Introduction to the Sales Funnel

What is a sales funnel?

A sales funnel serves as a map of the journey of your customer from brand awareness to actual purchase. This journey takes several steps and can take a long time depending on the user and the product. To summarize what happens, you can start with a large pool of users serving as potential customers. These are called leads. However, most of them will drop out through the process. You can then imagine the pool slowly becoming smaller as it passes through the sales funnel, until you get a relatively small pool of final customers..

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To visualize that change in the size of your pool, a funnel or an inverted pyramid is used to visualize the process, hence the name “sales funnel.” From the top, the funnel becomes thinner as each step is taken, ending with an actual purchase by a customer. Sales funnels are also called marketing funnels because they are practically the same process.

Sales Funnel Overview — *One example of a sales funnel diagram.* *Image source*

Why is the sales funnel important?

Analyzing the path your prospective customers go through in your business from brand awareness to purchases and then visualizing them in the form of a sales funnel gives you benefits beyond the simple awareness of the process. Here are some of the benefits of creating a sales funnel.

Systematizes your marketing and sales processes

If you already have your business up and running when you begin creating your sales funnel, you will notice irregularities in the process that can be ironed out and lead to better results. Creating a sales funnel does not only mean discovering how you acquire customers, but it also includes the selection and optimization of the processes involved.

Aligning the right message at the right time for each lead

Using the wrong message at the wrong time to your lead can either slow down their passage through the sales funnel or undo the previous efforts in cultivating a connection with them. By having a sales funnel, you can identify where your lead stands in the funnel and then deliver the right message to them to nudge them forward to the next step in the funnel.

Aligning the efforts of the marketing and sales teams

While the marketing and sales teams are separate and have different functions, they ultimately have the same goal - to add new clients and customers to your business. As such, they need to coordinate their work so that they can successfully accompany the lead through the sales funnel. Having a well-mapped sales funnel means you can identify when and how they can enter the funnel to convert the lead from brand awareness to a purchasing customer.

Helps monitor performance

If you have a systematized sales funnel, you can add metrics for each step in order to observe how the lead passes through the processes. While we expect the pool of leads to become smaller as they move onto the next step until they become converted to purchasing customers, we still want to reduce the number of the leads dropping out of the sales funnel. Are there bottlenecks in the process? We want to detect them and improve them to keep our business growing, and a well-developed sales funnel makes this analysis easier.

What are the stages of the sales funnel?

If you search for a diagram of a sales funnel in Google Images, you can easily notice a diversity of the steps that different websites present. You may find yourself trying to choose one correct format. However, the correct format depends on the nature of your business! While reading, keep in mind that no two businesses are the same, even if they are targeting the same audience and market. You may need to change certain parts and details of your sales funnel to fit with your specific needs.

What will be presented here is a more general outline of the stages of the sales funnel. It has four stages: awareness, interest, desire, and action. These are named as such because they are the actions that you want your lead to undertake to advance along the sales funnel.

Awareness

The first step is always to make your target market aware of your business and the products and services you offer. This awareness step has become much easier today due to the ubiquity of digital marketing tools and channels. Not only are these tools easier to use, they are also comparatively cheap now compared to the situation a few decades ago.

You can learn about all sorts of marketing channels, techniques, and tools in our Marketing portion of our blog.

Interest

Leads who become aware of your brand will undoubtedly compare your brand with your competitors. At this point, they are now in the so-called interest stage. They will do comparisons, whether mentally for quick purchases or in-depth searches for relevant information involving expensive purchases. At this point, it is best to use your website to provide relevant information that can easily be accessed and understood by your leads. This is in the realm of content marketing, where millions still use blogs as the main medium of conveying a wide variety of content to their leads.

Decision

With enough info, some of your leads will make a decision and hopefully jump straight to making a purchase of your product or service. Others, however, may not immediately make a decision and may even contact the businesses for more information or for special deals. At this point, you need to step up by regularly engaging your lead to slowly nudge them to decide in your favor.

Action

This is the final step, where the lead becomes your purchasing customer. While it may sound a bit automatic that once they reach this stage they will surely actually complete the purchase, there are certain last-minute issues that may actually stop the lead from completing the order. These are preventable if you optimize your online store for mobile browsing.

Additionally, if certain shipping issues appear afterwards, it can discourage customers from ordering again unless your customer service handles their complaints well. Basically, there is always an opportunity to improve your connection with your customer so they will order again.

What is the best content for each stage of the sales funnel?

When you are in charge of marketing, you need to be aware of the wide variety of marketing tools and methods you can use for different stages of the funnel.

In one survey done by Content Marketing Institute, more than 7 out of 10 marketers create blog posts or short articles (88%), emails (85%), case studies (83%), one-pagers (83%), videos (81%), presentation/pitches (79%), webinars (73%), infographics (72%), customer testimonials (71%), and white papers (71%).

There is a good reason for the prevalence of these content types. In a pair of surveys conducted by CMI of B2B and B2C companies, they assessed what they believe is the right content for each state of the sales funnel. Here are the results.

Building brand awareness (Awareness and interest)

Blog posts and social media content are the best choices for B2B (31% for blog posts and 25% for social media content) and B2C (blog posts and social media content tie at 31%) companies to build brand awareness. 8% of B2B companies also find in-person events effective for brand awareness.

Securing leads. (Interest)

Events conducted either in-person (19%) or online through webinars (16%) are the most effective for B2B companies. 13% of B2B companies also find disseminating ebooks and guides effective in securing leads. B2C companies find more success in email newsletters (16%) and social media content (13%), but also find in-person events (13%) effective in securing leads.

Nurturing leads (Interest and Decision)

Both B2B and B2C companies see email newsletters as the most effective for nurturing leads (31% for B2B and 24% for B2C). For B2B companies, blog posts and short articles (13%) and in-person events and case studies (tied at 9%) also help nurture leads. For B2C companies, social media content still remains relevant at 17%.

Converting leads (Decision and Action)

Both B2B and B2C companies find in-person events most effective at 25% for B2B companies and at 22% for B2C companies. B2B companies also use case studies (23%) and webinars and online events at (11%) while B2C companies use email newsletters at 21%.

How can one build a sales funnel for their business?

Now that you know how a sales funnel works, you now want to analyze your business processes and see how a sales funnel will fit in. Here are the steps in building a sales funnel for your business.

Analyze your target market

The first thing you need to do is to analyze your target market. While our stages of the sales funnel (awareness, interest, decision, action) are general steps that a lead undertakes to become a customer, the details of how it occurs vary depending on your target market. For some industries such as retail, food, and other products that are more or less essential to the customers, the sales funnel can be quite short. For other industries such as specialized equipment, the initial steps of awareness and interest can be accomplished in a single step.

Most of the time, however, the four stages of the sales funnel are more or less distinct for your industry and target market. If you already run an e-Commerce website, it is possible for you to gather data on user behavior as they browse the website and then eventually make a purchase or leave the website at some point. You should set up a range of tracking tools so that important metrics can be calculated. For example, a set of metrics for mobile-friendliness of your website can help you analyze whether your website is mobile-friendly enough or not.

If you don’t have sufficient data from your e-Commerce website, you can conduct market research. You can use a wide range of methods to gather data such as surveys, interviews, and observation. Read more about market research here.

Analyze your competitors

Part of market research also includes competition analysis. ClickFunnels recommends the so-called funnel hacking technique to gain insights into existing sales funnels. Here is a summary of the steps:

List your direct and indirect competitors and identify how successful they are
Engage, document, and analyze their websites, landing pages, and other marketing content
Use add-ons to observe tracking strategies used for the sales funnels
Use competitive intelligence tools for deeper analysis
Try purchasing from them to see the process in action from the perspective of a customer

It may feel a bit like cheating when you look at your competitors and observe how their sales funnel works, but in doing so you can also observe patterns and common features that may actually indicate what is standard in your industry and target market.

Establish specific goals

Once you gathered enough information about your market through market research, it is now time to establish specific goals for each step of the sales funnel. What do you want to achieve, besides generating sales/revenue? They can include a few of the following:

Do you want to create brand awareness?
Do you want to build credibility/trust in your brand?
Do you also want to educate the audience(s) to further establish your brand?
Do you want to build loyalty with existing clients/customers?
Do you want to generate demand/leads?
Do you wish to nurture subscribers/audiences/leads?
Do you want to support the launch of a new product?
Do you want to build a subscribed audience?
Do you want to drive attendance to one or more in-person or virtual events?

Or you can aim to address all of them! Most businesses aim to achieve all of these objectives every year, as reflected by the pair of surveys by CMI on B2B and B2C marketers.

Design the pages for the funnel

You need to design the following pages and content for your sales funnel:

Ads and other content for attracting potential leads to your websites - these include ads and social media content that contain short-form content or visual content with a corresponding link to your website or a specific content to your website.
Lead magnet - a free content or perk offered in exchange for the contact details of the user.
Landing pages - the page seen by the user coming from an ad or another website containing a link to your site. Landing pages contain relevant information about your business and what you can offer to your potential customers. While the ideal result is to convert the leads to customers, there is no need to do so in a landing page and it can be used to start nurturing your leads instead.
Email templates - emails are one of the effective methods of nurturing your leads that give them a sense of exclusivity at the same time, because emails are sent when the lead agrees to sign up to your free dispatches. Discounts and offers can be sent solely via email with a limited time period to move them to actually purchase products or services to your business.

These are some of the crucial content you need to prepare for deploying your sales funnel.

