for your competition's products and contacted these affiliates offering 200% commissions AND you could show them very specific numbers on how much money they could make.

Given that you know the metrics of your sales funnel you can tell potential affiliates to expect a certain amount per visitor they send through. Take this small sample from the Double Your Dating affiliate program for example:

I usually have conversion rates of 1:50 to 1:200 depending on the quality of traffic sent. This is, of course no guarantee of what kind of conversion your traffic will produce. If you send 1000 visitors a day, and your conversion is 1:100, that would equal about 300 sales per month, which would net you around $11, 985.00 a month. If you send more and/or your conversion is higher, you’ll make more.

David DeAngelo, Double Your Dating affiliate program

That's a pretty enticing proposition for affiliates. The more numbers you know and can provide to interested parties, based on your tested sales funnel, the greater the advantage you have in your market.

The advantages go beyond affiliate marketing. With a defined sales funnel you can conduct tests on elements like your pricing, product sequence, create segmented lists to refine each customer group and increase conversions, provide highly specialized products specifically for your segmented, hyper responsive customers, find the customers who love your work and spend most of your time with them, solicit amazing testimonials from your evangelist customers, who also act as great word of mouth lead generators.

Rich Schefren covers many areas where having a sales funnel leads to greater competitive advantage, increased profits and long term business stability - too many to mention here - but I think you can see just from the few examples I list what the potential is from having a well constructed sales funnel, with a stable back end.

Of course actually building a sales funnel is easier said than done. Your back end products better be pretty good if you are charging a premium price for them. Perceived value can only carry you so far - you have to offer real value as well - which is generally easier when working with your hyper-responsive customers because they are in the ideal situation to act on what you offer and therefore stand to benefit the most, but it's not a forgone conclusion, there is work involved.

Long Term Plans

It may take many months, even years, to fully establish a refined sales funnel, but if you have your sales funnel in mind as the "big picture" it makes the process of building your business that much more enjoyable and grants you some strategic freedoms you might not otherwise have if you weren't building a funnel.

Knowing that you may not necessarily have to profit on your front end products can come as a relief when you realize sales of your $27 ebook are not going to make you rich. You can go to work building in some form of back end where your margins will be better. Once you start singling out your hyper-responsive customers then you know your onto a profitable business model and if product creation is your only constraint then half the battle is over - you just need to start building some great stuff for your back end.

In the final piece of this four part article puzzle on the Sales Funnel I'm going to get practical with you and break down a very basic sales funnel I'm currently working on. I'll also attempt to offer you some form of guidance to start constructing your own sales funnel based Internet business.

How To Set-Up Your Sales Funnel

April 18, 2007 on 2:02 pm | Written by Yaro

Build Your Sales FunnelIn the final chapter of this series on the Sales Funnel we look at how you can begin the process of setting up your own sales funnel based business, in particular an Internet business. I will illustrate using an example of the sales funnel I am currently developing for my own blogging information business.

If you haven't read the first three parts of this series please do so now.

* The Sales Funnel Explained

* The Sales Funnel Part 2: Generating Leads At The Front End

* The Sales Funnel Part 3: Back End Profits

Find A Profitable Niche

Once you realize the potential of a sales funnel, which I hope you do by now after reading this series of articles, you should consider the possibilities of creating one in your niche.

A sales funnel can only succeed in a market where there is a demand for what you offer and you are capable of delivering services or products to meet that demand. Assuming you are operating in a marketplace and meet those two criteria, then you have a business and can begin the process of planning your sales funnel.

If you are yet to find your market niche then your focus must remain on finding the right business opportunity for you. You can't build a successful sales funnel if you don't have a market for the products and services you sell, so make sure you tick that box first.

If you are not sure whether you have a good market for a sales funnel you can test by setting up initial lead capture mechanisms and attempt to make front end product sales. This can be as simple as an email newsletter combined with selling an ebook, or even before creating a product, by performing keyword research and setting up a survey site, just like you do with the ebook business model.

Until you have actually made money you can never be certain the potential for a sales funnel based business is there. I'd place more trust in your conversion rate for actual sales rather than opt-in rates to a free newsletter as indication of a business opportunity. Having a newsletter as a relationship builder is a great first step - just don't assume people are willing to buy until you sell something.

Planning Your Sales Funnel

Once you are confident you have a profitable niche you can begin work planning your sales funnel.

Your main focus is always meeting the needs of your customer. Along the funnel you do this with ever more specifically tailored products. Your ability to charge high ticket prices and make the most profit rests on developing quality back end products.

I like to imagine I'm my ideal customer and consider what is the core problem or desire they have that compels them to buy what I offer. If I can help them meet that need then my business will be more successful and I will enjoy immense satisfaction helping others.

It's not always easy to jump into the shoes of your ideal customer, hence the need to gather feedback and survey your prospects and customers. The more focused you can define the problems they face, the better you can tailor the solutions you create.

