What is...

Sales funnel

sales funnel graph

Sales funnel definition

A sales funnel is a graphic representation of the sales stages a customer goes through when buying a product. This concept is based on the idea that all customers are led through more or less the same phases when making a purchase, the first step of the traditional sales funnel being the awareness stage, while the last one is the post-purchase evaluation.

Although the number of levels assigned to a sales funnel can vary from one company to another, the classic model includes the awareness, interest, evaluation, decision, purchase, and post-purchase evaluation phases. The number of prospective customers that are attracted in the awareness phase decreases in the next stages of the sales funnel, so the end result is a much smaller number of actual customers.

The efficiency of a sales funnel can be evaluated based on the number of prospects found in each stage and on the conversion rates of the stages.

Why are sales funnels important?

A lead who has just come into contact with your brand for the first time is highly unlikely to become a customer right away. Therefore, pitching them an offer as soon as they land on your website is quite an ineffective sales tactic. Conversely, failing to engage a first-time visitor whatsoever could potentially result in missed selling opportunities. 

Creating a sales funnel will serve to determine how close to buying your product each prospect really is. You can leverage this information to devise a comprehensive marketing plan that addresses potential customers based on their proximity relative to the moment of purchasing. 

Depending on the nature of the products you’re offering, the sales cycle may take anywhere from hours to months. Since this can be a long and convoluted process, to increase your chances of selling, it’s vital to understand and direct your customers’ journey as much as possible. A funnel allows for greater control over the entire sales process.

Based on how far along the funnel they are, your clients have a different state of mind and a different attitude toward your product. Therefore, ideally, you should design a marketing strategy that includes content tailored to support communication with prospects arriving at each particular stage of the funnel. Or, if you already have a marketing plan in place, a well-thought-out sales funnel could help you evaluate its effectiveness and tweak it where necessary.

For instance, the information that a new lead may find relevant won’t be as interesting for a client who has already purchased your products in the past. Understanding how well-acquainted your potential customers are with your brand and gauging their levels of interest relative to your products will help you design content that both your prospects and existing clients will deem valuable.

Additionally, if you fail to interact with your potential customers in a meaningful way throughout the sales process, they could quickly go adrift or lose interest, exit the cycle, and turn their attention to one of your competitors instead. The sales funnel lets you carve a clear sales path for your prospects and enables you to guide them through the funnel from one stage to the next until they’re finally ready to buy.

What’s more, the sales funnel enables you to collect a large volume of valuable data that you could then employ for lead prioritization, assessments, and forecasts. 

Regarding prioritization, think about it this way: if you’re selling fitness programs, and your data suggests that, in spring, a majority of your audience spends more time reading your fat loss content, then, from March to May, you might want to prioritize potential customers who are specifically interested in fat loss.

As far as assessments go, you could utilize the data in question to evaluate your sales teams’ performance or learn whether your products and services need improvements.

For instance, knowing at what stage of the sales funnel your potential buyers exited the network would allow you to find out what it was that turned people away from your company. Was it their budget? Could it have been a user experience or customer service issue? Was it that the product was missing a sought-after feature, or was it just that you were targeting the wrong audience?

As for forecasting, the same data we discussed could also help you produce reliable predictions concerning things such as the estimated quantity of orders you should expect within a given period of time, or the total number of new leads you need to generate in order to get a particular amount of sales.

To conclude, the sales funnel offers you the possibility to trace consumer habits. In today’s heavily digitized context, the way people interact with brands is constantly changing. Businesses that track their potential buyers’ behaviors and expectations, and make an effort to understand and keep up with an ever-changing environment have more of a chance to create and develop an up-to-date marketing strategy and offer their clients an outstanding customer experience.

Understanding sales funnels – the 5 Stages of a Sales Funnel

Although everyone may utilize a slightly different model to design their sales funnel, essentially, the funnel’s fundamental structure remains consistent. 

Regardless of the various titles sales experts use to describe each of the different stages of a funnel, the route to making a purchase always starts with awareness.

And if you employ a well-thought-out marketing strategy, produce and share valuable content, further down the line, the potential buyer may shift from awareness to interest.

From then on, if the prospect decides that your product is superior to those of your competitors, they’ll make a purchase.

Finally, if they had an overall positive experience, they may even become a fan and recommend your product to their peers.

Moving a customer through the different phases of the sales funnel requires a clear and comprehensive marketing strategy. However, marketing isn’t the end-all and be-all of the sales process. 

Understanding what the customers want and need, striving to offer them a positive user experience online, excellent customer service, and, of course, a first-class core product, are essential factors when it comes to gaining returning customers.

Unless the overall customer experience is a positive one, no amount of marketing will help retain an unsatisfied client, let alone transform them into a fan.

