As I have been recently writing on the topic of developing an effective sales process, I thought I would show a few examples of how successful sales funnels have been applied. In my post on How to Design a Service Industry Sales Workflow, I broke down the process of how to design a sales funnel for a business in the service industry. Businesses that offer a service, rather than a product, have some unique challenges over businesses that sell physical products. Martial arts marketing can be challenging on a number of levels. Therefore, I think it is worthwhile to take a close look at a business that has done a good job refining their sales funnel. This business is my son's taekwondo academy.
A couple of years ago, my son came home from school and was totally excited about a sport. This was a first for him. You see, he has always been the intellectual type. He could sit through a thirty minute reading session at 9 months old and was reading the Chronicles of Narnia in first grade. Over the years, I had tried getting him into sports, but found that this really wasn't his personality. He usually ended up strategizing the game and acting as an on-field coach rather than a player. And that is just fine. He is just like his dad.
So I was surprised when he came home excited about taekwondo. Sure, every little boy has seen the Karate Kid and pretends to be Daniel LaRusso (or Dre Parker, Jaden Smith's character in the 2010 remake) beating the Cobra Kai in the final round of his first competition. But some of us don't like the idea of contact. Or stretching. Or any type of exercise. I have been around sports enough to know that martial arts requires all of this; and more. But yet, my son was excited. You see, he had seen a demonstration at school and now he was fascinated by the sport.
As my son has been in his taekwondo studio for close to a year now, I have been extremely impressed with the sales funnel this studio has established. While they are part of a larger martial arts marketing organization, the American Taekwondo Association, my son's studio is one of three owned by a local instructor. This studio does a lot of things right, but the best thing they have done is learned how to funnel new students into enrollment - they understand what a sales process is. And because of this, the studio is growing.
As I explained recently, a service industry business should implement four parts to a sales funnel:
- Prospect identification
- A service trial
- An entry level service
- A commitment level service
When each of these components are fully implemented, the funnel works how it should; new students are identified, sign up, and become "ideal customers," which is basically of your avatar of a perfect customer - in terms of purchasing commitment. And my son's taekwondo studio has done a fantastic job of implementing all four parts to their sales process.
While people of all ages may be interested in taekwondo, the local studio has found a niche in elementary age students. From what I can tell, the vast majority of new students fall into this category. I would be interested to know how they have found this to be the ideal age, but I do know that children performing martial arts is pretty dang cute. Seriously, some of these kids are adorable and I am sure more than one family video real has included taekwondo testing in their highlights.
To further identify prospects, this studio provides demonstrations in local elementary schools. This is a fantastic approach as our metro-area has a large number of elementary schools within a two mile radius of the studio. In fact, I believe there are at least 10 elementary schools (including private schools) within about a 3 mile radius of the school. Providing demonstrations helps to further identify which children would be interested in the sport.
A Service Trial
The next step in designing a sales workflow is to offer a service trial. This is where a prospect can see the product or service in action. They get to experience the service and, if the product is good, the prospect should be left wanting more. From my observations, the local taekwondo studio has implemented three different service trials.
The first trial that is offered by this studio is a private lesson. This is the service trial my son experienced. He got a free one-on-one lesson where he got his hands dirty and made a connection with the instructor. He loved it and wanted more.
The second trial is a group lesson. While this is somewhat similar to the private lesson, group lessons provide an opportunity for several students to work with an instructor over a period of time. They aren't just a one-time event, but occur over a couple of weeks. This gives the prospects an opportunity to experience what a regular class would be like. They also get their hands dirty and get to connect with the instructor. But even better still, they get to connect with other prospects.
For the studio, having multiple prospects go through a trial together provides an excellent opportunity to "close the sale." As is often the case in sales, once the first purchaser is identified, momentum is built towards encouraging the others to follow the lead of the early adapter. This momentum is essentially a domino effect where late adapters follow the consensus of the early adapters; the excitement and peer pressure from a group dynamic is something you just cannot get with a one-on-one private lesson.
The final trial is a gift certificate for several months of free lessons. While this is technically a free trial, this product is actually more of an advertisement than an effective step in the sales process. You see, the studio provides these gift certificates as prizes for school and other events. What this does is that it serves as an advertisement for the studio. Students (and parents) who are interested in taekwondo get excited about the chance to have free lessons. When they don't win, there is still a residual amount of excitement; momentum towards enrolling has been started. While not everyone will sign up and some who win the gift certificate don't continue on, the gift certificates help to funnel qualified prospects to the next level of the sales funnel.
An Entry Level Service
The next step in the sales funnel is to provide an entry level service. The taekwondo studio has done this by providing an entry level package where the monthly fee is (essentially) reduced for the first three belts: white, orange, and yellow. During this time, students start to become acquainted with the basics of taekwondo, the instructors, the fellow students, and the structure of classes. They are taught respect, commitment, and confidence. And they are conditioned to understand that achieving a black belt is their ultimate goal.
The studio has taken the approach that they want to funnel more students into the entry level product, rather than even offer the commitment level product up front. The commitment level product costs more and requires the purchase of equipment (sparring gear), which would probably be a major turn-off to prospects who weren't ready for that level of commitment. The entry level service provides a very smooth transition into the commitment level product. In fact, they didn't initially communicate to me that there were two different pricing structures.
As a paying parent, I wasn't thrilled about discovering that the (reduced) fee was only a temporary, entry-level product. My son had worked hard to earn his first three belts, was enjoying the instructors and students, and was excited to earn his blackbelt. It would have been difficult on him if I had backed out at that point. That was my view as a parent. But from a business perspective, however, I thought this approach was fantastic; it got us in the door and established momentum towards the commitment level product. The process was effective for us and for a majority of the other students in the studio.
The Commitment-Level Service
The final step in an effective sales process is to offer a commitment-level service. My son's taekwondo studio has done this by establishing three different options for my son to achieve his blackbelt. Each of these "clubs" require an upfront fee, the purchasing of sparring gear, a monthly fee, and the signing of a contract. At this point, the student is pretty much locked into the program to earn his blackbelt; the upfront fee and purchasing of sparring gear become a sunk cost that is lost if you cancel the program early. This, coupled with the focus on achieving a blackbelt, provides for strong conversion rates and good student retention.
For example, if the studio did not have the up-front fee and sparring gear fee, the monthly fee would essentially need to be increased. The challenge with this is that the incentive to stay in the program is lost. Without the upfront, sunk costs, it is easier to walk away from the program as there was less of an initial investment to join the program. Therefore, the upfront fee structure provides for a more effective sales process.
As you can see from the above, my son's taekwondo studio has done an excellent job implementing a formalized sales funnel. They have identified their prospects, provided multiple channels for prospects to test the service, and developed an effective entry-level product that smoothly flows into the commitment-level product. This program is designed so that it does an excellent job of balancing sales with getting the prospects excited and building momentum towards becoming an ideal customer.
A Question for You
What examples of an effective sales process have you seen?