How the Sales Funnel Can Work at Nonprofits

Guest Post by Joe Garecht

There’s a lot that nonprofit organizations can learn from our counterparts in the for-profit world. Business budgeting and goal forecasting, A/B testing for marketing messages, and critical path planning can all be very valuable to charitable organizations.  Another concept that has huge applications for nonprofits is the sales funnel.

What is the “Sales Funnel?”

Simply put, a sales funnel is a list of all the steps a company takes in order to acquire new customers. Generally, businesses break their sales funnel down into several stages, including leads, qualified leads, committed leads (those ready for the sale), and customers who have purchased a product or service.

Businesses create a sales funnel to detail all of the activities that they need to take to get new leads all the way through the process to becoming a repeat customer.

Sales funnels work because they provide a system for the business – instead of having to think through a new sales process for each potential customer, the business has a proven set of steps it can apply to each new lead. These steps include using marketing materials, tours and test-drives, sales calls, meetings, etc. If a certain activity stops working, it can be replaced with a new strategy.

Businesses constantly test and measure the effectiveness of their sales funnel, to ensure maximum profitability.

How Does this Apply to Nonprofits?

Nonprofit organizations can and should be using their own version of the sales funnel to help them efficiently acquire new donors.  Sometimes called “donor funnels” or “cultivation funnels,” sales funnels for nonprofits should be detailed paths that donors are led through in order to become lifelong supporters of the organization.

The most important steps of the nonprofit sales funnel are:

1. Prospecting – This is the process of finding new leads (potential donors) who might have an affinity for the mission of the organization.
2. Cultivation – During the cultivation phase, nonprofits work to build relationships with their prospects so that the person or company is ready to make a financial commitment to the organization.
3. Asking – This is the “make the sale” phase, where the nonprofit asks the prospect to make their first gift to the organization.
4. Stewardship – After a donor makes their first gift, the nonprofit continues to cultivate (“steward”) the donor, in the hopes that the donor will continue to support the organization in the future with new and larger gifts.

As with for-profit companies, the sales funnel for nonprofit organizations must be planned well and tested often.  The most successful organizations are constantly dropping donor activities that don’t produce the desired results and replacing them with new and innovative fundraising strategies.

If your nonprofit doesn’t have a sales funnel in place for your donors and prospects, now is the time to create a strong and sustainable funnel for your organization.

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Joe Garecht is the founder of The Fundraising Authority and Smart Political Fundraising.  He has authored several books on fundraising, including How to Raise More Money for Any Non-Profit, and has consulted with organizations worldwide to help them supercharge their fundraising potential.