Beginners Guide to the Sales Funnel
A sales funnel is the marketing term for the journey prospective customers go through on the way to purchase.
There are several steps to a sales funnel, usually known as the top, middle, and bottom of the funnel, although these steps may vary depending on a company's sales model.
In this beginners guide to the sales funnel, we’ll explain what a marketing funnel is and how it can help you grow your business today.
Sales funnel explained
A sales funnel is a series of steps that potential customers follow in order to purchase your product or service.
Marketing professionals have identified five stages in a typical sales funnel: awareness, interest, desire, action and confirmation.
In an online marketing context, each stage of a sales funnel might be represented by an ad or email (or any of other marketing channels) you send out and each step encourages users to take their next move towards conversion.
The point at which someone purchases your product or service is known as conversion and can mean anything from signing up for an email list (awareness) to purchasing your product or booking an appointment (action).
You should also keep in mind that marketing experts will advise you that not all people who enter a sales funnel will convert—you shouldn’t expect 100% of them to go through every stage.
That’s why it’s important to set realistic expectations before launching into any sales process. Once you understand how many people are likely to go through each stage of your sales funnel, then you can figure out how much revenue your company needs to hit its targets.
Why Is a Sales Funnel Important?
Without a properly implemented sales funnel, marketers can easily generate leads who were interested in their product or service.
The way a company structures their sales funnel can greatly impact how successful they are at generating new leads and turning them into clients.
If you're looking for a great place to start, then take some time to familiarize yourself with these five questions every sales funnel should be able to answer:
- Who is your target audience?
- What type of content do they consume?
- Where do they find it?
- How can you reach them with that content?
- What makes your product or service better than what's already out there?
Once you know all of these things, developing an effective sales funnel becomes easy.
The anatomy of a funnel
The sales funnel is a long-standing, effective marketing concept. Although it has come to be associated with marketing, its origins are in advertising and sales psychology.
There are four sales funnel stages and here's how they work: top of funnel – often called awareness or prospecting stage; middle of funnel – often called consideration or evaluation stage; bottom of funnel – often called conversion or sales stage.
Top of funnel - often called awareness or prospecting stage
Ideally, potential customers need to meet your business idea when it’s not just known by yourself but also by customers already interested in what you're selling. This will provide validation that what you want to sell is useful (if there aren't other businesses making money selling it then why should people start now?)
When people consider a purchase for themselves rather than relying on others’ experience and word-of-mouth feedback, they typically spend longer considering their options before making a decision.
Middle of funnel – often called consideration or evaluation stage
In sales terms, middle-of-funnel questions are designed to determine whether prospects have enough information and confidence to proceed with a purchase. Typically asked during an opportunity review meeting, middle-of-funnel questions help determine whether an item is worthy of inclusion on a proposal – which exposes prospects even more information about your product or service. During these meetings, sellers build up seller credibility through demonstration of expertise.
Bottom of funnel - often called conversion or sales stage
At last! The beginning stages work hard so that you can close deals smoothly at the end. If there’s one thing business owners love, it’s reducing friction in any process: from getting into a gym to claiming health insurance online, people don’t like to wait around for things they want—and if there’s something standing between them and their desire? They get frustrated.
To work effectively, a marketing campaign requires all three stages of the sales process working together. As prospects move through stages, they are exposed to more information that strengthens their desire for your product or service.
The purpose of any advertising campaign should be to nurture leads from one step in your funnel through another and on until you have an actual sale.
There are four sales funnel stages:
Sales Funnel Stages - Stage 1: Awareness
Awareness stage is when your prospect is aware of your business.
Your task is to strengthen that interest. In some cases, an awareness campaign can be more effective when targeted at existing customers who know and like you as opposed to random prospects who might not know anything about you.
Your awareness efforts should ideally appeal directly to those who are specifically looking for what you offer.
Whether or not they're ready for it yet, through advertising such as online ads and banner ads, word of mouth from satisfied customers and more, lead your audience toward what's next in their sales funnel.
Sales Funnel Stages - Stage 2: Interest
Your message is clear and they’re getting a better idea of whether or not they can benefit from your product.
At the interest stage, it’s time to introduce them to your value proposition—the unique selling point for your product.
Rather than talking about what your product does in general terms, emphasize exactly how it addresses customers' needs and concerns in a compelling way.
Keep everything focused on building credibility so that by the time prospects reach bottom of stage of the funnel, they believe in you and trust that you will deliver on your promises.
Sales Funnel Stages - Stage 3: Decision
It's time for the customer to make a decision. There are probably 2 or 3 or more other options out there so put your best foot forward.
Literally - make the offer so good it can't be refused. Make it irresistible. Give a prospective customer free shipping, add a bonus training, whatever. You've done all this work and now you don't want to let them go empty handed.
Sales Funnel Stages - Stage 4: Action
Action is what happens at the very bottom of the purchase funnel. A potential customer becomes one - congratulations!
But your job is not done yet. There are two important terms here: lifetime value of the customer and customer retention.