  • Awareness

Before they became aware of your brand, your customers had an issue they were trying to fix and went online to find possible solutions. At this stage, your potential clients don’t have a clear idea about the type of product that would solve their problems. For example, their old laptop stopped working, and they’re interested in buying a new one. However, they don’t know too much about computers, so they’re not quite sure what type of machine they should purchase. Therefore, instead of searching for laptops based on memory capacity and processing speed, most people might go to Google and look for the best laptops for professionals who work in marketing, design, or any other field in which they might be involved.

Therefore, at this stage, it’s crucial to focus on making your company discoverable. For instance, you could invest in SEO to make sure that, when people perform online searches similar to the ones described above, your company comes up among the top results. However, don’t just wait for the buyers to find you first. Seek to understand who they are, and work actively to expand awareness of your brand and meet your potential customers halfway.

Nevertheless, remember that people aren’t ready to make a purchase just yet. Therefore, there’s no point in trying to sell anything for the time being. Instead, strive to create informative content such as white papers or e-books, to educate people about your industry, and about the types of problems that products like yours can solve. This way, you will demonstrate expert knowledge, gain people’s trust, and bring them one step closer to making a purchase.

  • Interest

At this point, people already know who you are. They’ve read about your company, they’re probably following you and engaging with you on social media, and they might have even subscribed to your email newsletters. Now that you have your potential clients’ attention, it’s time to interact with them in a meaningful way and nurture your relationship.

By now, potential buyers have already done sufficient research to have a clearer idea about the type of product they need. However, they have yet to decide upon a specific item. Therefore, this is your chance to set yourself apart from your competitors. Keep sharing informative content, but remember that at this stage in the sales funnel, you’re addressing a well-informed audience. Thus, it’s advisable to focus on niche content that’s more rigorous and detailed. Gradually move your prospects toward making a purchasing decision by highlighting your products’ unique properties and the benefits that they entail. Tell people what it is that you offer that other companies don’t.

At this point, prospects may reach out to you for assistance. Keep in mind that modern buyers don’t respond to hard-selling. Instead, they prefer to interact with knowledgeable salespeople who have the capacity to propose tailored solutions to solve customers’ unique problems.

  • Decision

By the time buyers arrive at this stage, they will already have a full understanding of their original problem. Up until this point, they have done quite a bit of research, and now they know precisely the type of product they ought to get to solve their issue. What’s more, they’ve even narrowed down their list of possible acquisitions to only a few selections, and they’re ready to make a final decision.

Right now, you have one last chance to convince people to pick your product. And there are two things you can do to tilt the balance in your favor and get the potential customer to make a purchase. To begin with, you could try presenting them with an offer that deems your product more advantageous than that of your competitors. For instance, you can pair your core product with an accessory, or suggest free shipping. In addition to this, you can share testimonials, case studies, and reviews to let your prospects know what your other clients think about the brand, the products, and the overall customer experience.

  • Action

The action section of the funnel is where the actual sale takes place. The exchange is pretty straightforward: the customer places an order, makes a payment, and you ship them the product they requested. The action stage is the culminating point of the sales funnel. Leading the customer to this point is the main objective of all the other sales funnel stages we’ve discussed so far.

However, even though taking action is the end goal of the sales funnel, this isn’t to say that the buyer’s journey ends here. Try not to think about this whole journey solely from the perspective of sales. Of course, closing the deal is fundamental, yet, simultaneously, it’s wise to establish a relationship with the buyer that goes beyond making one major sale. After all, statistically speaking, you’re far more likely to sell to an existing customer than you are to a new one. Therefore, once you’ve made a sale, you should immediately think about retention.

  • Retention

Whether your new customer will become loyal to your brand depends on their overall experience with your company. Of course, the quality of your core product plays a central role when it comes to establishing a trust-based relationship with your clients. However, as we pointed out, that’s not the be-all and end-all to customer retention. 

Instead, it’s advisable to devise a comprehensive customer retention strategy. Work on creating a smooth and enjoyable journey for your customers from the get-go. Optimize your website, invest in soft skills training for your customer support department, implement loyalty programs, and make sure that the products you’re shipping out get to their new owner quickly and safely. 

Finally, don’t neglect communication. Ask for your customers’ feedback to find out whether they’re satisfied with the product they purchased and continue to create relevant content for them in order to keep them engaged.

the sales funnel purchase funnel

How to Build a Sales Funnel

To build a watertight sales funnel, start by getting to know your audience. Find out who your potential customers are and how they think. There are various methods you can employ to encourage your prospects to tell you more about themselves. For instance, in exchange for survey participation, you can offer those who are willing to share their thoughts with you a discount on their next purchase. Once they agree to tell you more about their experiences, ask what they’re looking for in a product like yours, what specific features they want, and why. 