ClickFunnels offers additional steps you should consider when creating the content relevant to your sales funnel:

Match domain name and URL to your offer - since you can specify the URL for each page of your website, you should take advantage of it to even further nudge your leads to your brand. Additionally, it helps make your URL more memorable to your leads.
Structure each sales funnel stage relationally - the content of your sales funnel should be able to speak to your leads on a personal level. This means that you should show that you know who your ideal customer is, what they want out of your product or service, why they want a solution, and how you can help them solve their existing problem.
Address the “catch” - you should assure your lead that your offer is legitimate, a real deal, by adding a “catch” such as making it a limited-time offer or restricting it to first 50 leads who will avail of it.
Add a guarantee - money-back guarantees are often offered by businesses to give an impression to the leads that the risk is more on the side of the business than on the lead. However, make sure you can really back up your guarantee!
Recap the details to your lead - leads close enough to actually make a purchase can be nudged to do so by giving them a run-down of your offer. The thing is, leads also need to be reminded of what they will receive from you at a certain cost. It will help them decide in favor of completing the purchase.
Sequence the right pages - you can design pages so that you manage to gather contact information such as email addresses of your lead while in the process of nurturing your leads. This is important since the majority of your leads will not make the purchase and may remain at some point in your funnel. If you got their email addresses, however, it gives you the opportunity to nurture them through email campaigns.
Connect bundles, upsells, and downsells - the initial offer you give, the offer you want your lead to grab, may be too much for them. You should be ready with other offers that may prove to be fitting for their needs.
Include social proof - anecdotes are powerful. You should use them throughout the sales funnel to further show the lead that your offers are the real deal, and that they have already helped others before them.
Add exit intent offers - if your offers are simply not good enough or are too expensive to your leads, you should come up with simpler or less expensive offers before they exit your website. It should serve as a last-ditch attempt to convince them to stay and hopefully make the purchase.

Review the resulting sales funnel

Once you have created a plan and implemented it through a series of pages and contents, you should check it a few more times with your colleagues who are in content, marketing, and sales teams. If needed, you should look for experts as well and ask for their opinion and recommendations.

How can the success of the sales funnel be assessed?

I am sure the first metric that entered your mind is the conversion rates of your sales funnel. The conversion rate measures the percentage of users that take the desired action. As such, measuring the conversion rate is essential to managing a sales funnel. According to Databox, the majority of businesses report a conversion rate of less than 10%.

lead to conversion graph — *Image source*

Having said that, you need to calculate more metrics so that you can regularly assess the efficiency of your sales funnel and quickly identify points for improvement. Some of them are the following:

Average order value - the average amount spent per order
Bounce rate - the percentage of visitors who enter the site and then leave (‘bounce’) rather than continuing to view other pages within the same site
Customer lifetime value - the total amount of money a customer is expected to spend on your products during their lifetime
Churn rate - the rate at which customers stop doing business with an entity
Exit rate - the percentage of visitors to a page on the website from which they exit the website to a different website
Repeat customer rate - the percentage of your customer base that has made more than one purchase

Using these metrics, you can answer the following questions:

Are you capturing the attention of enough consumers with your initial content?
Do your prospects trust you enough to give you their contact information?
Have you secured purchases from your email drip campaign and other marketing efforts?
Do existing customers come back and buy from you again?
Where are the bottlenecks in my sales process?
Where do I tend to lose track of potential customers?
What are the positive trigger points—the specific actions that typically result in a sale?

The answers to these questions will point you to what you can still do to improve your sales funnel.

What are the common issues that can be uncovered by analyzing the sales funnel?

Some of the issues that arise from sales funnel are the following:

Dumping a lead too early

The thing is, the majority of your leads will not finish the sales funnel upon first attempt, and this can be due to factors outside your control.

The initial offers may be too expensive for them at this moment.

They might be just scouting and comparing offers from different businesses.

If these are the cases, you should still keep the connection and nurture the lead over time. It doesn't cost too much to nurture existing leads. They can simply be via email dispatches of discounts and promos. Maybe, one of your future promos is the perfect fit for their needs. Or maybe they are just waiting for their yearly bonus to buy your product.

Failing to follow-up enough

If you are following-up each lead by yourself, you would quickly realize that they can be a tough nut to crack. Surveys have shown that you need to follow-up a lead a few times before they progress along the sales funnel!

Fortunately, you can follow-up existing leads alongside discovering new leads through marketing automation tools. It removes the need for you to check each lead one-by-one and instead lets the tools do the follow-ups themselves. They can also be connected to a database containing the interactions of the lead with your website and your emails, allowing them to give a score to a lead and then select an appropriate follow-up template that will work best for them.

Too slow in following-up

Every customer will prefer the business quickly following up on their request whenever they do so, even if it is sent at 2:00 AM. A business that can quickly follow-up with their leads has a higher chance of securing a sale. In fact, the idea of actually purchasing the product or service still remains in the mind of the lead for a few minutes after leaving the site.

Again, automation tools exist to solve this problem, allowing you to respond to a potential lead that contacts you during your coffee break. These include the so-called chatbots that are programmed to respond to some of the basic queries done by leads to your website. Chatbots can be set to appear on the lower-right of your website and then pop up when clicked.