A sales funnel visually represents the customer journey right from the initial interaction to becoming a paying customer. Like a physical funnel, the top section of the sales funnel is wider and gets narrower as we go down. This illustration shows that the sales journey begins with many potential customers but only a small number of individuals close a deal.
Missing a potential lead when it is close to taking action is a nightmare for every business owner. It could happen to any business but if it happens more often, this is the indicator that you need to fix your sales funnel. Don’t miss your leads in the hands of inconsistent follow-ups or random holes inside the funnel that cause lead to fall out.
Fill the top of the funnel with the right prospects and follow up with them as they move down the funnel. Encompass your actions around the steps a prospect takes at every stage and take full advantage of the handful of opportunities available in the middle of the funnel.
Why is a sales funnel important?
A sales funnel helps you build an organized approach toward your sales process by analyzing what your potential customers are doing at each stage of the funnel. Once you are aware of the interactions that customers take in their buying journey, you can craft marketing activities and create personalized communications on the right channels to encourage potential customers to turn into paying customers.
Each stage of the funnel proceeds the qualified prospects to the next stage and drops those who do not fit into it. Analyzing your sales funnel helps you identify the potential bottlenecks and understand the reasons that convert potential customers into buyers. A properly managed sales funnel streamlines the customer journey and also helps optimize your business performance.
Generate new customers
Take your targeted audience inside the funnel and move them through different stages that help in conversions, eventually generating new customers for your business.
More concentrated focus
As the prospects move down the funnel, you will see only a handful of potential prospects following through the stages which allows you to focus only on the specific group of prospects and implement your efforts with a more concentrated approach.
Better customer understanding
By viewing the customers’ path from initial awareness to closing the deal, you can determine their preferences and behaviors which further helps in customer retention.
More revenue
The sales funnel gives you a clear understanding of the activities that result in customers making a purchase decision so you can focus on the revenue-generating marketing activities.
Better sales prediction
By tracking the pathway the leads take through the sales funnel, you can predict your future sales. For example, if you know the number of prospects who buy from you after subscribing to your mailing list or trying the free trial, you can forecast the total number of sales during a specific time.
Beat the competition
Businesses that utilize the sales funnel the right way are more likely to attract new customers, easily adapt to market conditions, and gain a significant advantage over their competitors.
Cost-effectiveness
Since the sales funnel filters prospects with high-converting potential only, you only have to spend your marketing efforts and resources on high-potential prospects. This helps you control your marketing budget and use it in the best possible way maximizing your ROI.
Exploring different stages of the sales funnel
A sales funnel comprises different stages covering every step a buyer takes right from his first interactions with your business to the moment he buys from you (or doesn’t). The stages may vary depending on the business, but in general, a funnel is divided into four stages.
Stag 1: Awareness
The first stage of the funnel has the largest number of prospects that interact with your business. This is when people discover your business or become aware of your services or products. They are either actively searching for a solution that your business provides or your ad pops up in front of them that interests them. Businesses should be promoting their content in places where it is more likely to be found by the target audience who are searching for it.
They usually become aware of your business through your blog, website, social media, advertisements, and word of mouth. You can use both organic and advertisements in this stage to make your business appear in front of your target audience. Although they are not ready to invest in your business yet, they become aware of your existence and this is when you need to encourage them to move down the funnel. The number of prospects that move toward the next stage depends upon your sales and marketing tactics and efforts.
Stage 2: Interest
There is a significant decrease in the number of prospects at this stage as compared to the awareness stage. Once the prospects move down to the next stage of the funnel, their chances of conversion increase. Keep in mind that at this stage, your prospects are more interested in getting a solution to their problems and not necessarily evaluating your services or products.
The interested prospects might visit your website, read blogs, subscribe to your newsletter, learn about your products, or services, and start getting to know your business and offerings. Your sales team might follow up with the prospects via email or phone calls to educate them about your services or products and how they can help fix their problems. You can also offer them product guides or use cases to tell them how your business has helped other customers who had the same issues.
Stage 3: Decision
Once the prospects develop interest in your brand and have learned about the right solutions, they evaluate your pricing options and figure out how your business is offering better solutions than the competitors. At this stage, the sales team can help nurture your prospects’ buying decisions by offering them free trials, and proposals and negotiating over them. The effective content at this stage of the funnel includes product demos, FAQ pages, and side-to-side competitor analyses that establish the prospects’ confidence in your business.
Step 4: Action
Upon reaching this stage, the prospect is clear about whether or not he wants to make a purchase. If the negotiation between you (as a seller) and the prospect succeeds, the deal is closed with mutual satisfaction. If the prospect does not make a purchase, you can create effective nurture campaigns to stay at the top of their minds for conversion in the future. If a prospect successfully closes the deal, you may entice them with appealing offers for improved customer retention.
