Your Guide to Building a Successful Sales Funnel
A well crafted sales funnel can help you to guide your leads as they progress on their journey to becoming paying customers.
- A sales funnel is a tool backed by consumer psychology that is designed to guide leads at key touch points as they progress from mere prospects into paying customers.
- By scrutinising, analysing and tailoring your sales funnel, you can optimise both your sales and marketing efforts.
- While they can vary, a typical sales funnel consists of three different segments: top, middle, and bottom (or high, middle, and low).
Are you a small business that wants to improve its sales and marketing strategies? If so, then read on, this article is for you.
Whether you have a physical brick-and-mortar or online business, it matters not, you will need to create a sales funnel to help attract and convert your visitors into paying customers. The ultimate success criteria of your sales funnel is to guide your visitors down from the top through the various stages of the sales process until they have been convinced and are ready to buy your products or services.
What is a sales funnel?
A sales funnel is a marketing term used to describe the steps a customer takes before buying a product.
You might want to think of it as a pathway of sorts that a prospect takes on their journey to become a fully paying customer.
Sales funnels are also called customer funnels, marketing funnels, purchase funnels, and sometimes conversion funnel, these terms are often used interchangeably
The terms above describe a consumer-focused marketing model which is used to exemplify a prospective customer’s theoretical journey towards making a purchase.
Similar to an actual physical funnel, a sales funnel gets narrower as it reaches the bottom.
Who created the original Sales Funnel?
St. Elmo Lewis the American advertising advocate is among the first visionaries who came up with the idea of a sales funnel model.
In 1925 when The Psychology of Selling and Advertising by Edward K. Strong, Jr. was published, it became commonplace to attribute the authorship of the AIDA model to Lewis. According to Strong, Lewis formulated the slogan attract attention, maintain interest, create desire in 1898, adding later the fourth term get action (source)
Lewis developed the sales funnel concept that describes the step-by-step journey that begins when a product attracts a visitor to the point of them making a purchase and becoming a customer.
A modern Sales Funnel consists of Four distinct Parts:
- The top of the funnel (Awareness) is the upfront marketing that attracts prospects to your business (e.g., the advertising displayed on your physical storefront, or the landing page your visitors see on your website).
- The next step of the funnel (Interest) involves all the individual pieces of your sales process prior to making the sale (e.g., in a physical store people trying on clothing, or with a website, your visitors reading about all of the benefits of your products).
- The third stage of the sales funnel is the decision phase. By now, the prospective customer has been convinced and is ready to buy and may be considering multiple options before making a final purchase. This is the stage when they will be comparing and weighing up pricing, deals, and other factors in order to find the best option for them.
- At the very bottom of the funnel is where the final purchase is made (e.g., customers paying for their products at a checkout, or website customers entering their credit card details info to complete a purchase).
Key takeaway: A sales funnel then describes the point where an individual is within their buying journey, they may have only just become aware of your brand or they are a returning brand-loyal repeat customer.
Why are Sales Funnels Important?
The sales funnel shows the path that your prospective customers will take on their journey towards purchasing your product or service. Performing an analysis of your sales funnel will help you understand how it works and where it falls short. It will also help you identify the shortcomings of the different stages of your sales funnel (i.e., where prospects seem to drop out and do not end up converting into customers).
Really understanding your sales funnel will help you to have influence over how prospective customers move through it and whether they convert into buying customers. This will also provide insight into the customers psychology to figure out what they are doing at each stage of the sales funnel. Armed with this knowledge you will then be able to invest in marketing activities backed by data that will help you to attract more prospects, develop relevant messaging at each stage of the sales funnel, and ultimately convert more of your prospects into paying customers.
Key takeaway: In-depth knowledge of your sales funnel is absolutely essential for understanding your customers buying persona. In doing so you can recognise the gaps in your funnel and invest accordingly with the most effective marketing strategies.