Initially a need might seem quite broad - say for example "I want to improve my golf game" - but when you dig deeper you might find that it's actually a very specific aspect of the general problem that most people face that you need to focus on, for example "I need to improve my putting technique". Having a "drilled down" understanding of the common problems your customers face when attempting to meet a general need, helps you to determine what products to create.

Different Communication Media

Once you have a list of the most common problems in your market you can begin to plan how best to solve them. Consider delivering solutions using different media, such as downloadable audio or video, text, over the phone or in person, conferences, workshops or private tuition.

It's important to remember that different people prefer different methods of learning, and consequently if you can provide solutions using a range of communication methods you stand to help the most people and obtain a larger share of the market.

While it's great to offer many solutions to the most pressing problems your customers face, you also need to consider your ability to deliver. Everyone may prefer private time with you in person, but obviously there is only so much of you to go around. If you are like most entrepreneurs, you are not in the business game to trade time for money, so you probably want to focus on creating methods that do not require your personal attention to deliver.

Digital Downloads

A common practice at the front end of a sales funnel for an online business is to focus on digital goods. Ebooks, reports, recorded audio, transcripts, Camtasia video presentations and other products that can be delivered via the web can satisfy many hundreds or even thousands or millions of customers without you having to work any harder with each new purchase. You create the product once and assuming it remains current, it is set-and-forget.

As you move down the funnel you can still use digital products to satisfy your hyper-responsive customers, perhaps with more highly tailored content (an even more refined problem), or by delivering your most advanced techniques or offering a larger package of content bundled together.

Generally as customers move towards the back end, especially if you operate an information publishing business based on your expertise, they expect to receive more personalized attention. The back end is often where private coaching or small workshops work well. You can gather a very small group of your overall customer base, who are prepared to pay a premium price and travel to come work with you in a more intimate format.

Perception and the Offer

It's important to realize that although you might have assumptions of what people expect for their money and how much they are willing to pay, both in the front and back ends, the primary drivers are actually perceived value and the offer you present. What the actual product is and how you deliver it do not factor in as much as you might think.

Do you remember this from the notes I took from a Rich Schefren presentation?

Compelling Offer

It’s not the product that makes a business, it’s the offer presented to solve a very “painful” problem. Once you find the golden combination of a hungry market, a believable promise (offer) and proof that you can and have delivered on that offer, you have the foundation for a very successful business.

Source: Key Lessons For Internet Business Owners

While there has to be some correlation between how much you charge and the type of product people receive for their money, it's actually more important how you market your offer than anything else.

There's a common perception of marketers that they cheat and lie in order to make sales - and some do - but I think it's important to distinguish between a well crafted offer and misleading the market, before applying the label of "evil marketer". The line between an emotionally compelling offer and misleading people with hype can be a fine one at times, and I'm not writing this article to debate the ethics of marketing, but it's a point worth making.

A good offer is a preposition that a certain product or service will meet a specific need. What makes the offer compelling is how the marketing materials tap all the right triggers (social proof, empathy) in the people who possess the need and how well refined the problem is. With that level of clarity it is possible to create a perception that you offer the best solution and can charge a premium price. Whether you actually present the best solution is a moot point - there really is no such thing as a "best solution" - it's all about how people feel and what they perceive as the best solution.

Beginner Sales Funnel Building

I expect many of you reading this are like me, independent, small business owners, who produce products and services mostly by yourself. You might outsource certain tasks, but product and content creation is your responsibility. You have a topic area that you love and blog about, or run a business in an industry you know reasonably well. Your interest in creating a sales funnel is high because you can see the potential, but you have to realize certain resource limitations hold you back from creating a super-sized, uber-sales funnel quickly.

For many people who operate Internet businesses they never go past the front end. They might have an email newsletter, or a free e-course, or a website or blog as a lead generator and then sell entry level products like books, or software, or templates or videos, but that's as far as they go down the rabbit hole. The same goes for affiliate marketers, or AdSense earners - you may make good money from it but it's all about one-off front end sales or clicks.

The Big Picture Mindset

To start building your sales funnel you need to think beyond that first sale and see the big picture. Are the people who buy your ebook coming back with questions? Can you take those questions (problems) and make more products? Do they love what you do that they will lap up everything you produce? Are you building an email list and segmenting it into different customer groups so you can create different products? Do you have plans for up-sells and cross-sells? Can you see yourself creating a large, home-study package selling for $997 with a big product launch that makes six figures like the guru Internet marketers do?

All these elements can be part of your sales funnel but the most important concept to grasp is that your first product or your current email newsletter or blog are just front end components, and if you one day want a thriving business turning over six or seven figures, in most cases developing a back end is the way to go.

