Everyone has heard of the typical sales funnel, right? This article will show you a strategy to “flip the funnel” to achieve a better ROI on your digital advertising dollars. The strategy is designed for most businesses who have a limited digital advertising budget and with the highest rate of probability to generate a sales opportunity.
The typical sales funnel is comprised of three sections: Consumers at the top of the funnel are considered “Researchers.” This category is defined as people starting their broad search for a product or service. The middle of the funnel is comprised of ”browsers.” This category is defined of people who typically have narrowed their search to compare products (plus competitive set) and GEO (location). The smallest part, or bottom of the typical funnel is the “buyer.” This consumer is ready to purchase and is now comparing offers, incentives and business names.
There are two significant problems that I overcome with new clients. The first is that most digital advertising budgets are evenly spread out towards the typical sales funnel. The , and even more important, is most digital advertising is vertical agnostic, which means it was not designed specifically for any one business. Google does not recognize the difference from a dentist to a car dealer. It only understands keywords, landing pages, text and relevancy. So it’s up to the business (or your agency partner) to create strategies to align you with the best opportunity to market your products to a low funnel buyer. In order to do this, you have to go “Old School.” Meaning, if you were back in the 90’s where every business spent thousands of dollars for a full page newspaper ad, you had to decide what products would you need to place in the ad to get people into the showroom? You wouldn’t advertise low inventory, high demand, or poorly merchandised products, would you? So why do you digitally advertise them now?
High Demand. If you have a high demand product, you wouldn’t need to spend significant dollars in advertising because they are hard to find products and the consumer will find you. You certainly wouldn’t need to share budgets equally with other core products.
Low Inventory. If you had one new “widget” in stock and two hundred “thingamijigs”, would you equally share the advertising budget?
Poorly Merchandised. If you just started carrying a new line of products, but did not have pictures, marketing materials, or descriptions yet, would it be wise to pour marketing dollars into advertising that product?
I say “Flip the Funnel” and focus on your stocked inventory of core vehicles that have the highest probability of reaching the low funnel buyer who is typing in the exact search terms for that vehicle. Then work backwards to distribute budgets from the bottom, upwards.
There’s a few other factors that will tighten up the ROI to this new strategy. The first is understanding that standard digital advertising does not blend the art and science of merchandising; and you need both to be successful. You need to automate technology to evaluate inventory, market day supply, with other signals and have humans create engaging, influencing text ads. Another factor to consider is ditch the “round radius” effect. Does your higher end vehicles sell to the same consumer in the round radius as the least expensive cars on your lot? Probably not. And finally focus on the KPI’s that have the most effect on you selling cars. If I was able to lower you CPC on that one Honda Fit you have in stock would that make you happy?