You're probably familiar with the idea of a sales and marketing funnel. Traditionally, your funnel starts at the top with your total available market. From there, your first objective is awareness. You want them to know that you and your products exist. Then, there's trial, you gave them a taste of the value you provide to wet their appetite so they'll actually complete a transaction with you and buy whatever it is you're trying to sell. In transactional businesses, that moment of purchase is the finish line. Hooray, you sold something, now forget about that customer and go back to the top of the funnel and find some more prospects and start the whole thing over.
But in the membership economy, that transaction is only the starting line.
The biggest mistake most companies make is focusing too much on acquisition, before they've mastered retention.
If you're attracting the wrong people, or offering a product or service people don't love, you're wasting your marketing dollars.
More important than acquiring new customers is keeping them. And to optimize retention and minimize churn, you have to start at the bottom of a funnel. The first thing you need to do is to make sure you have what jargonists call product/market fit. This means that you need to make sure that if the person you built your offering for gets a chance to actually try that offering, you are 100% confident that they will be a happy customer and stay forever.
In other words, you have to be confident that you are solving the problem for the people you aim to serve. If you're not sure, you either need to adjust the offering or adjust the target until you are sure. From there, the next step is to know how to explain your offering and the value to that perfect prospect. You need to pass the airplane test. If you are on a 45 minute flight and the ideal prospect was in the next seat and they asked you to explain your offering and they were open an listening, by the end of the flight, would they be begging of the privilege of trying and maybe even buying your offering? If not, do not spend any money further up the funnel on awareness or trial until you are confident.
If you do have a good message that the founder or CEO can use to sell a prospect on trying your offering in a conversation taking 45 minutes or less, the next step is to simplify that message in such a way that it can be replicated by any salesperson. Or, even better, in a recorded or written format,that way you can distribute it broadly and cheaply. Only now should you start building awareness.Ideally, your funnel looks like a pint glass, wide on the top and less wide, but still pretty wide at the bottom.
Most organizations invest in awareness before they're confident in the message and the product/market fit, so their funnel ends up looking like a martini glass, wide at the top, but narrowing quickly into a skinny stem at trial. Some organizations have a great product/market fit,but are best kept secret, their retention is great but acquisition is lousy. Their business is flat and their funnel looks like a highball with the sides being the same all the way down. Take a look at your own funnel.
If your funnel looks like a pint glass, congratulations, perfect. If it looks like a martini glass, you need to do two things to fix your product/market fit. Make sure that your product is good enough to justify the investment, and make sure that your market is the right one for the offer you have. And if your funnel is a highball glass, stop being a best kept secret and invest in building awareness. So, what about your business, what does it look like? Is it a martini glass, a highball glass, or that ideal pint glass? Once you've taken the time to identify the shape of your funnel, it's easier to recognize the prescriptive action.
By Robbie Kellman Baxter