Try The ‘Funnel Approach’ To Marketing

May 23, 2003
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PALM SPRINGS, Calif. – Al Roach said there is one way to take the “mystery out of marketing”: use the funnel process. The co-founder of Callahan/Roach & Garofalo told ACCA meeting attendees that with proper planning, the funnel process is a “step-by-step tool to realistically and accurately establish, visualize, measure, and manage a company’s marketing and sales goals and objectives.”

Al Roach: "We spend a lot of time doing things we are not supposed to be doing. A plan puts us back on track."

Planning And Marketing

One of the goals of Roach’s workshop was to demonstrate the importance of planning in business and marketing. He said that contractors need to practice “visioning” — setting a direction. “Companies need to define who they are and what they are going to be,” he said. In his own business, Roach said that he looks to increase his closing rate “in every aspect of the business.”

Roach added that businesspeople need planning because, “We spend a lot of time doing things we are not supposed to be doing. A plan puts us back on track.”

He listed these benefits of planning:

  • Defines needed resources;

  • Defines and tests tactics on paper; and

  • Provides a meaningful measuring tool.

    According to Roach, marketing is a “fundamental business process that is goal driven with objectives that are set during the business planning process.”

    He added that it is very important to know to whom you are marketing. “It’s probably more important to know a little bit about your customer than it is to know everything about your product.”

    To emphasize his point, Roach used the funnel process to give an example of how a company can grow its replacement sales by 10 percent using the following data:

  • 2002 Replacement sales — $182,000

  • 2003 Replacement sales goal — $200,000

  • Average sales ticket — $2,500

  • Prospects-to-qualified lead rate — 33 percent

  • Qualified leads-to-sales rate (closing rate) — 40 percent

    Using these facts, Roach showed the funnel process:

  • The gross sales/average job size is $200,000 divided by $2,500. The number of jobs to be sold equals 80.

  • The closing rate is 40 percent. Therefore, bids needed (80 divided by 40 percent) equals 200.

  • Prospect-to-bid rate is 33 percent. Therefore, prospects needed (200 divided by 33 percent) equals 600.

    As prospects get whittled down, the data takes the shape of a funnel. Six hundred prospects represent the “top” of the funnel and all of the factors, such as prospect-to-bid rate and closing rate, filter the 600 down to 80 sales at $2,500 per sale, which equals $200,000.

    Roach said it is very important to track the numbers in the funnel process on a daily basis to ensure you are on track. And there is another reason to track the numbers: to inform employees. “We post the data everywhere, so everyone sees who is getting leads and who is closing them,” he stated.

    Publication date: 05/26/2003

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