What is a sales funnel?
A sales funnel is a marketing concept used to map out the stages potential customers go through, from initial interest to making a purchase. The funnel is made up of various phases, which differ depending on a company’s specific sales approach.
When a sales funnel is well-constructed, it guides prospects smoothly through each step, ultimately leading to a completed sale. On the other hand, a funnel with gaps will cause prospects to get stuck or fall out of the process, much like water leaking from a sieve.
Types of Sales Funnels
Sales funnels are like fingerprints—each one is unique. Every company designs its funnel to fit the specific needs of its customers, sales strategies, and processes. Some businesses might even have multiple funnels to track different customer segments or marketing campaigns. However, most sales funnels share common elements because their ultimate goal is the same: driving conversions.
Now, let’s look at a few different types of sales funnels based on business models:
- B2B Sales Funnel: The B2B sales process tends to be long and complex, with six or seven stages. Extra time is often spent in the interest stage, where sales teams provide detailed, value-driven information to address customer pain points.
- B2C Sales Funnel: B2C funnels are generally more straightforward, with stages like awareness, interest, desire, and decision. Many B2C transactions are completed without the need for a salesperson.
- SaaS Sales Funnel: SaaS funnels often include a seventh stage—advocacy—focused on turning customers into brand advocates. Customer renewals are also a key priority in service-based models.
- Small Business Sales Funnel: Small business funnels are the most flexible, often blending elements from B2B, B2C, or SaaS funnels. These funnels are usually shorter and heavily rely on word-of-mouth referrals.
Why is implementing a sales funnel important?
Implementing a sales funnel is crucial for several reasons, including the following:
- Creates customers: The primary goal of a sales funnel is to guide a business’s target audience through a series of stages, ultimately turning them into paying customers.
- Generates referrals: Beyond attracting and converting a target audience, a sales funnel encourages satisfied customers to recommend the business to new prospects who may not have been part of the original audience.
- Monitors and tracks: Sales funnels allow businesses to assess the effectiveness of each stage in the process and make improvements where needed. This ensures time and resources are used efficiently, and customer behavior provides valuable feedback.
- Focuses efforts: A sales funnel narrows the business’s efforts to a specific group of prospects, making it easier to engage them and increase conversions. It also helps filter out less qualified leads by moving potential customers through a series of steps leading to a purchase.
In today’s market, a successful business relies on both sales and marketing teams to guide customers through the sales funnel and foster loyalty. This is achieved through content marketing, customer data analytics, and leveraging social media for two-way communication.
How Does a Sales Funnel Work?
Let’s consider a sales funnel example where you run an online bookshop. You know that your primary audience is active on Facebook, consisting of both men and women aged 20 to 50.
You create a landing page with a form where potential customers can sign up using their email in exchange for a freebie. In this case, the freebie is the first ten pages of a newly released novel.
You then launch a Facebook ad campaign that directs traffic to this landing page. Visitors submit their email addresses and download the freebie. Now, instead of just prospects, you’ve gained leads, and they’re progressing through the funnel.
Next, you nurture these leads by sending them engaging content, such as book-related educational tips, updates about upcoming book releases, or DIY guides for building bookshelves. This email series is designed to educate and engage your audience.
At the end of the email series, you offer a 10% discount on their first purchase. As a result, your leads begin converting into customers, and your book sales take off.
What are the stages of a sales funnel?
The sales process can generally be broken down into three key stages: the top, middle, and bottom of the funnel. The top is where the customer journey starts, often before the buyer even considers making a purchase. The first step in any sales funnel is building brand awareness, which is why it’s essential to have a strategy for getting noticed by potential buyers.
Stage 1: Awareness
At this stage, buyers are just starting to become aware of a brand. For businesses using full-funnel tracking, it’s also where they begin to identify the buyer.
Potential customers are exploring the company’s offerings, reading product details, and researching competitors. They aren’t looking for anything specific yet; instead, they’re searching for solutions to their problems.