Not Set In Stone

One thing to accept is that the process of building a sales funnel is not set in stone. You do want to create a reasonably consistent back end, but the process of developing one takes testing and effort. You have to consider what products to offer, produce the products, what offers to present to the market and test all the metrics that make up the system. This is a significant job, something you can't do over night and you will probably need to bring in specialized talent to handle some of the areas, especially if metrics and testing are not your strong point.

Start At The Beginning and Follow My Example

The first step is to start building a front end, and in my case I didn't even realize I was doing so when I began blogging.

I started blogging back in November 2004. The launch of this blog was my very first step in creating a sales funnel for my blog training business. At the time I was just experimenting with blogging and didn't realize I'd be doing it still nearly two and a half years later and make a full time income from it. Nor did I consider I would one day release products in the blogging niche, so that's what I mean when I say things constantly change and are not set in stone. Entrepreneurs-Journey was my first front end marketing and lead capture tool and still is my best front end resource.

Later I purchased and along with it came an established audience. That increased my exposure and ability to capture attention (leads) for whatever business I would end up creating. This was my second front end tool - another blog.

Once my vision for an information business became more concrete - in this case a blog traffic training course - I created an email newsletter for it at the start of 2006, my Blog Traffic Tips Newsletter. This was my third front end marketing mechanism and the first to have some form of opt-in process. I used my existing tools, my two blogs, to feed sign-ups for the newsletter, creating the very first part of my sales funnel.

For an entire year I left my sales funnel pretty much like that and clearly not making any sales since I wasn't selling anything. I used some pay per click marketing to drive more opt-ins to my newsletter, created a pre-launch blog for the course (currently on hold) that drove more sign-ups (two more marketing tools for the front end), but that was pretty much it.

With my recent decision to actually release a product, a blog mentoring program, I began work on the launch of, the first entry level product of my sales funnel. This will complete a basic front end process combining marketing tools, a lead capture opt-in process and an entry-level product.

Obviously I want to ensure the entry level product,, is awesome before releasing anything else, but I certainly have plans for a more extensive catalogue of front end products and my first back end offerings. Some of these I already have almost finished, some will come together over time and others I expect haven't even thought of yet. For the time being I aim to satisfy my first customers as best I can and come to understand what their unique blogging problems are.

Establishing Purpose and Credibility

I've spent the last year writing free blog traffic newsletters and more than two years publishing some of my best stuff about Internet business and blogging. This process has been rewarding both financially and intrinsically, however its also been a fantastic ongoing credibility and expertise building exercise, and most importantly from a business point of view - a lead generation tool as well. Since I've spent so long and worked hard pumping out free content in many different forms, I already have an audience from which to start a sales funnel business with.

From your point of view, building an audience (attention) and establishing credibility within your niche will always be one of the greatest challenges and it's crucial if you want to start building a sales funnel. That's why I recommend if you intend to have an information business based around your passion, experience or knowledge that you immediately start work on your email list or blog or both - at least some form of front end exposure tool.

In my case the process of blogging and building my email newsletter the past two years has helped me to do two very important things:

1. Learn and experience a lot about the topic I want to be an expert in (and establish enough proof elements to demonstrate that I actually do what I teach)

2. Form a vision for what my sales funnel might look like

Here's What You Have To Do


If you currently have absolutely nothing online, no business, no blog, no email list, then I suggest your first step towards building a sales funnel is to start something.

You have to create something that generates awareness for you. That's what online marketing is all about. You could start in reverse and build the product first, but when it comes to building exposure online, NOW is not soon enough, it's something you should always be doing even while creating your product.

If you decide a blog is the first asset you will build, then consider working with me as your mentor in Blog Mastermind.


If you already blog then you have your first front end asset. I suggest your next step is to create an email list to go along with it. Create a newsletter or a free e-course, or give away a report in exchange for signing up to your list. Do something that stimulates an opt-in. At the same time consider what your first front end product might be and go to work creating it.

I recommend AWeber or GetResponse if you are looking for a good email newsletter service.

Business owners

If you run an Internet business then start considering your back end if you don't already have one. Think what products or services you could add to your sales funnel that are specialized or delivered through different media formats. Try bundling a few different products together to create a large package, offer a more focused and personal service at a premium price or look for other logical progression purchases that your customers would make if you gave them the option to.

Building a sales funnel can be a complex and time consuming process and is probably beyond most solo-entrepreneurs. The important concept to grasp, even if you do not intend to build a sales funnel, is to understand why they work. It's about capturing attention, filtering and then isolating the customers who you should spend most of your time with.

Even at the entry level this principle applies. Right now in your blog or your email newsletter or your Internet business, you should be looking at ways to filter and find your ideal customers (or audience), determine their needs and work with them for mutual benefit. You will be a much happier and if applicable, more profitable, if you can stick to working with your main beneficiaries and give them more of what they love.

// by Yaro Starak

// April, 2007


No comments: