Sales Funnel Explained – Double Your Profits

Sales Funnel Explained – Double Your Profits

Sales Funnel Explained – Double Your Profits


The basic difference between a decent company that sells a good product versus a ‘profitable successful business‘ is the use of Sales Funnels.


In this article I will show you why you need a sales funnel & an easy analogy with a local business so that you can think of ideas of how to plan & implement sales funnels into your business.


Let’s get into the action zone…


Case 1

I have seen businesses selling a ‘good product’ but they are not generating enough profits as they are capable of because of the lack of a sales funnel.


For example, coaches selling one off teaching courses.

Getting one off sales or may be regular sales is good.

But, if they are not generating more profits from the same customer, then it’s a loss.


P.S – Why do we need to generate more profits from the same customer?

Ans – Because it’s a hot customer who has bought from you or have just entered in your funnel.

And the probability of such customer buying your another product right then is really high. Rather than focusing on getting new customers, it’s really important to increase the average customer value.


Case 2

I have seen businesses running advertisements for lead generation but they are not happy with the lead costings & they cry over Facebook Ad costs.


(Without realising that their advertisement was doing a fantastic job. The leakage was in their funnel, not the ad costings.)


Case 3

And then their are businesses who are doing well but can do much better in terms of generating more profits.


Well each of these cases can be well taken care of when you have a good sales funnel implemented.


Sounds good?


Let’s go ahead!!


Please note – This article revolves around increasing the average funnel revenue & average value per customer. So if you are playing at $100-$200 per customer, then how to increase the average value per customer upto $500-$600. Similarly if you are playing at around $500-600 per customer, then how to get it upto $1000-$1500. And similarly increasing the value henceforth.


For the ease of the article & for everyone’s better understanding I will be using an example of my recent visit to a Dolphins show & connecting the same with our business’ funnels.


Let’s begin….

Basic Rule of Thumb while creating a Sales Funnel

Always keep in mind that multiple products/deliverables (upsell, downsell or cross sell) of a sales funnel should always be a completely independent product/feature in itself.

Meaning their service/delivery/usage is independent of the other products in the same funnel.

Your sales funnel should not be a combination of multiple products that are inseparable part of each other.


For example,

Shoes without laces – You cannot sell a shoe without laces and then offer laces as upsell.

You will lose your initial sale as well.

Or may be a gun without a magazine. It’s natural for a gun to have a bullets magazine in it or else the gun will become useless.

So always sell a product that is complete in itself and user doesn’t feels cheated.


Our goal with sales funnel is to create more products on top of the core product that will align well with the core product & serve as a proper upsell, cross sell or downsell. And these products should not in any way affect the use of the core product. The only thing the other products in the funnel should do is strengthening the core product.


Let’s connect the dots:


Recently I along with my family went to a Dolphins show ‘Dubai Dolphinarium‘.


Here was the first upsell: VIP Seating.

Normal seating for 105 Dhirams & VIP seating for 125 Dhirams.

(Note – Dhirams is Dubai’s currency)

sales funnel explained - double your profits


Now as a customer, if you buy a normal ticket you are getting full value from the show. So as a seller, offering a VIP ticket is not affecting the normal offering by any means.
Hence it’s a perfect upsell.
I was sold to that upsell. We took the seats bang on first seat next to the show.
Average customer value directly increased by 20 Dhirams per customer.
More than 90% VIP seats were full. 20 Dhirams per customer extra generated from same set of customers.
Many people won’t realise this, but it is not just 20 Dhirams extra per customer,
but it is 20% extra the sale price of normal ticket.
Imagine if your business starts doing 20% extra business per year!!!
Your normal go to process to achieve this would be – find a new customer.
But the easier way to achieve this is generating more revenue from same set of customers.
20% extra revenue in this case

Next came in 2nd Upsell right before the starting of the show:

Inside the Dolphins show there is a game in which Dolphins will come & pick a ball from *X* number of balls thrown in the pool.
They announced a lucky draw competition in which the balls will be thrown by the attendees of the show and the Top 3 balls picked by the Dolphins will receive a gift & the owner of the first ball picked by the Dolphins will get a photograph with the Dolphins.
To qualify to play that lucky draw game, the interested audience was asked to pay 20 Dhirams each.
By the time the closing call came to participate in that game, there was a queue there. Few people even bought multiple entries so that they can have more chances of winning.
sales funnel explained - double your profits

Now I want you to understand 2 things:

No.1 – What’s the Dolphins show owner’s cost of delivering the first prize?
Ans – ZERO.
Giving a photograph with dolphin will cost them nothing, but even then it worked as a perfect upsell to excite the crowd.
Because the perceived value of the upsell was high.
Remember perception is reality.
If you can create hype of anything, it becomes reality.
2nd thing you need to understand is – The revenue generated from that activity was almost 10-15% of the sales revenue generated from the sales of the tickets.
WOW.. 10-15% extra revenue in a business without acquiring any new customer.
How cool is that?
Imagine if they would have behaved in the following 2 manners:
1.) Not offering any upsell at all with the fear of upsetting the crowd. In reality, your audience will never get upset of buying from you. Infact, if you won’t sell, someone else will.
2.) If they would have increased the price of the ticket from 105 Dhirams to let’s say 200 Dhirams per customer with an all inclusive package.
In this case, not a lot of customers will be able to enter their funnel because of the initial cost + trust barrier, hence loss of revenue & less customer acquisition, thus less business.
The best case scenario is to breakdown your overall product into multiple independent products and offering it as separate products inside a funnel.
You will ultimately be able to generate the full value of your funnel by doing this. Plus more customers would be acquired.
So, first think of an average value you want to generate from a product.
Let’s say it is $1000.
Now plan & launch the product with the core offer at let’s say $297 & then few upsells giving you the overall value of $1000.
(Just an example. You yourself can be a better judge of your funnel’s pricing model)
By not keeping the one off price at $1,000, and dividing into multiple pricing inside a funnel, you will be able to attract more customers who are interested in your offer but don’t have enough trust on you yet.
So they will not be reluctant paying to you that lower amount. Plus later on once they have used your core product and they are satisfied with it, they can be ascended up the ladder (meaning selling more upsells will be an easier job to them).
On an important note, you will acquire more customers by doing this.
Let’s go ahead..

Then came the 3rd Upsell….

In mid of dolphins show they showed that dolphins can even paint a picture.
Here is the image of that picture drawn by a dolphin:
sales funnel explained - double your profits
Guess what happened?
Yes they sold it.
And this time they sold it as an auction.
The top bidder bought it for 200 Dhirams.
And guess what, he was not even someone who was sitting in the VIP area.
*Lesson learned* – Your any offering can excite any customer. Not all offers will excite every customer.
You will naturally assume your VIP customers to be your favourite customers, but the reality is the VIP offering just didn’t catch the attention of the random ‘X’ customer. But that random ‘X’ user too has enough money to pay for your other upsells. Just the proper pitch is required.
You need to keep firing in multiple products, because you never know what can interest whom. You will never know unless you throw things at them.
Remember people love buying things.
That’s why that Random person sitting in a normal seating paid 200 Dhirams extra there.
May be in some other auction, the bidding can reach upto 500 Dhirams or even more.
Another lesson learnedAverage funnel value of that random *X* customer was increased by 3 times.
105 Dhirams (ticket price) + 200 Dhirams (painting).
Not sure whether he picked the lucky draw offer as well or not.

Was that the end of their funnel?

