All business owners want more sales but a sale does not always occur when an individual first learns about a business’s products or services. A potential customer is most likely to want to do some research before making a purchasing decision and that might include reading product reviews, and comparing it against similar offerings to determine its true value.
This is where the sales funnel comes in.
This funnel shows you exactly how potential customers transition through stages and eventually turn into buyers. Whether you own an e-commerce site, are a SaaS company owner, a consultant or offer a local service it is vital for any business to be able to see their funnel so you know how your prospects exit and where you might stand to optimize the conversion.
Here we will explore the various stages of the funnel and explain the reasons for their importance, frequent errors that companies make and strategies for improvement.
What is a Sales Funnel?
A funnel of this type is a way of looking at how potential customers move through to a point where they purchase something.
It’s called a funnel as thousands of people may enter at the top, but only thousands will pass each stage until only a percentage reaches the point where they become a customer.
Consider the example below:
- 10,000 visitors to a website
- 1,000 who sign up for a newsletter
- 200 who ask for a demo
- 50 who actually make a purchase
In each instance a percentage of individuals drop out of the process.
What is a Sales Funnel? Why should I use it?
Without a proper funnel in place, it’s easy to figure out what works and what does not. The proper funnel system allow a company to:
Understand what their customers’ behavior is.
- Generate more leads.
- Convert more customers.
- Reduce costs for acquiring customers.
- pinpoint where the purchasing process is failing.
- Increase their marketing efficiency.
Instead of wondering why they are not closing enough sales, the business can determine which phase of the process needs modification.
What’s a Sales Funnel For?
If there’s no sales funnel, it is difficult to assess what is working and what is not. A well defined sales funnel: allows businesses to: understand what their customer is doing, attract more leads, increase conversion rates, decrease customer acquisition costs, identify the points of failure in the purchasing cycle, optimize marketing efficiency and finally instead of guessing what the problem is for low sales, look at stages in the buying cycle and fix that stage.
The Four Main Stages of a Sales Funnel
Regardless of the industry you operate in, most of these funnels follow four stages.
Awareness
This is the stage where potential customers become aware that your business exists. This could be through a Google search, social media, ads, blog posts, videos, or recommendations from others.
Visitors at this stage are often not in buying mode yet; they are simply learning about available solutions to their pain points. For example, a potential client searching the web for “best project management software” is probably in this stage. The key here is to get found and be educational.
Interest
Once visitors are aware of your business, the next stage is to build their interest in it. While a user is in the interest stage, they are likely interested in your:
- Product descriptions
- Pricing plans
- Testimonials/reviews
- Case studies
- Other valuable content
They are trying to determine if your product or service is the correct solution. A software company could use free webinars, product demos, e-books or even a newsletter to nurture leads through this stage of decision-making.
Decision-making
- Decision-making is the stage in which the prospects compare alternatives and eliminate them to a smaller pool.
- Questions that may arise at this stage are:
- Is it worth the price?
- How does it fare against competitors?
- Can this company be trusted?
- What outcomes will I achieve?
Companies can guide prospects through this stage by offering:
You can assist buyers by providing:
- Testimonials
- Product demos
- Free trial
- Comparisons of alternatives
- Customer case studies
This is likely to be a stage where trust is a key influencer.
Action
This is the final stage where the prospect becomes a customer. The actions may include:
- Purchasing a product from any company
- Signing a contract with any business partner
- Booking a consultation for any technical services
- Starting a subscription to enjoy the full benefits
This is a stage where it is really easy for things to go wrong if they’re complicated. Difficult forms, complex checkout pages or opaque pricing are examples of friction.
How Modern Sales Funnels Have Changed
Historically, these funnels were thought to be linear.
Modern buyer journeys, however, don’t usually look like this.
A customer might:
- Stumble upon you on LinkedIn
- Consume a blog post
- Watch a few YouTube reviews
- Compare with your competitors
- Come to your website a couple of times
- Join your mailing list
- Buy many weeks later
There’s a lot of movement back and forth in a buyer’s journey before they make a decision.
