48% of marketers prioritize improving their sales funnel (HubSpot). And it shouldn’t come as a surprise.
A sales funnel is one of the most powerful tools to turn prospects into paying customers.
By dividing the buyer’s journey into stages, the sales funnel narrows down to different touch points and specific activities businesses do with potential buyers.
In this article, you’ll learn what is a sales funnel, how it works, and how to build the right one. We will also give you an example of a well-built sales funnel that drives conversions.
What is a Sales Funnel?
A sales funnel is a marketing term used to capture and describe a prospect’s buying journey, from awareness and sales prospecting to purchase.
A sales funnel is made of multiple steps that depend on the sales model that the business is using.
A well-built sales funnel effectively guides potential customers through their buying journey, from initial awareness to the final purchase decision.
It helps systematically nurture leads, addressing their needs and concerns at each stage.
If there are gaps in your sales funnel, potential customers will get stuck in different stages of a sales funnel and won’t move toward conversion.
What Makes the Sales Funnel So Important?
A sales funnel is important because it shows you what prospects are doing at each stage of their purchasing journey.
By tracking actions at each stage, businesses can identify where prospects engage most and where they lose interest.
This insight allows for targeted marketing and optimized sales efforts at each step. It also gives you insights into the most relevant and effective communication method, channel, and message type when turning prospects into paying customers.
The goal of a sales funnel is to advance prospects towards a purchase, which drastically increases conversion rates and boosts your revenue overall.
What Are The Stages of a Sales Funnel?
Sales funnels can be very different depending on the company and the industry you work in.
However, this is the most common structure of the sales funnel, and it’s made of 6 different stages:
Stage 1: Awareness
In the awareness stage, leads (both inbound and outbound leads) first learn about your brand, product, or service. It’s on the very top of the sales funnel.
The goal at this stage is to catch the attention of the target audience and make them aware of solutions that your brand offers to their problems or needs.
The best strategies to use at this stage are SEO-optimized content and content marketing, social media posts, and targeted ads.
Remember, contacts at this stage are not ready to become customers yet; they still don’t know much about your brand, and they’re only aware it exists.
Stage 2: Interest
Once the potential customers become aware of your brand, they will move to the interest stage. At this stage, they become slightly more curious about your offer.
During this phase, leads will consume more of your content to learn about your products or services. They will likely spend more time on your website, blog, or social media account.
That’s why you have to create a strong hook to capture their attention and optimize your website for the best user experience.
Marketers should focus on nurturing this interest by implementing a lead nurturing strategy. That includes providing detailed and useful content such as blogs, videos, newsletters, and ebooks that answer common questions and concerns.
This is crucial for building an initial connection and guiding them to the next stage.
The more work you do at the interest stage, the more smoothly your leads will move down the sales funnel toward purchasing.
Stage 3: Evaluation
In this stage, prospects assess your offerings against competitors to see who best meets their needs.
They look for differentiating factors and weigh the pros and cons of each option available to them.
Businesses must present clear value propositions, showcase customer testimonials, and offer detailed product comparisons in their blog.
Make sure that leads can easily access your customer service and obtain any info they need.
Providing exceptional customer service and interactive tools like live demos or free trials are super effective in the evaluation stage.
Stage 4: Intent
At this point, the lead decides that your offer may be the right choice, but they need the final push. They now intend to purchase it and need the details finalized.
They may negotiate the price or terms of your offer, so make sure your sales team is well-prepared for in-depth discussions. It means that sales reps should be prepared with flexible options or incentives like discounts or added services to help finalize the deal.
Prompt and clear communication is key to successfully navigating this stage and moving toward closing the sale.
Stage 5: Sale
This is the bottom of the sales funnel, where the transaction occurs, and the lead becomes a customer.
It’s important to ensure a smooth purchasing process, whether it involves an online system or direct interaction with the sales team.
Ease of transaction, clear instructions, and reassurance about product benefits can be a game changer.
Immediate follow-up thank you messages or emails will enhance customer satisfaction from the start.
Implement a post-purchase support procedure to make sure you take care of your customers from the get-go.
Stage 6: Loyalty
Contrary to popular belief, the sales funnel doesn’t end with the sale stage.
Post-sale, the loyalty stage aims to develop a long-term relationship with the customer that encourages repeat purchases, plan renewals, and referrals.
If you do customer nurturing right, your customers will be more satisfied, acquire high lifetime value, and become brand advocates. You’ll see increased retention, less churn, and a steady revenue stream.
Businesses should focus on customer support, request feedback, and offer loyalty programs or rewards.
Regular updates about new products or services and exclusive offers keep the brand relevant to the customer.
Customer loyalty will pay off when it’s time for subscription renewals. You’ll save money when your customer decides to continue buying your service. Retaining old customers is much cheaper than acquiring a new one and moving them through the sales funnel process.
How do You Create a Sales Funnel? A 5-Step Guide
Step 1: Define Your Target Audience
In sales, just like everywhere, knowledge is power. The more knowledge you gather on your potential customers, the more effective sales funnel you will build.
In order to fill up your sales funnel with leads, you need to know who you are targeting. Start by clearly defining your ideal customer profile.
Ensure you understand their industry, demographics, interests, and pain points. Analyze data on your leads and existing customers, and gradually gather the data with progressive profiling.
Make sure you define your target audience’s needs and motivations by taking a deep dive into your lead segments and contact list.
Do the leads you are fueling your sales funnel really correspond to your ICP? The answer should be a positive one.
This understanding will help tailor all subsequent steps in the funnel to your target audience’s specific needs and motivations, ensuring more effective engagement.
Step 2: Develop Engaging Content
At this point, your potential customers may not even know you or have a brief understanding of your service.
