Are you familiar with the reverse sales funnel?
In a subscription business, the reverse sales funnel is critically important to succeeding in your business.
The “normal” sales funnel is often used in an old-fashioned transactional business where you simply sell our products, services, software and knowledge.
In sales and marketing, the sales funnel is a model to describe the customer’s journey from lead to customer. The top of the funnel consists of lead generation while the bottom funnel consists of the leads that are converted to become customers of the company. The goal is to get as many leads as possible into the top of the funnel, and convert as many as possible to become customers at the bottom of the funnel.
The 4 Steps of the Sales Funnel
The sales funnel comes in different variations, but the four steps in the funnel are typically:
- Awareness – Creating awareness of your product/service. Awareness can be created, for example, through ads on social media or search results on Google that point the potential customers to your website.
- Interest – Creating interest in what you offer. This can be done via your newsletter where you can tell more about your range of products and services.
- Desire – Creating an actual need or longing for your product/service. For more expensive items, this is often done via a form of physical or online presentation.
- Action – to convert the longing into a specific action, i.e. a purchase.
Once the customer has taken an action – in most cases, that is, having purchased your product or service – success is on the line and the sales funnel ends. Hurray! The focus can be on getting new leads into the top of the funnel and creating sales to even more customers.
The Sales Funnel in a Subscription Business
However, that’s not the case in a subscription business.
After all, we are selling a membership, and when the customer has purchased the subscription and is a member, the journey does not end. In fact, now the fun really begins!
A new funnel opens up – the reverse sales funnel – with some completely new steps. Now it is about getting the new member to stay with us “forever”, and ultimately to have him/her made an ambassador for our brand.
The 4 Steps of the Reverse Sales Funnel
The steps to get there are these:
- Onboarding the member
- Creating ongoing value for the member
- Establishing a deep and long relationship with the member
- Getting the member to become an ambassador
All four steps are super important to work with and succeed in, and in the following I will describe the four steps a little more closely.
#1 Onboarding New Members
When you get new members in your subscription business, it is very important that you welcome them and help them get started. This is done in what we call the onboarding process. The process often consists of a series of emails that are triggered / initiated the moment the member signs up.
The Purpose of the Onboarding Process Is:
To create a relationship with you and/or your team in your business.
People don’t relate to businesses but to people! And the goal in a subscription business is to create as deep and long relations with your members as possible, so that the average lifetime value is maximized.
Building this relation begins the moment the member joins.
It is very important that you act personal in the email and include the name of the recipient, sender of the mail, inserting a picture and your contact information, etc.
To help members get started to using the membership.
If they do not know or understand how to use the membership, they get no value from it, and quickly unsubscribe. For example, help can be provided via a beginner’s guide conveyed via text or an explanatory video.
To ensure that members quickly get value from the membership.
If this does not happen “immediately” or within a very short time from enrollment, there is a high risk that they will unsubscribe. Immediate value gives the member a great satisfaction to quickly getting “value for money”, and a good start to the membership is the best prerequisite for a long lifespan.
Reminding members of all the benefits of the membership and the value that they can get if they use the membership is essence . After all, there is a reason they signed up, but they often forget this to quickly and must be continuously reminded of how much value they can get as a member of your subscription business.
#2 Creating Value in a Subscription Business
To attract members and getting them to join your subscription business, the perceived value must be sufficiently large. And in order to retain them for a long time, the expected value must be at least as large as the perceived value. In other words, you should at least give them as much value for money as they expected they would get when they signed up.
What is important is that you manage to give them great value from the start, but also further down the road in the form of a ongoing value. The fact that you constantly show them how much value they get as a member of your business will create succes, because if they are not aware of the value, they do not experience that it is there, and might unsubscribe.
You Can do This by Constantly Showing Them:
- How much money they have saved so far on their membership
- What extra loyalty benefits they have currently earned
- How many events they have attended
Furthermore, it is important to repeatedly show them what value they can expect to get in the future, giving them something to look forward to.
#3 Creating Strong Relationships in a Subscription Business
The core of a subscription business is to create as deep and long relationships with your members as possible. It is a never-ending process that determines how successful your business will be.
If you don’t succeed in creating the strong membership relations, your members will slowly seep out of your business. It’s like filling a bathtub with hot water but forgetting the bottom plug. You might be able fill a bathtub that way, but it is expensive, takes a long time and is not recommended.
There are many things you can do to create strong relationships with your members, including:
Paying attention to your members so that they feel that you are aware of them and, if possible, also respond to their wants and needs. In doing so, they feel valued and unique. At the same time, you get valuable feedback from them for the further optimization of your business.
Creating engagement. Engaged members are more loyal and satisfied and feel a stronger relationship with you. And if you can help them to also create relevant and meaningful relationships between each other, you often get an even stronger business. No one wants to leave a community where they feel a sense of belonging and that gives them great value.
Being personal and not be afraid to give something of yourself. Your members would want to see you and feel that you are there for them. They want to feel that it is not just an unpersonal business they have subscribed to, but that there are real people behind the scenes, with whom they want to get to know and have fellowship with.
Communicating continuously with your members. Good communication is vital for creating strong relationships. Much of this can be automated in the form of triggermail flows and automated email set-ups, as long as the communication remains personal and relevant.
Creating a club feeling and pride in being a member of your subscription business. Who wouldn’t want to be a member of a cool community with other people who have the same passion/needs as themselves? We basically all want to, because it speaks to the basic human need in us.
#4 Cultivating Ambassadors for Your Subscription Business
The final step in the reverse sales funnel is to cultivate ambassadors in your subscription business. Someone who loves to be a member and who recommends you and your business everyone the meet. The journey begins with the member joining your subscription business, and the ultimate goal is for him/her to become an ambassador.
Studies show that on average there are only 2% ambassadors in subscription stores, so if you can get 5% ambassadors, you are doing super well, and you are well on your way to creating a great business.
Work systematically with the reverse sales funnel
My recommendation to you is to work systematically and sustain each of the four steps of the reverse sales funnel.
The investment in terms of time and money that you put into this will be well worth it, because there is no business model that is stronger and more profitable than a subscription business with many very loyal and happy members. The ongoing automatic revenue it generates creates a predictable ongoing revenue stream, making your business very strong.
With this ongoing fixed income, you can plan your operations to a greater extent, predict your income and generally work with a more long-term perspective than if you have a business where you start from zero every month to create sales and revenue.
The reverse sales funnel is your path to success with your subscription business, and I wish you all the best on the journey.
To learn more about how to create a succesfull subscription business, take a look at my Best Seller book. You can order it right here