4 stages of the sales funnel
Your prospects will pass through each of the four stages of the sales funnel, from when they first become aware of your product or service until they get to the stage of making a purchase (or not) of your product or service. The four stages of the Sales Funnel represent a prospect’s mindset, and each stage requires you, the creator, to take a slightly different approach with your messaging.
You can easily remember the four stages of a Sales Funnel by using the acronym AIDA:
The very first stage of the sales funnel cycle is awareness. This is the point when an individual first becomes aware of your product or service offering. They may have developed this awareness from encountering one of your advertising campaigns, or finding out about your brand on social media, or from friends or colleagues via word of mouth. Or, a prospect might have found out about your business offerings via a search engine like Google that happened to bring up your company’s website, or by seeing one of your ads, or reading your blog.
If the timing is just right, and the prospect has buyer intent then they might very quickly become a customer by clicking a link and buying your product. In most cases however, it is much more likely that you will have to convince the prospect to visit your store or website, or get in touch with you via phone or email in order to engage with your business.
The second stage of the sales funnel is interest. At this stage in the journey, the prospective customer has learned enough about your company, your brand, and your products or service offerings, and are now evaluating based on their level of interest.
At this stage in the buyer cycle, you should display beneficial content that simply informs and educates the prospective customer but does not overtly try and push a sale on them. This stage can commonly fail when the content becomes too pushy or aggressive with making a sale, this can then turn off and dissuade the prospect and compel them to leave your shop or site. Your content at this stage should always highlight the benefits of and demonstrate your expertise which will help the prospect make an informed decision.
The third stage of the sales funnel is decision. By now, the prospective customer is in a buyer mode and may be weighing up multiple options before making a purchase. This is the phase when they will be carrying out a comparative overview of pricing, packages, and other factors that will help them to find the most suitable option for their needs.
At this key point in time, you should be making your best offer. For example, you might provide a customer with free shipping for their purchases, a discount code, or a separate bonus product if they go ahead and place their order. The key here is to make the product or service offering irresistible so that the prospect will want to move forward and choose what you have to sell. Your content at this stage should drive and convince your prospect to make that purchase. Sales pages, webinars, or offers with countdown timers here could help turn this prospect into a customer.
The final stage in our journey through the sales funnel is the action phase. At this stage the prospect becomes a customer by making a purchase of your products or services (or they have decided to leave without making a purchase). If the individual does make a purchase however, they will now be part of your company’s customer network.
Although the sale has been made at this stage, this is an ongoing process with no end in sight. Your goal from now on is to focus on and build your customer retention so that the customer goes ahead and makes future purchases. Your well crafted content will help to build customer loyalty. A good measure here for example, would be to thank the individual for making the purchase, then ask them to provide you with feedback, offer them after-purchase support if need be and invite them to sign up for your newsletter, or sign up to your rewards program.
Key takeaway: Now we know and understand that the four stages of the sales funnel cycle are Awareness, Interest, Decision, and Action, but how do we make these stages work exactly? Find out more below
How to build a sales funnel that converts
Creating a sales funnel is an essential part of moving prospects from the initial contact and awareness phase to the final stage of making a sale. When the Sales Funnel has been created correctly you can track the individual’s level of engagement at each stage of the funnel to see where it’s working, and more importantly where it’s not.
There are heaps of ways to create a sales funnel, with different businesses and industries having their own types of sales funnels, some even have seven stages or more. Using software like ClickFunnels for example takes away much of the hard work involved with creating a funnel that converts.
Follow the steps listed below to create a sales funnel for your business:
1. Create a Landing Page.
The landing page on your website is very often the first opportunity that a prospect has to learn about and build their awareness of your business and its products and services. Users typically arrive at your landing page by a variety of different ways; they may have clicked an ad or a link on a social media page, found you via organic search or from word of mouth.