Life time value tells you how much money can you make off this relationship during its duration. Sometimes it makes sense to lose money on acquisition costs (paid ads) only to make it up later.
Customer retention rate tell you how long customers stick around. The longer the better as it allows your sales team to make more sales over time.
How does a funnel work?
A funnel is a way of visualizing a process that leads you from point A to point B.
To learn more about how it works, let's use an example: Let's say you're planning on going out for dinner at a restaurant tonight.
First, you'd decide what kind of food you want by narrowing down your choices. So for instance, if there are 50 restaurants in your city and only 10 have great sushi, then that would be your top choice -- a perfect funnel!
Now once you've made your decision (you'd choose sushi), you'll head over to Yelp or another review site and check out all those 10 restaurants' reviews before deciding which one will be best for tonight's dinner.
What is a lead magnet?
A lead magnet is a free piece of content offered to website visitors as an incentive for them to provide their contact information and subscribe to your newsletter or marketing emails.
For example, let's say you run a business that sells dog toys. A great lead magnet might be 10 DIY Dog Toy Recipes: Send these recipes to new subscribers, and they'll get excited about what you have to offer in your email marketing campaigns.
If you don't have 10 dog toy recipes, no worries—just write a quick outline for dog owners explaining why homemade toys are better than store-bought ones. This becomes your lead magnet.
How to create a sales funnel for your business?
A sales funnel is a series of carefully executed steps designed to help you increase your customer base and revenue.
Before you start building your own, it’s important to understand what these steps are, why they’re critical for your business and how to push prospects form one stage of the funnel to another to advance your marketing and sales efforts.
What follows is a basic primer on sales funnels, what each step accomplishes, and where to find more detailed information about how to develop one for your business.
To build a good sales funnel, follow these steps:
Step 1: Analyze Your Audience’s Behavior
Before beginning a sales funnel, you need to analyze your audience’s behavior.
What are they looking for? How do they go about making their decision on what product/service is best for them?
What can you do in order to make their search easier, more efficient and ultimately more successful?
It may take some time to figure out exactly how your target market makes decisions, but it’s a crucial step in figuring out how they move through your sales funnel.
Step 2: Capture Your Audience’s Attention
In order for your sales funnel to work, you have to get people through it.
This means choosing keywords and topics that align with your ideal customer and using those keywords in an enticing title or subtitle.
It’s also a good idea not only to include these in your meta data but also use them throughout your content.
And it is important for you to link out to high-quality resources (like our awesome ebook) whenever possible, as well as mentioning any services or products you offer that might interest potential customers.
You want everyone who lands on your page to come away knowing exactly what they need from you, without having scroll through long pages of content in order for them figure out what kind of help you can provide them with.
Step 3: Build a Landing Page
If you already have a website, you need to see how well it supports your sales and marketing efforts.
More often than not a website is a glorified brochure and that's not website visitors expect. Sales pages need to reflect your marketing strategy.
How to attract more prospects? Create content for landing pages that answers questions of your potential customers.
You are going to need a proper landing page - and preferably more than one - for every sales funnel you set up.
The purpose of your landing page is simple: get people into your sales funnel by offering them something for free - a lead magnet.
It can be an ebook, a white paper or a checklist - you should know what your target customers need.
Once they've downloaded it, that's when you start selling them on a product or service.
Step 4: Create an Email Drip Campaign
Drip campaigns are an essential part of the sales process and a fantastic way to nurture leads and convert them into paying customers.
It is also one of your best options for nurturing leads because it doesn't require as much active management on your part as other types of campaigns.
A drip campaign goes out in pre-set increments with just one click from you, so it's not like you have to spend time crafting custom messages or building out new templates each time.
But there are still some components that need attention, including automation rules and lead scoring.
Step 5: Keep in Touch
Stay in touch with your qualified prospects by email and mailing lists.
Never forget about them or drop off their radar. When you stay in touch, they become aware of who you are and what you do.
Even if they don’t buy from you, they will remember that you tried to reach out to them.
This can be used as a lead generator when there is a better product or service that might interest them later on down the road.
It’s a matter of staying visible at all times; never be hard to find and always be in touch.
That's the secret of social selling.
Lead Scoring - Dismiss Bad Leads Early
One of the best ways to avoid losing potential sales is by weeding out bad leads.
A bad lead, in general, describes a prospect who lacks one or more key qualifications for your products or services.
Think about it: you wouldn't want someone without a purpose for your products as a customer; why would anyone else?
So how do you spot and dismiss these leads before they take up too much of your time?
Start by asking them questions like these: What kind of product are you looking for?
What price range are you aiming for?
Do you need any help with installation/ training/ maintenance once your purchase is complete?
If they can't answer these questions or give vague responses, they likely won't be worth much of your time anyway and should probably be disregarded.
How to create content for each stage of the sales funnel?
In content marketing, one way you can use your sales funnel is to write a post for each stage of it. Start with an introduction post about what you do and why people should care.
Then, create a post for each specific stage of your sales funnel—these should be shorter posts with quick action steps that show people where they are in your sales funnel at any given time.
