The closer the lead to sale, the more expensive and the less volume you get in the first stage. Few people are ready to buy right now. It also depends on the decision making process. For consumer goods under 50 € instant purchases are possible, but for higher value goods or more complex goods it is unlikely.
In order to build a working sales-funnel we recommend to test different funnels, that are located at different parts stages of the sales-process and connect them by offering the next stage after the first is completed right away and those users which drop out we retarget using banners or automated EMails to get them to continue in the next stage of the funnel.
Calculate your business case and funnel architecture
We have designed and calculated some typical funnels:
- Ads > Direct Sales (Case Study Brandnooz Adventskalender)
- Ads > Direct Lead + Calling (Mrs.Sporty, Bon-Kredit, Natürlich Reisen, Zahnarzt)
- Ads > Lead > Automation > Qualified Lead
- Ads > Sweepstake Lead + Funnel Automation (Mrs.Sporty, Boss Kalender)
GOOGLE DOCS BUSINESS CALCULATOR
Start to develop your funnel architecture
- What is your business case?
- How does your current funnel look like?
- Can you think of alternative funnels that also might work for your product?
Now that you have a calculation, what KPI’s do you need for each stage to be successful and profitable? You can go backwards and calculate from the price per order and your closing-rate how much you can pay for a qualified lead, how much you can pay for a unqualified lead and finally how much a click can cost for that qualified or unqualified lead.
By calculating this different models, you get an idea of what is realistic.
These are general ranges of values to work with:
CTR: 0,3% to 5%
CPC: 0,50 to 2,50 €
CPM: 5€ to 35 €
Landingpage conversion Rate: 3% to 50%
Whether your funnel is at the lower end or the upper end of this range, depends on a) size of your target group, b) closeness of your campaign to a sale, c) demand for your solution.
Example 1: Segmented Audience in B2C Markets
If you market something for free to a big target group, that is still segmented enough so you can make relevant offers (let’s say parents, car-tuners, gamers etc.) you will be able to work with low CPM’s and yet high CTR’s).
Example 2: Specialized solution for IT professionals
If you market something very special to a small niche of certain IT-Professionals you will have a rather high CPM. If you cannot target your niche very good your CPM will be lower, but your CTR will suffer. In any case you will pay a rather high CPC. If your solution is very relevant to that niche target group, you can still have a good funnel when you have high conversion rates and high close-rates. Or just a high price.
What influences the price of traffic?
Relevance of your offer for the target group segment > CTR
Size of the audience and competition > CPM
Relevance of your offer > CVR
What influences the amount of traffic?
CTR * available audience = maximum number of clicks
You can always reach less than 100% of your audience, calculate with 50-60%.
Start to calculate with something like 5 € for a promotional, unqualified lead and 50 € for a qualified lead. Lower that number by 50% if your market is very broad and increase it by 50% if your market is narrow.
Using this rule-of-thumb model you get an idea of the range how you want your ads to perform. But it’s all useless until you know the real numbers.
Build your funnel to get real numbers
Implement your funnel starting with generating traffic to get real numbers:
What do you need to build and which assets do you need?
Think of: Squeezepages, Landingpages, Sales Pages: Content, Images, Forms, APIs, Settings; Widgets: Content, Images, Settings, Forms, APIs; Ads: Ad-content, Ad-images, Audiences, Pixel, Fanpage
Implement the funnel
Use the easy-to-use backend and watch tutorials for each step of the implementation process. For each tool you have On-Boarding videos, which will show the main features and how to use them. Whenever you get stuck to implement your idea,, you can contact our technical support and we will try to help quickly and help you to get it done.
Launch your campaign
Launch your ad campaign, send traffic to your page and get the main KPIs:
CTR, CPC, CPL, CVR
If you want, you can use different Audience-Clusters or Splits using large targetings to get a range of what seems viable:
When using splitted-audiences you will have an idea of how good or bad the performance can be based on audience-targeting. Follow the Audience Tutorial to test a wide range of possible audiences.
Use different versions of Ads: By using different ad-styles, texts, images and call to actions you can find out which ads are working best and you get a range of likely CTR’s and CPC’s. Use the Ad-Creator-Framework to build different types of creatives.
Identify the leaks
Once you have started you can start replacing this placeholders in the business case calculation with your real numbers and then you can clearly identify weak parts of your funnel and work on optimizing it. You can define measurable goals of your KPI’s, based on where you are now.
Now if you understand where you are leaking performance in your funnel, you can identify which parts need optimization.
Define your goal in the way like: I want to lower my CPC by 30%, I want to increase the conversion rate to unqualified lead by 30%. Then focus on that parts, and run experiments to find the best option.
To increase conversion rate you can try different offers or call to actions. You can also add limitations (time-wise, limited slots, limited offers). Generally your offers should be consistent from the ad to the landing page. If there is a mismatch between your ad and your offer or CTA, this will likely to be a leak.
To lower cost per clicks and get more clicks, you need to increase CTR. To increase CTR you need to work on Relevance of your Ads and Product-Market-Fit (Audiences). Try different types of ads and different audience-targetings to identify the ads with the highest relevance and to find audiences which actually describe your target market best.
Optimize your funnel and take notes on the progress you make
For each step in your funnel that you want to optimize you can setup a series of experiments to find better options than the status quo. And step by step you can optimize your funnel to profitability.
We recommend that you take notes on each iteration that you do. By writing down your hypothesis, the things that you have done, and the results you will be able to remember how things have developed and it will help you to take the next steps based on more experience.If you enter the current values of your funnel, and make it better through experiments (a/b tests) you will see that you make progress you will understand what drives value and what makes a difference.