Additionally, you could inquire what kind of issues led them to search for a product like yours in the first place, what other related problems they’ve encountered in the past, and how they went about addressing those problems.

Another essential part of getting to know your audience would be to examine your potential buyers’ online behavior. To that avail, you can utilize a website analytics tool. Your objective should be to discover what your visitors do when they come to your site. How much time they spend reading your content and what type of content they prefer. This analysis will provide you with some valuable insights regarding your buyers’ central interests.

Use this information to build or refine your buyer personas and, subsequently, your marketing strategy. Once you understand your customers better, it’s time to develop a plan to capture their attention and get them to visit your website in vaster numbers. 

There are numerous tactics you can employ to draw traffic to your website, starting from SEO to social media ads. However, an excellent way to consistently get traffic while establishing a relationship with your audience is to create engaging and informative content and distribute it across all platforms. Build your reputation as an expert and thought leader in your industry, and people will come to you when they eventually decide to acquire a new product because you will have already gained their trust.

Last but not least, make sure your potential buyers aren’t encountering any difficulties when they come to make a purchase. Ensure that the buying process is as smooth and straightforward as can be. A well-trained customer service department and a simple order placement system will definitely help. Finally, don’t forget about your existing customers. Continue to deliver relevant content, find out if they’re satisfied with their purchase, and see if they have any suggestions on how to improve your product further.

Sales Funnel Example

Lead Magnet – Tripwire – Core Product Offer – Action – Retention

Imagine you’re browsing the web, seeking to learn more about improving your digital marketing conversion rate. You perform a Google search and click the top link on Google’s search engine results page. Suppose that the website you’ve just accessed belongs to a digital marketing agency. Now, you’re on their landing page, at the top of their sales funnel.

To take you closer to the point where you might purchase one of their digital marketing services, the company in question will first try to stir up your interest by offering you value for free. For example, they could display a pop up inviting you to sign up for a free consultation, download a free content marketing e-book or SEO checklist. In return for their free materials, you would have to provide them with your e-mail address or subscribe to their monthly newsletter. Free informative digital content that companies offer in exchange for your contact details is known as a lead magnet.

If you find the information provided valuable, you might consider coming back to the website at a later time to learn more. If that’s the case, the company will then have an opportunity to move you further down their sales funnel by using a type of content known as a tripwire, which can be a book, a personal consultation, a webinar, or another similar content model. 

There are two main differences between a lead magnet and a tripwire. 

While the lead magnet presents interesting but overall general information for free, the tripwire introduces rather specific information, designed to address a particular issue, for a modest price.

Apart from offering you valuable insights, the purpose of the tripwire is to slowly introduce you to the core product offered by the company. If you’re happy with your experience so far, you might decide to buy that core product. Yet, your journey through the funnel doesn’t end with the purchase. 

If the digital marketing agency we’ve imagined has got a well-thought-out sales strategy in place, they will make sure to engage with you after the purchase as well. They might ask you for feedback via e-mail, and they will continue to keep you in the loop concerning their latest offers or their new product launches.

How to measure a Sales Funnel

There are several metrics of which to keep track when it comes to assessing a sales funnel. The fundamental component to keep an eye on is your conversion rate. To that avail, you could compare the number of sales opportunities at the top of the sales funnel to the number of closed deals at the bottom.

Additionally, to go into even more detail and get better insights, you could measure the effectiveness of the funnel at every stage. To do this, see what the existing data can tell you regarding the number of prospects that shared their e-mail address, that of potential customers who accessed the link in your e-mail newsletter, or the number of people who registered to try your product for free.

As a side note, you can think of a sales funnel assessment in terms of pre-sale and post-sale metrics. The pre-sale category includes things such as evaluating the time that it takes for a buyer to get from awareness to the point of making a purchase. Additionally, this category also includes marketing channels evaluations, for instance, measuring how many people come in via Facebook versus Twitter. In terms of post-sale assessment, the number of return customers is the most relevant metric.

How to Optimize Your Sales Funnel

There are numerous things you can do to optimize your sales funnel. The metrics we presented and others similar to those could provide you with valuable insights, and thus allow you to discover the vulnerabilities of your funnel. However, generally speaking, it’s vital to focus on optimizing the vessels that carry your potential customers from one stage of the sales funnel to the next: from your social media ads and content to your e-mail newsletters.

To begin with, evaluating your sales funnel will allow you to discover whether your target audience is paying attention. If you find that your social media content isn’t getting the reactions you want, perhaps you should try something different. Refine your imagery, your message, or the call to action, and strive to create content that’s both informative and engaging.