Make sure every stage has a call-to-action so people who read it know exactly what they need to do next. Your main goal here is to show people in each step where they are in their buying journey and how they can get moving forward again if they've stalled out.
If you're in a business that sells directly to consumers, sales funnels can be a useful part of your content marketing strategy.
For example, if you sell wedding dresses online, you might have different sales funnels for people who are just browsing dresses, people who are thinking about buying a dress and need help deciding on styles and sizes, people who have bought a dress but want help getting it altered, etc.
In each step of your funnel are different ways to help customers—for example by providing info about different types of dresses or information about alterations—and each step is likely to have a different call-to-action.
This can make reaching out more targeted and personal because it allows you to tailor your sales funnel based on what your customer needs at that time.
Measuring the Success of a Sales Funnel
There are two key points in a sales funnel that can be measured: top of funnel (TOFU) and bottom of funnel (BOFU).
If your sales funnel is designed properly, you should be measuring these benchmarks throughout your marketing campaign.
For example, if you set up a free trial for your software product, TOFU would refer to all visitors who hit your site from an advertisement or social media post.
BAFU would capture all users who entered their email address and followed through with their free trial. These measurements tell you how many people completed a step in your funnel - but they also tell you how well they did at it.
If 60% of people entering at TOFU were qualified leads and only 10% finished step 2 in your sales funnel, there's room for improvement!
Use those numbers to optimize future campaigns by changing goals or marketing tactics until you get better results.
By keeping track of these numbers over time, you'll have hard data about what methods work best for different demographics on different platforms - so keep it up!
The more data you have at hand when building out future campaigns, the more likely it is that they'll work out positively!
Sales Funnel Optimization
The goal of any solid funnel is to attract more leads and get more conversions at each stage of your funnel.
The best way to optimize a sales funnel is by testing out different elements at each stage.
Test which headline gets you more clicks, which form length makes people convert better, etc.
With enough tests, you’ll be able to fine-tune each part of your funnel for optimal results!
Test ads
As you test, you’ll be able to determine which words or images appeal most to your target audience and what kind of content people are more likely to engage with.
Once you’ve done enough testing, you should start looking at how conversions are affected by which funnel stages they visit.
For example, if people see different headlines when they enter your sales funnel than when they move along it, your conversions might increase if all leads see those same headlines regardless of where they are in your funnel.
Using different elements that change everything from ad text to headline size can give you a much clearer picture of what works and what doesn’t in each part of your sales funnel.
Test landing pages
Landing page optimization is essential for effective sales funnel management.
When your leads come into your sales funnel through different types of ads, it’s critical that each ad take them to a landing page that can appeal to them.
Each section of your sales funnel should have its own landing page with different content and benefits in order to build trust, begin sales conversations and drive conversions.
Your first step is deciding what elements are best for each stage of your sales funnel by using A/B testing or multivariate testing (MVT).
This means you set up multiple versions of a web page—with slight differences between them—and test which version performs better over time, based on conversion rates or other factors.
Test email campaigns
This is a good opportunity to learn what language, imagery, and content gets people excited about your business and motivates them to take action.
A/B testing can also help you understand which content work best with your audience and how often they open emails from you.
By tracking key metrics like clickthrough rate (CTR) or email open rate (which are only available if you’re using a marketing automation platform), you can better understand the customer journey and how effective your sales funnel stages are.
With enough tests at each stage of your sales cycle, you’ll be able to find out which parts of your marketing campaigns perform best for your target audience and enhance them for greater results!
Sales Funnel FAQs
What is a funnel?
A funnel describes a customer journey usually consisting of four stages from the awareness to the purchase.
How do I create a sales funnel?
Start with getting to know your prospects' needs and create a piece of content for them. Then, design an email drip campaign to nurture the leads and show how your solution helps them. There are many easy software applications to build a sales funnel, please contact us to learn more.
What is a funnel strategy?
A funnel strategy is a process that describes the entire consumer journey and translates it into actionable items. It focuses on nurturing the entire relationship and helping the prospect better understand the value you're providing.
What are funnels used for?
Sales Funnel is a great way for businesses to visualize what people do when they search for products or services from your company. It also lets you see how well visitors convert at each point in the Sales Funnel.
This can be used as a measurement tool for understanding if certain changes need to be made. The Sales Funnel looks like an upside down triangle and it's easiest to see where people stop converting, so this can tell you what needs improvement.
What are the 4 sections of the purchase funnel?
The four stages of the content sales funnel are Awareness, Evaluation, Purchase, and Delight. Content should be adjusted for each customer's needs based on what stage they're at in their journey.
How does a funnel work?
The sales funnel leads people to become clients. It is composed of various phases, each one taking them closer to becoming a paying customer. A perfect plan for the sales funnel will detail what steps need to be taken so that your prospective customers can transition from phase to phase.
How much does a sales funnel cost?
Basic acquisition funnels that include a lead magnet, a main offer page, an upsell, and a follow-up sequence can cost upwards of $5000 to $10000.
To get started with sales funnels book your FREE CONSULTATION now!