Marketers capture attention during this stage through lead-generation strategies. Companies often use the following channels:
- Blogs
- Email campaigns
- Websites
- Social media platforms
Stage 2: Interest
In the interest stage, the buyer moves from casual browsing to actively seeking specific solutions. While they may not be fully committed to a brand yet, they are focusing on one or two products that might meet their needs.
At this point, sales teams use prospecting tools and lead scoring to figure out which potential customers to prioritize. Moving buyers from awareness to interest can take time, and businesses need to consistently demonstrate their value to stay on the buyer’s radar.
Stage 3: Decision
When a buyer reaches the decision stage, they are ready to make a purchase but may still be weighing their options. This is where you need to differentiate your brand and give buyers strong reasons to choose you.
Consider offering:
- Free shipping
- A discount code
- A bonus product
These small incentives can influence a buyer’s decision. Also, emphasize what makes your product or service stand out, and be sure to have resources like FAQs readily available on your website.
As buyers approach this critical stage, even minor details can make a big impact on their final choice. It’s important to keep guiding them toward making a purchase.
Stage 4: Action
Even if a sale seems likely, it’s crucial to keep engaging with the prospect until the deal is done. Letting up at this stage can result in a lost opportunity. Use the ASK approach to close the deal:
- Align priorities: Show the prospect that you fully understand their needs and remind them how your solution addresses their pain points.
- Secure a commitment: Highlight the benefits they’ll receive, ask any final sales questions, and address any concerns they may have.
- Keep the relationship alive: Even if the prospect doesn’t make a purchase, follow up later. Their situation may change, or they could provide valuable feedback for future improvements.
This process ensures you’re not only closing deals but also building relationships that can lead to future business.
Benefits of a sales funnel
- Improved Customer Experience
Personalize your sales approach by drawing inspiration from the sales funnel. Focusing on your customers’ needs at each step of their journey can lead to higher conversion rates and boost their lifetime value. - Better Insights
Leveraging different content formats, your sales team can gain a clearer understanding of what your customers are looking for and deliver it right when they need it. Gathering insights through surveys or customer interviews also helps you better connect with your audience. More understanding leads to more effective communication with today’s savvy buyers. - Building Stronger Customer Relationships
Guiding leads through a structured sales funnel creates long-term relationships, which simplifies future sales. Your sales cycle will likely speed up, and you’ll benefit from more referrals and high-quality leads. - Refined Sales Funnel Strategy
Ongoing communication opens up more chances for feedback, allowing you to spot and fix any weaknesses in your sales funnel. Using sales automation tools can help you track and implement these improvements.
With more opportunities to refine their strategy, businesses can increase revenue while saving time and resources, resulting in higher productivity with less effort.
How to create a sales funnel for your business
To create an effective sales funnel, you first need prospects to move through it. Once you have those leads, you can track their actions and engagement using lead scoring to determine where they are in the funnel.
Here are five steps to help build your sales funnel:
1. Create a Landing Page
A landing page is often the first place potential customers learn about your business. Whether they click on an ad, sign up for a webinar, or download a resource, they’ll arrive at this page. It should clearly showcase your company’s identity and value proposition since it may be your one chance to impress. Most importantly, include a form to collect their email address so you can keep in touch.
2. Provide Something Valuable
In exchange for their email, offer prospects something worthwhile. A lead magnet, such as an eBook or whitepaper, is a great way to deliver value through your landing page.
3. Begin Nurturing
Once you’ve captured their email, your leads move from the Awareness stage to the Interest stage. Now you can nurture them with a series of educational emails that explain more about your product or service.
4. Encourage the Decision
As leads approach the Decision stage, offer something to help push them toward a purchase. This could be a product demo, an extended free trial, or a limited-time discount.
5. Maintain the Relationship
In the Action phase, you’ll either gain new customers or discover why some leads aren’t ready to buy. For new customers, focus on product education and retention. For those who didn’t convert, create a follow-up nurture series and check in with them periodically to keep the relationship alive.
