The magic in the middle of the funnel
(This originally appeared in my newsletter. Sign up now to get this content when it’s fresh.)
A few weeks ago, I decided to shop around for a better deal on my car insurance. I went to one of those websites where you put in your contact details and some other information, and in exchange get quotes from a few different providers.
The quotes were unremarkable. Premiums were about the same as what I'm paying now. Boring. I decided not to switch.
Then the phone rang. It was a salesperson asking if he could help me pull the trigger on one the quotes. I said no thanks, hung up, and moved on with my life.
And I haven't heard a word from that company since.
A common mistake
I see this mistake all the time. The insurance broker - like many businesses - focussed too much on the top and bottom of the purchase funnel, and forgot the middle.
A purchase funnel is a way of segmenting your potential customers by their stage in the buying process. Here's an example of one:
At the top, you have people who barely know you exist. At the bottom, you have paying customers. The marketing team's job is to get people into that funnel, then move them towards the bottom. The sales team's job is to get them over that last hurdle and turn them into customers.
Lots of businesses behave like the insurance broker. They only really pay attention to the top and bottom of the funnel.
They focus their efforts on getting as many leads as possible into the top of the funnel, then calling every single one of those leads immediately to find out if they want to buy today. They discard the ones who aren't interested, and repeat the whole process again the next day.
This approach can work, but you need a huge number of leads at the top of the funnel for it to do so. This means it's both expensive and inefficient.
It's not a binary proposition
If you've ever bought something (and I assume you have), you know that there are very few things that you are either definitely going to buy today, or definitely not going to buy ever.
More often, a "no" can be translated to something like "I don't need this right now" or "I don't know enough about this to make a decision."
So when businesses focus exclusively on the top and bottom of their purchasing funnels, they're missing an opportunity to eventually convert people who don't want to buy today, but will buy in the future if they get the right information.
These are the people in the middle of the funnel.
Education along the way
You can do a whole bunch of stuff in the middle of the funnel to turn more of the leads you put into the top into customers at the bottom. For example:
Automated nurturing emails to educate leads about what you do and the value you offer. These are useful to prep people for a few days before your salespeople pick up the phone.
Newsletters (like this one!) to keep your business top of mind for when your contacts do need your services.
Retargeting campaigns that point to very solution-specific landing pages (because they already know who you are).
Case studies to build value for people who don't see it yet.
What's more, all of this stuff is relatively cheap! Leads are expensive because it's hard to find people who are interested in what you have to say, get their attention and convince them to fork over their contact details.
Communicating with people whose details you already have, who already know you is trivial by comparison.
Adding leverage
Another way to think about middle-of-the-funnel activity is as a force multiplier for your top-of-the-funnel activity.
Let's say you run a yearly campaign that costs $100,000. And it reliably gets you 10,000 leads, of whom 1,000 (10%) convert into customers who spend an average of $1,000 each.
So your $100,000 earns you a million bucks. Pretty good!
But what if you could increase that 10% by just one percentage point? Now you're getting 1,100 paying customers from those 10,000 leads.
At $1,000 per customer, you're now earning $1,100,000 - another hundred thousand dollars! You've just paid for the entire next year's lead generation campaign.
That's the leverage effect of middle of the funnel activity. If you're working with large numbers of leads, you don't actually have to increase your conversion rate by that much to have a significant impact on your bottom line.
So have a think about what you're doing in the middle of your purchasing funnel. Are you just pouring leads into it and hoping enough of them want to buy immediately? Could you do more to nurture them towards seeing value in what you do further down the track? Let me know how things are looking.
If you like what you just read, you can get content like this delivered straight to your inbox at 6am every second Monday. Sign up for the newsletter today: