What is a Sales Funnel?



what is a sales funnel

Too many small businesses fail to full understand their sales process and identify areas of opportunity. Creating a sales funnel helps sales teams track their leads through each stage of the sales process until they ultimately are converted to customers.

What is a sales funnel? A sales funnel is a model that illustrates the phases of a customer journey. It’s composed of specific stages, which when diagrammed form the shape of a funnel… much as the strategy’s name implies.

Beginning with the prospect’s initial knowledge of the brand, a successful sales funnel progresses through the entire sales pipeline to the customer’s final purchase. As the funnel proceeds, the group of viable leads decreases as potential customers choose not to proceed in the buying journey. Understanding the specific sales funnel stages can help a business owner improve their overall marketing and sales funnel strategies, thereby boosting conversions rates.



Why a Sales Funnel is So Important for Your Business Marketing Efforts

Why is a sales funnel important? Defining and understanding the sales funnel is important to business marketing efforts for a variety of reasons, including:

  • A sales funnel helps teams identify problem areas within their sales processes. By visualizing the point in the sales process when more prospects drop out of the pipeline, brands can pinpoint problems in their sales strategy and focus on improving these areas.
  • Creating a sales funnel allows brands to align their marketing and sales efforts. If marketing and sales teams are not aligned in their strategies, they can’t work together to boost conversion rates. An effective sales funnel helps these teams strategize together for best results.
  • Understanding a company’s sales funnel helps sales reps identify what converts leads into buyers. Not only can sales teams better understand what isn’t working, but the sales funnel can help them see what parts of their sales strategy is working well so greater focus can be placed on these selling points.
  • An effective sales funnel helps brands grow by generating more prospects. By gaining a better understanding of their prospective customers’ buying journeys, a sales team improves its knowledge of its target customers, which helps generate qualified leads in the future.
  • Using a sales funnel converts cold leads into paying customers. Without understanding the customer’s journey, sales teams miss key opportunities to convert prospects into sales. Improved knowledge of the sales funnel provides teams with the knowledge they need to close more deals.

Read More: how to create a sales funnel

Sales Funnel Stages

Unsure how to create a sales funnel? All sales funnels contain the same specific stages, which differ from a marketing funnel. To create an effective sales funnel and illustrate the customer journey, it’s important to include the various sales funnel stages, including:



Stage 1: Awareness and Discovery

The first stage of the sale funnel, the awareness stage, occurs when a prospective customer first learns about a brand. This stage can begin when a lead discovers a brand on social media or through a Google search, or it might occur when reading an advertisement or receiving a cold call.

In some cases, a lead could be so moved by their initial discovery of a brand that they immediately convert to a customer, but this is not the norm. In most cases, however, additional sales efforts will be needed to close a deal, including additional information and follow ups. Generally, awareness and discovery leads to the next step of the sales funnel: interest.

Stage 2: Interest

In the customer’s journey from initial discovery to final purchase, the next stage of the sales funnel is the interest stage. Once a prospect has learned of the company, they will either lack interest and drop out of the funnel, or they will want to learn more about a company, its products and its services. Many potential customers also will conduct their own competitive research to compare their options.

Sales teams can nurture leads through the interest stage of the sales pipeline by providing plenty of digestable information to education the customer. This information might be provided on a website, blog article, email or consistent social media posts. Potential clients also might be educated directly by sales reps following up on their leads.



Stage 3: Decision

Now that the prospect is aware of the brand and educated about its products and services, they have the opportunity to make a buying decision. While the future customer might be ready to purchase at this point, they might still be considering multiple options. Because leads might also be evaluating competitors prices, it’s vital for sales reps to issue their best offers at the decision stage of the sales funnel process.

Not only should sales teams offer their best prices at this stage of the buying process, but they should take this opportunity to offer any other encouragement for prospects to consider, including options like free shipping and discounts. The more irresistible the offer, the more likely to buyer will move ahead with the purchase at this point.

Stage 4: Action

Potential business growth won’t be obtained without completing the final step of the sales funnel, in which the lead makes the purchase and converts into a paying customer. This final step, the action step, doesn’t occur until the purchase is made and money is exchanged for the product or service.

Of course, even though the purchase is made, the customer’s journey doesn’t end. Sales and other marketing efforts will continue to engage the customer, retain their business and convert more sales from them in the future.



Optimizing Sales Funnels

Of course, creating a successful sales funnel for your small business is only the first step in using it to boost sales. With the sales funnel explained, it’s important to start properly managing your sales funnel. Be aware of the following tips to optimize your sales funnel:

  • Create a well-defined sales funnel. It’s hard to know if how well your sales funnel works if it’s not well defined. Determine exactly what actions and activities are included in each stage of your sales funnel.
  • Know your target audience. It’s important to cater your marketing efforts and marketing channels to the right audience, so it’s key to determine your target customer and focus content marketing efforts and other sales strategies on that market.
  • Attract prospects to your funnel. Whether you create a landing page to attract website visitors, you run a social media campaign or you engage other marketing efforts to let leads discover your brand, you have to get them there to start the sales funnel process.
  • Nurture your leads. Don’t expect leads to naturally find their ways down the sales funnel until they automatically decide to buy. Be sure and nurture leads with various sales and marketing efforts to gently urge them from one stage of the buying journey to the next.
  • Focus on customer loyalty. Your customer retention rate is vital to the growth of your brand. You don’t want to syphon customers through teh sales funnel and out the door, you want them to come back and make future purchases. Establishing a customer loyalty program for existing customers can help accomplish this objective.

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Samantha Lile Samantha Lile is a staff writer for Small Business Trends as well as freelance writer and journalist who contributes to a variety of web publications from her home office in the heart of the Ozarks. Her work can be viewed at Samantha Lile.

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