Additionally, make sure that your landing page is in pristine condition in terms of both functionality and packaging. Is your site easy to navigate, accessible, and fast? Is it aesthetically pleasing? Different page designs can yield different results when it comes to conversions. To optimize your landing page, employ funnel testing to find out what combination of visual and functional elements works best with your audience.

How is a marketing funnel different than a sales funnel?

Many people are using the terms “sales funnel” and “marketing funnel” interchangeably these days. And although the two are closely related to each other, there is an essential difference between them. Let’s think about the distinct role of a sales team compared to that of a marketing team. While the purpose of the former is to sell, the end goal of the latter is to raise awareness.

tofu mofu bofu diagram

Both funnels represent the customer journey, each from a separate angle. The culminating point of the sales funnel is the act of the sale. Similarly, the peak of the marketing funnel is the moment of maximum interest exhibited toward a particular product by a potential customer.

TOFU

The top of the marketing funnel is quite similar to the top of the sales funnel. At this point, people are just finding out about your brand. Perhaps they came across your company on social media, or maybe they’ve read one of your blog posts or seen some of your videos. Whatever the case may be, they are nowhere near the point of making a purchase. Therefore, for the time being, your objective should be to educate your audience without trying to get them interested in a particular product. Focus on creating relevant content, expanding your audience, and being seen.

MOFU

Once your potential customers reach the middle of the marketing funnel, they already have a better idea about who you are and what you have to offer. For companies, the middle of the marketing funnel can be quite challenging to manage. That’s because, at this point, you need to find engaging ways to communicate meaningfully with a vast audience comprised of a heterogeneous group of people, each having their own distinct collection of various wants and needs.

On the other hand, the good news is that they’ve become interested enough in your brand to consider making a purchase. They’re already comparing you to your competitors. What you can do to expedite the process is to keep creating informative content, but start introducing your products as a potential solution to their pain points.

BOFU

The bottom of the funnel is the stage where your potential buyers will be at their maximum level of interest. By now, they already know everything about your products, and they’re eager to reach out to you. From a marketing perspective, the type of content you should focus on right now includes case studies, testimonials, and reviews. Offering people a free consultation is also a great strategy to help tilt the balance in your favor.

Improving your sales funnel – Funnel Testing

Creating a sales funnel isn’t a one-off thing. To get the most of it, you have to tweak it and refine it permanently. As we previously mentioned, when it comes to your landing page, it’s crucial to make sure that everything is flawless, both in terms of functionality and aesthetics. In order to optimize your sales funnel, it’s essential to discover what type of page design works best with your target audience. Funnel testing can be an incredibly powerful instrument to help you do just that.

You can employ this process throughout your sales funnel to test for every detail on every page on your site. Funnel testing involves creating multiple design variations of a specific page in the funnel to find out which design gets you the most conversions. For example, if your strategy includes a webpage where you invite people to sign up for a newsletter, you can use funnel testing to find out which color scheme, fonts, button size, and text size will get you a higher number of newsletter subscriptions.

FAQ

What is a sales funnel and how does it work?

A funnel is a visual representation of the customer journey, from the moment the customer first becomes aware of a brand to the moment they make a purchase. The idea behind it is that all consumers go through the same stages when making a purchase – from mere awareness to post-purchase evaluation. Companies devise their marketing strategies to address potential buyers at every stage of the funnel and move them from one step to the next until they finally make a purchase.

How do I create a sales funnel?

Start by making an effort to understand your audience. Learn how much time people spend on your website, and find out where they spend the majority of that time. 
Capture the attention of your audience by creating and distributing engaging content across all of your social media channels. Build a landing page and provide your potential customers with first-class content, either via e-mail, marketing campaigns or through your blog or video content distribution channels. Invest in the development of your sales team and remember that consultative selling will ensure greater customer satisfaction and help you establish long-lasting relationships with your clients. Thus, you’ll be giving people a reason to come back again.

Why do you need a sales funnel?

Essentially, you need a sales funnel to optimize your sales process and make sure that you’re not missing out on any sales opportunities. The funnel allows you to get a clearer understanding of the process your customers go through before making a purchase and find out what determines them to either buy a product or drop out. 

In other words, the funnel allows you to have more control over the entire sales process. Without a clear strategy, you won’t understand why prospects go off the road that would have otherwise taken them to making a purchase. Sometimes it’s just a little thing that you can easily tweak to improve the whole system. Without a funnel, you’re missing out.

What is sales funnel marketing?

This marketing approach implies producing different types of content to engage every potential customer based on their position in the sales funnel. The idea behind it is that the content that an individual who is just becoming aware of your brand might find informative and engaging is quite different as compared to the type of content that someone who has already purchased your products before might consider enjoyable.

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