Sales Funnels 101

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Regardless of whether you’re into internet marketing, e-commerce or a cross between the two, you will have likely heard of sales funnels.

Hearing about them and actually using them are two different things, so let’s break down what a sales funnel is and how to implement one.

What is a sales funnel?

A sales funnel, no matter how it’s implemented or for what style of business, usually flows in the same way:

  • Traffic arrives
  • Visitors engage
  • Visitor takes action
  • Conversion occurs

Internet marketers usually see funnels as only happening once the visitor has decided to buy, and then they are funnelled through up and downsells.

  • Customer takes action
  • Customer offered upsell
  • Customer offered downsell
  • Customer offered upsell
  • Customer offered downsell
  • (repeat as needed)
  • Customer buys

Really both are used, though the first “funnel” isn’t always seen as an actual funnel, by some people, though it is and important too.

However you perceive a funnel, the idea is to lead customers by the hand through a process in order to get them to buy a product (or whatever the final action of the funnel is).

For the purposes of this article, I’m going to focus on the funnel from the checkout point of view.

Upsells vs downsells

Once a product has been selected by a customer, the next step for the funnel is to lead the customer down the upsell and downsell funnel.

Upsells and downsells can be viewed in different ways but the most common ways are:

  • A landing page – a separate page from the cart/sales page that is a sales page in its own right for the upsell or downsell.
  • A pop up – a pop up window that shows the upsell/downsell but contain a lesser amount of information about it.
  • Near the cart – an area near the shopping cart itself that showcases other products that are either better or complementary. This doesn’t work for downsells of course.

Commonly, internet marketers use the landing page option while e-commerce sites use the “near the cart” option. There’s no reason why an e-commerce page can’t use a landing page, it just depends on the product being sold and the audience.

An example upsell and downsell funnel

What is an upsell?

An upsell is basically offering the customer a product that is virtually identical to the initial product but better. The idea is for the upsell to simply replace the initial product.

That works well in an e-commerce setup, but for general internet marketing an upsell is slightly different. Instead of replacing the initial product an upsell is a separate product that complements the product – really these should be called cross sells, but for whatever reason most internet marketers refer to them as upsells.

What is a downsell?

If an upsell is declined, then a downsell can be offered instead. It can take two forms, both of them discounted.

The first is to just simply offer the same upsell but at a discount price. The idea here is to just try to sell the extra product even with a smaller profit margin.

The second option is to offer the same product but with reduced features for a smaller price.

For example, if you are selling an online course on email marketing, your upsell might be 100 email templates for $99. The downsell could be 50 templates for $49.

How many is too many?

Upsells and downsells can be a great way to increase profit, but they can also get out of hand, especially with internet marketing and digital products.

There’s really no rule for how many upsells and downsells you should offer, but anything more than 5 of each is getting into crazy town territory, and even over 3 could cause abandoned carts as people get annoyed by the constant sales pitches. Perhaps this is why it’s common to see upsells happen after the initial purchase has been made.

Really the only true way to know what works for you and your audience is to test.

Just remember, you don’t always need the downsells, you could simply just offer upsells.

E-commerce Upsells and Downsells

As mentioned earlier, it’s common to see upsells in an e-commerce site cart area. These are either true upsells, or more commonly a cross-sell (a complementary product).

That being said, it’s possible to have an e-commerce site that on cart completion (or in the process of cart completion), redirects the user to a landing page to offer up (and maybe even down) sells that are related to the cart contents.

Imagine you sell laptops, and the customer has added a mid-range laptop to cart, the upsell landing page could pick a top range laptop on sale to offer.

The key factor with this is testing – does this sort of upsell increase cart value or does it increase cart abandonment? Only testing can determine this.

How to build a funnel

If you’re focusing on a single product like often happens with internet marketers, building a funnel is relatively easy.

The first thing you need to determine are what upsells and downsells you will offer.

The prices are normally higher than the original product, regardless of business type. For an e-commerce site the price shouldn’t be too much higher, ideally no more than an extra 25% otherwise you will end up turning the customer off the impulse purchase.

Digital products may get away with higher priced products but the general rule of thumb is to offer increasingly more expensive upsells.

From there it’s a case of using your chosen cart system to implement the system. Services like JVZoo make this easy, but cart systems like ThriveCart and Shopify also make it really easy to implement a sales funnel, and can be used for non-digital products.

Another option to create a sales funnel is to do it manually. For example you could have someone purchase a product and have the “success page” that they are sent to after paying, be the start of an upsell funnel.

Manual sales funnels may require a developer to get right, and are usually not needed because so many cart and shopping systems offer funnel capabilities.

Test, test and test some more

I’ve mentioned throughout this article that there are areas that will need to be tested, but really you should be testing everything!

Decent cart systems (pretty much most of them nowadays) offer some sort of upsell system and the really good ones allow you to split test (A/B test) the process.

This is necessary so that you can easily tell whether the funnel process is actually working or being detrimental to your profits, because hard data is always better than guessing!

The Bottom Line

No matter how you make money online, the need for a solid sales funnel is imperative. Not only can you guide customers into making purchases, but you can increase your profits by offering upsells, cross-sells and downsells.

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