Examples of a sales funnel
- Look into the example of a skincare brand that manufactures and sells its skincare range online including serums, moisturizers, sunscreens, mists, face wash, etc. The brand’s targeted audience is shoppers aged 20 to 40 who spend most of their time scrolling through social media, particularly on Instagram. Knowing these analytics, the skincare company runs Instagram ad campaigns targeting individuals aged between 20 and 40. Upon clicking the ad, interested users are directed to the landing page with a popup encouraging them to sign up for the Newsletter to receive the brand’s updates, offerings, discounts, etc. The individuals who continue with the signup become leads.
The brand stays in touch with the lead through email campaigns and offers a discount code. The code eventually pushes the lead to purchase from the brand becoming their customer.
- Another example is a luxurious cosmetics brand that targets middle-aged women through Google ads and entices them with a 30% discount upon entering their email addresses. Once the interested prospects enter their email address for the first time on the website, they will get a discount code via email encouraging them to make a purchase, and at the same time, the brand adds their email to their subscribers’ list to send emails on regular basics.
How to create a sales funnel for your business
Analyze your targeted audience
First and foremost, you have to analyze the goals that you want to accomplish with every stage of your sales funnel. And for that, you need to understand your targeted audience, their preferences, pain points, interests, etc, and create buyer personas. The more data you collect about your audience, the more effective your funnel will be. Once you have analyzed your targeted prospects aligned with your goal, you can create personalized messaging to attract them.
Capture your targeted audience
It’s time to encourage your targeted audience to enter into the sales funnel. You can capture their attention with informative and engaging content on search engines and social media, via advertisements, that they interact with to ensure that their issues will be resolved. Use organic or inorganic ways to grab their attention and align your content based on the problems, needs, and interests of your audience.
Building a landing page
A landing page is a dedicated webpage that the prospect lands on when he clicks on an ad, link, or any other call-to-action. A well-crafted landing page tells your prospects about who you are, your offerings, and how you can solve their pains, which helps build trust and credibility. The primary goal of a landing page is to convert visitors into leads or customers. Embed a form on your landing page where visitors can enter their contact details so you can capture their data such as email and phone for further marketing communication. Don’t forget to add an engaging CTA to guide users to take the desired action such as making a purchase, signing up for a trial, or downloading a free resource, moving your prospects to the next stage of the funnel.
Offer something valuable as a lead magnet
Why your prospects are supposed to enter their email addresses or contact details into your web forms? This is because you offer them something valuable in exchange for their contact details. A lead magnet on your landing page such as an eBook, templates, whitepaper, or a free trial generates interest in your audience that might further proceed into their buying decision.
Start nurturing
Now that your prospects have moved from awareness to interest, it’s high time to nurture them through marketing campaigns. Since you have collected their emails via landing pages, share educational and engaging content with your prospects at this stage that might help them understand how your business can solve their problems. Don’t pitch them randomly or repetitively otherwise, you will lose your credibility, and the prospects will lose their interest. Put your focus on inspiring them rather than stuffing their mailbox with too many emails.
Close the deal
Create promotions, discounts or limited-time offers to convert leads into customers. Make the checkout process easy for your customers to complete the purchase process. Also, this is the stage of your sales process where you will either learn why your prospect is not able to convert or you will land a new customer. Whatever the scenario is, don’t stop communication. Educate your new customers about your business and create new email nurture campaigns for prospects who didn’t convert.
Fix the cracks with sales funnel management
A lead might slip through the crack right before closing the deal, but this should not stop you from proceeding with the lead in the future. With effective sales funnel management, you can manage your leads effectively and efficiently.
Don’t throw lead too quickly
If a lead has not decided to purchase at the moment, it does not mean that it will not purchase from you in the future too. Probably they are not confident enough to purchase, know very little about your product/service, or are unable to afford your product/services now, but if you keep on following up with them, educate them on how your product/service helps them and solves their problem, and offer them discounts they might make room for the new purchase.
Create automated email campaigns that address the lead objections by educating them. These campaigns nurture leads towards a sale so instead of dismissing the lead in the first place, manage it inside the funnel and successfully close it.
Follow up consistently with automation
Are your sales reps giving up after one follow-up? Are you consistently following up with the prospects even after encountering failure? If you are not persistent with your follow-up campaigns, you won’t be able to nurture your leads into closing the deal. The automated marketing campaigns are targeted to the prospects and they receive personalized emails at every stage of the funnel. It saves your time so you can focus on nurturing the high-potential leads only and quickly respond to brand-new leads inside the funnel.
Sales funnel metrics
Multiple key performance indicators (KPI) are used to determine the value of leads and prospects inside the funnel and the efficiency of your sales process which further helps in evaluating better sales strategies.
- Website traffic: Number of visitors that come to your website.
- Bounce rate: Percentage of visitors who leave your website after viewing one page of your website.
- Time on site: Average time spent on your website.
- Social media engagement: Total number of likes, shares, followers, and comments.
