What Is a Sales Funnel?

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sales funnel cover photo
A sales funnel is an essential part of a company's sales and marketing plan. It demonstrates how a sale develops from gathering leads to completing the sale. You can improve the efficiency of your marketing strategies by learning how to build a successful sales funnel.

In this article, we define a sales funnel, explain its stages, and outline how to build this type of funnel.

What Is a Sales Funnel?

The journey prospective customers take before making a purchase is referred to in marketing as a sales funnel. A sales funnel has multiple steps, commonly referred to as the top, middle, and bottom of the funnel, though these steps might differ based on a company's sales model.

The funnel, often known as a marketing funnel or a revenue funnel, shows the idea that every sale starts with a huge number of potential consumers and concludes with a significantly smaller number of people who actually make a purchase.

Well-designed sales funnels enable businesses to guide potential consumers through the purchasing process and toward successful transaction completion. Contrarily, those funnels with holes will cause potential clients to abandon the sales process, similar to how water passes through a sieve.

Examples of Sales Funnels

A good example is a bicycle company that builds, markets, and sells racing bicycles and spare parts. Through internal customer research, the company knows that most of its customers are between 30 and 50 males. And it's known that a high percentage of their target audience spends much time online on social media platforms like Instagram. The bike company runs ad campaigns, which provide their audience with interesting product insights/announcements etc. By clicking on the ad the users will get to a landing page. This extra page encourages them to sign up for their newsletter to get tips, updates, offers, etc.

The newsletter will provide the new contacts with content that informs and educates them. How to install/repair videos, step-by-step instructions to fix common bicycle problems, and so on. The idea is to inspire people and make them consider buying the company's products.

At the end of each email campaign, the company sends these leads a discount coupon or special offer. With the background info from the last weeks, the leads know how the products of the company can help and how they can be used. The special offer or discount will now make it easier for the leads to make a purchase decision.

Aura

aura sales funnel
The AI company Aura catches the user with a bold headline when they get to the main page.

The website visitor is informed of the main benefits of their service right under the headline.

The reader is now aware of the product and might want to click on the 'learn more' button in case they need to know more before signing up for a free trial.

The "free trial" button is what converts at this stage. Visitors are now able to test Aura's product in exchange for their contact data such as name, email, phone number, etc.

Companies (except SaaS) offer free trials to allow users to try their service for free, usually for a limited time period. This gives them a chance to try out the software, get to know its features, and experience how the software can be the solution to the issue they're trying to solve.

This is the point where web visitors are turned into leads. Because Aura is a B2B company, this process can be called inbound lead generation. From this point, the sales team will continue with personalized outreach to push leads further in the sales funnel.

B2C companies don't have the resources to follow up with every free trial sign-up. That's why in B2C, free trial leads will be moved into a newsletter which continues as mentioned in the fictional example above.

Reply.io

reply.io sales funnel
Repy.io, a sales automation platform, has a chatbot that tries to start a conversation with web visitors.

Chatbots are another great way to build a sales funnel with qualified leads.

A visitor would typically land on a landing page or social network page, read it briefly, then leave. By initiating a discussion and directing the visitor in a particular direction based on their response, a chatbot engages the visitor. This action alone assists in creating a lasting connection between your brand and visitors by giving them a positive first impression.

Reply's chatbot lets the reader choose between "scheduling a meeting," "chat now," "already a customer," and "just browsing"

This way, all kinds of visitors can be covered.

When the lead shows interest in Reply's product, they start seeking more information. They could go to the Contact Us page, call a salesperson, or send an email through the form you provide on the page. Or you could use their sales chatbot for faster response time.

As a consequence, a conversation with a chatbot can lead to a direct meeting with a salesperson, newsletter sign-ups, etc.

For more great sales funnel examples check out this blog from Close.

Sales Funnel Structure

The sales funnel CAN be structured into six stages. Keep in mind that not every company's sales funnel will have six levels or stages.

Companies and industries use different sizes and shapes of sales funnels. However, a fundamental sales funnel can be defined as having six tiers. Marketers can use this basic layout as inspiration to create a sales funnel that works for their company.

Stage 1: Awareness

At the top of the sales funnel lies the awareness stage, where most prospects are located.

During this stage, prospects have just had their initial interactions with your business and its products, and they may not yet be ready to become a paying customer. While they may not know much about your brand yet, they know it exists.

The goal during this stage is to capture the attention of potential customers and create brand recognition. This can be achieved through various marketing strategies such as advertising, social media, and content marketing.

Stage 2: Interest

As prospects become more conscious of your brand during the awareness stage, some will naturally be drawn further down the sales funnel. This is where the interest stage comes in.

During this stage, potential customers are actively seeking more information about your business and the products or services you offer.