Your site’s landing page should clearly deliver a description of your company and the unique benefits associated with your product or service offerings. This landing page your prospects visit might be your only opportunity to impress them, so the copywriting standards should be strong and compelling. It should also include a way to capture the prospect’s contact information so you can continue to communicate your value to them. Something along the lines of a form or a popup collecting nothing more than an email address.
2. Offer your prospect something valuable.
For a prospect to want to part ways with their email address, you must provide them with something useful in return. For example, this might be something as simple as a catalogue with your best deals, a free ebook or a whitepaper with useful and educational content.
3. Nurture the new prospect.
By now, the prospect has shown enough interest with your landing pages content to provide their email address. It’s important to nurture the prospect here with content that both educates and informs them about your product or service. This part is key to a successful email campaign. You’ll want to touch base with your prospect regularly (once or twice a week) but not so frequently that they get annoyed or bored with all the content. Make sure that when you are sending these emails that the content addresses their key needs and overcomes any concerns that they might have.
4. Closing the deal.
Make your very best offer, an offer that your prospect simply cannot refuse in order to close the deal. For example, you could provide a detailed product demonstration to your prospect, a free trial, free shipping or a special discount code.
5. Keep the process going.
At this point in the funnel, your prospect has either decided to become a paying customer or has not yet been convinced. Whatever the case may be, you should continue with your communication and building rapport.
If your prospect does become a customer, continue to build the relationship by educating them about your products or services, engaging them regularly to build loyalty, and offering them great service to retain them as valued and loyal customers. If the prospect has not yet made a purchase, stay in touch with these individuals via regular emails. Continue to make contact with them in an effort to convert them into paying customers by using a multitude of email nurturing series.
6. Optimise your sales funnel.
Now that you have put the wheels in motion and have created a sales funnel, your work is not yet done. You will need to constantly examine ways to improve and optimise your sales funnel, and determine where exactly your prospects are dropping off. Focus on the touchpoints where your prospects begin to move from one stage of the funnel to the next. From experience these are the likely areas for drop offs.
When you are starting your analysis, you should start at the top of the funnel, and work your way down. Evaluating just how well each piece of content is doing. Is your initial (Awareness) content capturing enough prospects? The primary goal of your content is to get your new prospects to click on your call to action (CTA). If the prospects are not doing that, or one piece of content is getting fewer clicks on the CTA, then some rework might be required on that element. It helps here to perform A/B or multivariate testing to analyse which content works best for your prospects
Next you need to evaluate your landing page. The offer that you are making and CTA should mirror the content (e.g., Display ad, Facebook ad) that brought the prospect to your landing page in the first place. Are the prospects trusting you with their contact information? How many people visit but don’t sign up compared to those that do? You need to test every part of your landing page (e.g., the page heading, imagery, copywriting standards, CTA and page loading time) to understand what is working and what is not.
Test every offer that you have put forward in the Action stage of your funnel. Contrast and compare the variety of results from different offers (e.g., free shipping versus discounts). What gets more engagement? How many purchases are coming through from your email campaigns vs other marketing efforts? If one of your offers is getting much more positive results than another, you should focus on using that offer to close prospects and see if you can improve upon it.
Track and monitor your customer retention rates after you have made an initial sale. Figure out how often these customers actually return to purchase your product or service offerings. Do these customers keep coming back more than once, and if so are they buying different products or services? Try and keep track of how these past customers engage with you following that initial sale.
Key takeaway: To generate and maximise your sales funnel leads, create a compelling landing page and cleverly worded copy with your digital content to drive people to your website. When they have arrived, capture their contact information to continually market to them throughout their buying journey.
Sales funnel FAQs
What’s the main difference between a Sales and Marketing Funnel?
Although conceptually they are very similar, they aren’t the exact same thing, they tell a similar story. The Marketing funnel is different in that it advertises a product or service offering to give leads a motivation to buy. Whereas, the sales funnel channels and deals with the leads that have been directly generated from the marketing funnel and tries to encourage them to buy products or services as often as possible.