This is why companies are now concentrating on multi-channel customer journeys with seamless and consistent customer experiences.
Common Mistakes Related To This
Conversion problems for businesses can often be avoided.
Only Focusing on Traffic
Traffic to your website does not ensure your customers buy. Thousands of visits per month do not translate into sales if visitors cannot find the information they want and clear next actions.
Quantity is not always key; quality is.
Neglecting Lead Nurturing
A visitor is not always ready to purchase immediately. Through sending resources, emails, and relevant information about products and services to prospects, companies are keeping their brands top of mind and ready to convert when ready to buy.
Lack of Strong CTAs (Calls to Action)
Every visitor needs to know what to do next when they enter your website, by taking action in what seems appropriate in that part of their funnel. For example:
- Free Trial
- Request A Quote
- Schedule a demo
- Downloadable Guide
The clearer the Call to Action, the more engagement your business has.
Excessive complexity in the buying process
If it takes potential customers too long or has too many required forms, you’ll lose interest. Always analyze your funnel regularly and cut barriers where you can.
Simple Examples
Let’s consider a digital marketing agency.
Top of Funnel
The agency produces content such as articles about SEO, PPC marketing, content marketing etc. Potential clients learn about the agency by doing relevant Google searches and discovering this content.
Middle of Funnel
Potential clients can download a free marketing strategy guide by entering their email address, and then receive helpful content via email over a couple of weeks.
Bottom of Funnel
Potential leads can then sign up to have a free consultation call. In the call, the agency would discuss the services and give the lead a proposal.
Conversion
The lead converts to a paying client once they sign the agreement.This example illustrates how content, education, and relationships fit together in this funnel.
Tools That Manage a This Funnel
There are several tools that allow for managing the customer journey.
- CRM Platforms
- Examples of popular CRM’s:
- HubSpot
- Salesforce
- Zoho CRM
- Pipedrive
These tools track the customer journey through this funnel.
Email Marketing Tools
The most commonly used:
- Mailchimp
- ConvertKit
- ActiveCampaign
- Brevo
Email is by far the best method for lead nurturing.
Analytics Tools
It’s crucial to know how your users interact.
Useful tools are:
- Google Analytics
- Microsoft Clarity
- Hotjar
These tools help you pinpoint weak spots, find potential to enhance your selling funnel.
How to Optimize Your Funnel?
Making small changes can lead to a significant impact.
Think about:
Producing Higher Quality Content
Address user questions and provide answers:
- Blog posts
- Videos
- Guides
- FAQs
Informative content helps build relationships and trust.
Questions Frequently Asked
What is a Sales funnel primarily used for?
A sales funnel will guide your business through how a prospect goes from initial awareness to purchasing.
Are these funnels used only online?
Local businesses, service businesses, consultants, and even B2B businesses are able to benefit from using one this funnel.
How many steps are typically in a funnel?
There is a progression of awareness, interest, decision, action, but some companies add further steps, should that be the nature of the sales process.
What is the difference between a marketing funnel and a sales funnel?
A marketing funnel works to attract and cultivate leads, a sales funnel is there to guide leads to becoming a customer.
How can I measure my funnel performance?
Some key indicators are, conversion rate, leads, customer acquisition cost, and sales achieved in each stage of the funnel.
Final Thoughts
The sales funnel is not simply theory in a marketing book. It’s a blueprint that shows the relationship customers have with your business leading up to making a sale.
By understanding the steps that a customer takes during the sales, businesses can get insight into what is leading them to the sale, and what is not. This information can help you make adjustments to content, improve the trust factor in your business, overcome hurdles and increase customer satisfaction.
Whether you’re just starting a business or you already have an e-commerce, service based, or another type of business and you’re trying to improve customer engagement, learning about these funnels will prove itself to be an invaluable skill to acquire and utilize, which will improve your overall strategy for years to come.
The most successful of these funnels are not based on pushing individuals into buying something; they are based on customers receiving the information, trust, and support that is necessary to make the best purchasing decision.