They may browse your website, check out your inventory, read your blogs, or look through client reviews. This is a critical stage in the sales funnel.

It presents an opportunity to engage with potential customers and provide them with the information they need to make an informed decision.

Stage 3: Evaluation

As potential customers move through the sales funnel, they enter the evaluation stage. At this point, they have gathered enough information during the interest stage to evaluate your products or services against your competitors actively.

During the evaluation stage, potential customers may submit forms for additional information or contact your customer support staff with specific inquiries. It's crucial to provide them with clear and concise answers to their questions and demonstrate how your products can meet their needs.

At this point, potential customers seek evidence that your business can provide them with the solution they pursue.

Stage 4: Negotiation

As potential customers move further down the sales funnel, they reach the negotiation stage. At this point, they are close to making a purchase decision and may begin to negotiate the cost or conditions of the deal, depending on the nature of your offerings.

While it's important to be open to negotiation and address any concerns potential customers may have, it's also reasonable to assume that they are interested in purchasing your product or service.

The negotiation stage presents an opportunity to discuss any final details and ensure that the terms of the deal are mutually beneficial.

The goal during this stage is to close the deal and convert the potential customer into a paying customer.

Stage 5: Closing the Sale

This is where the potential customer makes a decision about whether to purchase your product or service. At this point, they may negotiate on the price or terms of the agreement, depending on the nature of your offerings.

While it's necessary to be open to negotiation and address any concerns the potential customer may have, it's reasonable to assume that they are seriously considering making a purchase.

The goal during the closing stage is to provide excellent customer service and ensure a smooth onboarding.

Stage 6: Loyalty

The final stage of the sales funnel the loyalty stage, which occurs after a sale has been made. At this point, the customer has purchased your product or service, and the sales contract will eventually expire and need to be renewed.

During the loyalty stage, it's possible that a new round of pricing and purchase term negotiations may take place before the contract is renewed or repurchased.

By being responsive to the customer's needs and providing personalized solutions, you can establish trust and build a positive relationship with the customer, leading to increased loyalty and future sales.

How to Build a Sales Funnel

You must first have prospects who can pass through your sales funnel in order for it to exist. Following the acquisition of those prospects, you can monitor their activity and engagement to determine where they are in the sales funnel.

To set up a sales funnel, follow these five steps:

Step 1: Analyze Existing Customers

A strong understanding of your current consumers is the foundation of a successful sales funnel. Your sales funnel will work better the more customer information you can collect and analyze. By keeping in touch with your consumers and monitoring how they interact with your online and offline presence, you may collect customer data.

Your analysis of your consumers should take into account their problems, requirements, objectives, aspirations, and previous solutions. You can use this information to identify audiences that are similar to your target demographic and to release the ideal messaging at the ideal moment to draw potential customers.

Step 2: Landing Page

The first time potential customers discover your business will probably be on a landing page. They will land on a landing page if they click on an ad, register for a webinar, or download an ebook.

That page should sum up your company's identity and highlight your features (after all, this could be the one and only opportunity you have to wow prospects). Additionally, and perhaps most importantly, make sure the landing page has a form for visitors to fill out. You want to get their email address so you can stay in touch with them.

Step 3: Offer Value

Here is where you must provide your prospects with something in exchange for their email address.

A lead magnet, like an ebook or whitepaper, is an effective way to offer something of value to your landing page.

Step 4: Maintain Relationships

Keep your leads interested with a powerful email campaign after collecting their email addresses. In order to help leads understand how your products and services may satisfy their needs, a successful email campaign begins with educating and informing them.

Offering your leads incentives to become paying clients is the next step, which should come only then. Instead of simply hammering leads with uninspired product presentations, concentrate on motivating leads to convert to customers.

Step 5: Keep Them In

A customer does not exit the sales funnel after purchasing your goods and services. The funnel's very bottom is where they stay, and you want to keep them there. You want these clients to purchase more of your goods and services after using and paying for them. Engage them regularly with dialogue.

Through promotional (deals) and educational (new product information) campaigns, you can express gratitude for their purchase and encourage them to make another one.

You should feel free to make adjustments to your sales funnel in response to changes in the market and the products offered by your business. The key is to establish a sales funnel that draws in the most prospects and successfully reduces them to a smaller group of devoted clients.

Conclusion

A sales funnel is one of the strongest tactics to convert strangers into paying customers.

However, building it requires a wide understanding of your current customers to make the funnel experience as effective as possible.

The most effective sales funnels are those that are constructed with precise objectives for defined target audiences and are carried out with engaging marketing material.

Connect with us to gain access to top-quality SDRs that help you move leads along the sales funnel.
Post by Mattes Wöstemeier.
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