Absolutely not.
Right when the show ended, we were sent through a passage where all dolphins related physical products were kept.
See the photographs below:
sales funnel explained - double your profits sales funnel explained - double your profits sales funnel explained - double your profits
Were people buying it?
Yes like absolutely crazy.
Average sale amount there was around 100 Dhirams.
Overall, all upsells included the average revenue generated from the show would be almost DOUBLE of the revenue that would have been generated just by doing normal ticket sales.
200% ROI we call it – that too without any new customer acquisition.
Or 200 Dhirams per customer that too when the face of the funnel was just 105 Dhirams.
Did the sales funnel end there?
The exit passage after the show ended had branding of the ‘bird show’ that was about to begin in few minutes (call it scarcity) & we were offered discount coupons for it right then & there.
(Read it as a perfect cross sell)
Lesson – A customer interested in product ‘A’ of one domain, will also be interested in product ‘B’ of same domain. Best thing to do is keep offering multiple products. If not upsell, then a cross sell.
Remember – if you won’t sell to them, someone else will.
Note– The calculations here are based on my understanding & observation in real time. Obviously I don’t know the exact figures.
Note 2– to the owners of the ‘Dubai Dolphinarium’, if you are reading this: Your show was absolutely fantastic. Loved it.
I want to add a suggestion of another upsell.
Right at the end of the show when you invite Dolphins at the front, at that very moment if you will have announce a final call for the audience to have an opportunity to get a picture clicked with the Dolphins, a lot of people would buy it right then & there.
sales funnel explained - double your profits
That’s because we have seen your show for 30+ minutes, and a huge gravity of the Dolphins had been created in front of our eyes.
(For internet marketers – the reasons why webinars do well.)

Now coming back to Case #1 & Case #3.

If your business is doing decent sales or average sales or even if it’s running pretty well, there is still a lot of money kept on the table that you can grab when you use sales funnels.
All you need to do is just sit & plan the things that should work as a perfect upsell for you & you might see DOUBLE REVENUE generated from the exact same process without acquiring any new customer.
However, our next goal when we achieve this goal would be to use the new revenue generated as the customer acquisition budget on Facebook™ ads or whatever medium that works best for you. For me thats Facebook™.

Let’s solve Case #2 now 

A friend of mine running Facebook™ ads in US was doing lead acquisition for $7-$8 in a fairly competitive market. He was quite upset about it.
However, being into the Facebook ads game since a long time, I knew the average lead acquisition cost in his market niche had to be $5-6 minimum. So he was not doing bad. Infact his ad was doing great.
The only bad thing that he was doing was offering nothing beyond the lead acquisition.
Here was my simple suggestion adding a series of multiple offers right after the lead acquisition.
His lead costs will come down to zero when he will do this or probably he might run into profits by doing this. So, lead acquisition plus profit at the same time. BOOM.
Should he next work on reducing the ad costs? Absolutely.. start spilt testing there & bring the lead costing down. But, before that he needs to work on his funnel.
And similarly if you too have tried lead acquisition with FB™ before and stopped because of high lead costs, you need to rethink your strategy and work on your funnel. Once done, you will be willing to spend almost any amount because you know you are running a profitable funnel in the backend.

Quick sneak peek of what I am talking about:

Let’s say here is your lead acquisition funnel:
Step 1 – FE – a lead magnet – lead cost $5 per lead
Amount spent for 100 leads – $500
Step 2 – Offer a cheap $19 offer as upsell 1.
Even if just 15% people opt for it – you generate $285 revenue.
Add a $37 bump offer there.
My personal average bump offer conversion – 18%.
Means 2.7 people opt for it out of 15.
Revenue generated – $99.9.
Step 3 – Another Upsell of $97.
Let’s say we get just 10% conversion at this level.
Meaning 1.5 people opting for this offer.
Revenue generated 1.5*$97 = $145.5.
Overall revenue generated = $285 + $99.9 + $145.5. = $530.4
You are already profitable at just step 3.
That too without any surreal expectations at any stage.
(And if you are like me, you will add another high value upsell after it. Plus you won’t stop at just 15% conversion at Step 2 & just 10% conversion at Step 3. You will keep on working on them to increase the Step 2 conversion and get it upto 20-25% & increase Step 3 conversion to 15-20%. And similarly working on step number 3.)
Or let’s say after making the funnel this profitable, you are able to decrease lead cost from $5 to $4.7 or $4.5.
The whole maths in the entire funnel gets disrupted with every single % conversion at every single stage of your funnel.
And that’s how you start running profitable ads giving you leads at zero cost.
Just understand this maths & start tweaking…
…your sales funnel & you will be all merry
Hope this article gave you a lot of insights where you can improve on your sales funnel.
Any queries?
Hit me up in the comments.
Is there any way I can help you in sorting your funnel?
Saurabh Bhatnagar

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