You want to change that by capturing their attention and standing out from the competitors.
The more compelling and engaging content you provide them, the more hooks you use to draw them in, and the more likely they will give you attention.
There are two types of content to capture prospects:
- organic (social media, blog posts, email newsletters, webinars, podcasts, events, SEO)
- paid (influencer and affiliate marketing, paid ads)
Most importantly, you want to find the right balance between educational and promotional content across multiple channels.
It’s not a quick win; you must invest time and consistent effort into building your brand’s credibility and authority, which will earn leads’ trust.
Step 3: Optimize your Landing Page
Your landing page is often the first detailed touchpoint with your potential customer. At this point, your goal is to make a lasting impression.
The optimized landing page needs to have the following:
- CTAs
- Contact details
- User-friendly UX
- Clearly showcased the value and benefits of your products
- On-site SEO
- Optimized landing page
- Comprehensive navigation
Ensure your CTA engages visitors to take the next step and move down the sales funnel. For example, encourage them to sign up for a newsletter, use a free tool, or download a resource.
Learn more about lead capture and the best strategies to apply here.
Step 4: Launch an Email Campaign
At this point, it’s time to use all the contact information you gathered in the three earlier steps and initiate a targeted email campaign.
You can do so with a sales engagement platform like lemlist or by choosing the right lead nurturing tool.
It’s part of your lead nurturing process, where you provide further information to your leads about your product and focus on adding value with every communication.
Your goal is to move them down the sales funnel so that they become more tempted to purchase your product.
Step 5: Keep Communicating
Keep the communication alive even after the lead converts to a customer.
Post-conversion follow-ups and customer nurturing are key to increasing customer lifetime value via repurchases and renewed subscriptions. At this funnel stage, your goal is to boost your customer satisfaction.
We suggest focusing on two main subjects— product education and customer engagement.
Even if the lead slips out from the sales funnel and you lose them, there’s a strategy to re-engage and convert lost leads.
The Example of An Effective Sales Funnel
Imagine you are a B2B software company specializing in CRM and project management tools.
You start your sales funnel by investing in valuable content, such as blog posts, guides, how-tos on effective project management techniques, and the benefits of automating project tasks.
This content must be well-optimized for search engines by using SEO techniques to rank it high for relevant search queries and draw in organic traffic.
Right content, SEO, and well-chosen content distribution channels help you target businesses looking for project management solutions. They will likely discover your company organically when browsing for educational material or product solutions.
In the second stage of the sales funnel, interested visitors are encouraged to sign up for a free webinar showcasing how the software can streamline project management.
During the webinar, attendees are offered a free trial of the software without any commitment to purchase. The webinar provides a deep dive into your software’s features and benefits. It further nurtures leads’ interest and makes them want to try the product firsthand.
Once leads sign up for the free trial (BOFU content), you place them into a segmented email campaign. This is the third stage of the sales funnel.
Make sure you provide relevant tips on making the most of your software during the trial period. The emails must be personalized to each lead.
In the decision stage, you want to make the final push to move warm leads down the sales funnel.
Toward the end of the free trial, your sales reps can reach out to the leads to schedule a one-on-one consultation.
In this call, they discuss the business’s specific needs and demonstrate how the software can be customized to meet these needs best.
Make sure you demonstrate how your solution stands out from the competitors.
In the sale stage, when the lead shows interest in purchasing, they enter negotiations to finalize pricing and terms.
After closing a deal, they must receive excellent onboarding support to ensure smooth implementation and adoption by their teams. They make your new client feel confident in their purchase, which creates a positive start to their buyer’s journey.
Frequently Asked Questions
What is the difference between a sales funnel and a sales pipeline?
The sales pipeline focuses on the sales rep’s actions, while the sales funnel focuses on customers in their buyer’s journey.
The sales pipeline tracks what the sales rep does to move a lead to the next stage (calls, appointments, formal proposals). The sales funnel tracks how a prospect moves from discovering your product to making a purchase (e.g., becoming aware, signing up for a newsletter, requesting a demo).
Do I need a sales funnel?
Every business in any industry needs a sales funnel to optimize its sales processes and increase revenue.
Do sales funnels actually work?
Yes, sales funnels are very effective in increasing sales because they guide potential customers from initial awareness to purchase. They target specific customer needs at each stage of the buying process, which leads to higher conversion rates.
Why my sales funnel is not working?
There may be several reasons why your sales funnel is not converting your prospects well. It may be that:
- you’re targeting the wrong leads
- you don’t have a clear goal
- you didn’t invest enough in your content
- you neglected your landing page
- you didn’t provide value to your leads
- your targeted email campaign was badly executed
- you have a lead leakage in the funnel (prospects slip away before moving on to the next stage)
- you’re using the wrong lead tracking software
- you’re not automating your sales processes, and there are human errors
Key Takeaways
A sales funnel is a sales-driven strategy that leads potential customers from initial awareness to the final purchase.
Unlike the sales pipeline, the sales funnel tracks the buyer’s journey from the prospect’s perspective.
By tracking customer engagement at each stage of the sales funnel, businesses can target their marketing efforts more effectively and increase conversion rates. The basic structure of the sales funnel typically includes these stages:
- Awareness
- Interest
- Evaluation
- Intent
- Sale
- Post-Sale Loyalty
To create an effective sales funnel, you have to:
- well define your target audience,
- gather as much knowledge about your ICP as you can,
- develop valuable and engaging content,
- optimize website, landing pages, and blog,
- launch targeted email campaigns,
- automate your processes for smoother workflows,
- nurture your leads with timely follow-ups,
- maintain communication after conversion.
A sales funnel is an excellent revenue-increasing tool that efficiently converts more leads into customers.