- Brand mentions: Frequency with which your brand is discussed in the market.
- Click-through rate: Total percentage of users who clicked on your link.
- Lead generation rate: Number of leads generated per marketing campaign.
- Entrances: Total number of leads entered the funnel.
- Open rate: Percentage of emails opened.
- Follow-ups: Prospects who follow up with the business marketing efforts and respond to them.
- Lead to opportunity conversion rate: Average number of leads who converted into qualified opportunities.
- Flow rate: Average time a lead spends in each stage of the funnel.
- Sales cycle length: Average time between the lead’s first interaction and the deal closing.
- Win rate: Total number of deals closed among the total deals present inside the funnel.
- Conversion rate: Number of leads who converted into customers.
- Abandonment rate: Percentage of customers who want to take an action but leave it midway.
- Average order value: Average revenue generated with each order.
- Total revenue: Total revenue generated by the sales during a specific period.
- Acquisition cost: Marketing and sales cost of customer acquisition.
- Customer lifetime value: How much a customer spends on your product/service against the average customer acquisition cost.
- Customer retention rate: Percentage of customers who made a second purchase after a defined period.
- Customer satisfaction score: Percentage of customers who are satisfied with your brand and are more likely to become the advocate of your brand.
- Churn rate: Percentage of customers who have stopped doing business with your brand over a specific time.
You can use these sales funnel metrics to create valuable sales and marketing activities and offer your customers a smooth buying experience right from the first inquiry to the deal closing.
Optimizing sales funnels
A sales funnel helps your business determine the right strategies to convert prospects into sales. You can keep on testing each stage depending upon your business to see their impact on the conversion rates. Here are a few essential points to consider to optimize the sales funnel for better outcomes.
Craft targeted content for each stage
While your prospects move across the sales funnel stages, it is important to deliver them the right message at the right time. Initially, you target a high number of customers for example by offering the downloadable file across the website. But you can make it more effective with a concentrated approach by attracting specific groups of individuals with targeted content and moving them successfully to the down stages.
A/B testing
The best way to determine what works best for you inside the funnel is to test two versions to see which works better. For instance; if you are directing your audience to a landing page, do a/b testing to see if it could be better. Instead of replacing it with a completely different landing page, you can create another version (e.g., headline, button color, image). and direct one group of your audience toward it. Monitor the performance of each version based on specific metrics (e.g., click-through rate, conversion rate). to see which one is doing better and proceed with it.
Keep trying new strategies
If you are implementing a strategy and it results in success, it does not mean that it is the only way out. You can experiment with new strategies to see their potential for your funnel. For instance; if you are using email marketing to attract new customers and it is turning out good, you may also try social media marketing to attract a new stream of customers and see their impact on your sales.
Marketing automation
The marketing automation funnel helps you respond to every prospect immediately after their first contact and allows you to follow up with them and pitch them. The automated email sequences nurture and guide the leads across the funnel. You can personalize emails based on the prospect’s interactions and interests. Use CRM to analyze the data of every prospect to craft email campaigns specifically for them.
Use social proof
The potential customers are more likely to purchase from you if you present them the social proof from other customers. If you want to optimize your sales funnel, you need to display adequate social proof, ratings, use cases, and reviews to convert a prospect’s initial interest into conversion.
Retargeting and remarekting
The purpose of a sales funnel is not only to close the deal and forget but also to retain the customers by remarketing them and creating a strong customer base. You may retarget the high-potential customers who have visited your site in the past and guide them toward making a purchase decision this time. Remarketing and retargeting are two of the important sales funnel optimization strategies to encourage better engagements and future sales.
Bottom line
The customer’s buying journey is not as smooth today as it used to be previously. The competition is sky rising and with that, it is important to stay in touch with your prospects and don’t let them fall for your competitors. A sales funnel takes in a large number of potential customers and nurtures them into making a purchase. With a well-managed sales funnel, a business can achieve a more steady flow of customers by nurturing the prospects and connecting with them at every stage so they are knowledgeable about your solutions and can have a frictionless buying experience.
FAQs
How to fix a sales funnel that is losing leads?
A sales funnel loses a lead due to not facilitating an immediate response after the initial query was placed or not responding to the potential lead optimally. A leak in the funnel can be seriously threatening to your business but you can fix it by keeping a close look at the internal interactions that might affect the customer experiences, speed up your lead initial response time, and defining the ideal buyer persona to analyze if the prospect fits into it.
How does a sales funnel work?
A sales funnel guides your prospects through the different stages, starting from awareness, followed by interest, evaluation, and finally closing the deal. The stages filter the high-potential leads so you can nurture them with targeted campaigns and convert them into buyers.
What are the benefits of a sales funnel?
Sales funnels are highly beneficial in understanding the customer journey, tailoring content for specific groups of prospects at every stage, increasing conversion rates, extracting valuable insights, and boosting sales and revenue.
