Sales funnel

What is a sales funnel?

A sales funnel is a model for visualizing every stage in the customer journey, from the time prospective customers learn about a brand to the moment they make a purchase. The top of the funnel represents ‘awareness,’ when potential customers discover a brand, while the bottom represents the ‘decision,’ when prospects convert into actual customers. At each stage the number of prospects narrows, with only a fraction converting in the end.

Why are sales funnels important?

Sales funnels allow companies to visualize each step that prospects take on the path to conversion. Each step is a micro-conversion that can be optimized to increase conversions in the end; if one of these steps shows a higher-than-expected drop-off rate, it can be analyzed to see what’s wrong and test out possible improvements. Funnel tools like Google Analytics help you visualize the flow of customers across your website and spot pages with high drop-off rates, displaying how many visitors exit the funnel at each step.

How does a sales funnel work?

In a traditional sales funnel, the moment of awareness is at the top: it’s the point of entry, the widest part: anyone can start from there. Once prospects enter the funnel, there are steps they can take to continue down towards the bottom, but they can also exit at any point. Each step they take downwards is another stage of the funnel, leading them closer and closer to the narrowest point—the point of decision—which you’re hoping is the point of conversion.

Seeing the funnel from a customer’s perspective

• If you look at it from the customer’s perspective—from the moment of awareness up until the moment of buying decision—they’re not traveling through a sales funnel, and they’re not on a customer journey: they’re simply shopping.

• Rather than thinking about each stage in the sales funnel, prospective customers are experiencing each stage. When you learn how a sales funnel works from the customer’s perspective, you can better understand drop-off points, and make improvements to each stage in the sales funnel to increase conversion rates.

• Your job is to make each stage of the sales funnel as simple and painless as possible (maybe even enjoyable!) for your prospects, to motivate them to keep moving through the funnel to the point of decision.

The 6 sales funnel stages

Stage 1: visit

At this stage, prospective customers are arriving on your landing page, and are navigating to different pages of your website. They’re at the widest point of the funnel: if they were in a brick and mortar shop and a salesperson approached them at this point, the customer would say, “I’m just looking.”

Stage 2: lead

When the customer sees something they like, they take a step downwards in the funnel, and they become a ‘lead.’ At this point, leads have a clear interest in your product, and they may start doing product research and comparisons. This point of the funnel is still pretty wide—the customer has a problem and is aware of your proposed solution, but it’s still unclear whether or not your product will meet their needs.

Stage 3: marketing-qualified lead (MQL)

At this stage, your leads are going to realize one of two things: either your product has the potential to work for them, or it absolutely does not. If you’ve done your homework (including running market research), your unique selling proposition (USP) is clear and you’ve tailored your sales funnel to attract ‘marketing-qualified leads’ (MQLs) based on user personas that you built from demographic and psychographic data (more on that later). Don’t fret: leads that are exiting the funnel at this point are most likely not your ideal customers.

Stage 4: sales-qualified lead (SQL)

When prospective customers take the step from MQLs to SQLs (‘sales-qualified leads’), this means that they are nearing the end of the ‘consideration’ stage, and are now close to entering the ‘decision’ stage of the sales funnel. SQLs have researched and compared products, and have determined that yes, your product does fit the bill, and is a viable solution to their problem. The leads that are exiting the funnel at this point are a missed opportunity—they found another solution.

The next step is really important in preventing SQLs from exiting the funnel:

Stage 5: opportunity

This is where your offer and call to action (CTA) take the stage. When an SQL has made it to this point in the funnel, they are only one step away from converting (so close!). Your USP and CTA could make or break the opportunity stage of the sales funnel. Either your product is the one solution, or it is not. Your job is to put the customer at ease: be ready to answer their questions and provide social proof.

Stage 6: customer

They made it! This point of the funnel is the final stage—where conversion happens—and prospects can now step out of the funnel as your newest official customers. Your job doesn’t end here, though. Your customer has chosen your product over a lot of other available options. Earn their trust and commitment by engaging with them at this point: for example, end them a follow-up email including resources and articles that they may find useful, or share a post-purchase survey so they can tell you what worked (and didn’t) throughout the process, so you can improve it for future customers. This final step presents an opportunity for you to motivate the customer to come back and browse more products—to become an advocate for your brand.

Tailor your funnel to your ideal customers in 3 steps

Step 1: build user personas

Your ideal customers are the ones who would benefit most from what you have to offer; when you build your funnel around their needs and drives, you can quickly boost conversions.

To find your ideal customers, start by building a user persona: a semi-fictional character based on demographic and psychographic data of the people who buy your products, which answers these three questions:

• Who are your customers?
• What is their main goal?
• What is preventing them from getting what they want?

One way to get started is by adding on-page surveys to your website and ask your customers for feedback. Consider polling customers once they’ve converted, paying special attention to those who barely did: this will help you uncover objections that are keeping similar prospects from converting and get them to the next stage in the funnel.

Another way to collect this data is through customer interviews: speak with paying customers and ask them to tell you about the very first time they began searching for a solution to a problem your company was built to solve. Customer interviews won’t give you volumes of data like polling does, but they’ll help you understand and empathize with your ideal customers. Plus, they’ll often draw your attention to things that have not crossed your radar—from unique product use cases to struggles you never imagined.

Step 2: spot the problem pages

Set up a funnel tool to start collecting traffic data. A typical e-commerce funnel might look like this:

homepage > category page > product page > cart > checkout > thank you page

As you collect the data, you’ll be able to identify the high-traffic, high-exit pages where visitors are leaving your website. 

Step 3: understand the issues that need fixing

After you’ve identified your problematic pages, it’s time to dig deeper. Using a combination of behavior insight and user feedback tools lets you discover how your customers actually behave and what they think of their experience:  

Heatmaps show you where most of your users click, scroll, and hover their mouse pointers. By placing heatmaps on your most problematic pages, you’ll get a good sense of how people interact (or fail to) with them. 

On-page surveys help you gather customer feedback so you can ask people straightforward questions about any issues they’re encountering. Some helpful open-ended questions include:

• What’s missing from this page?
• What’s stopping you from continuing?
• What were you looking for?
• How can we help?

Session recording customer feedback gives you the opportunity to watch recordings of individual (anonymized) sessions. You can watch session recordings in the context of the feedback you receive—if customer feedback shows that people aren’t converting because the product page confuses them, you can watch several recordings of people interacting with the page and determine what the problem(s) might be.

The Sales Funnel Stages

Stage 1: Awareness

After determining goals and building personas, it’s time to start marketing.

Here are a few ways to build awareness:

• Social media posts and promotions
• Guest posting/blogging
• Whitepapers and webinars
• Infographics

Before you can sell anything, you need to make people aware of your product or service. The good news is that there are plenty of sales funnel tools to help you get the word out about your brand:

1. SEMRush (It offers competitive intelligence, keyword research, backlink analysis, anchor text reports, and traffic analytics).
2. Ahrefs (includes a content explorer that lets you quickly discover the most popular content online).
3. Buffer (enabling you to post updates to multiple social media channels all at once). 
4. Hootsuite (offers a few more bells and whistles, but doesn’t let you play for free (permanently, anyway).
5. LeadCrunch (a sophisticated algorithm to help you find people in your target market).
6. LinkedIn Sales Navigator (finding lead recommendations that are tailor-fit to your business. It makes navigating through your sales funnel much easier).

Stage 2: Interest

Once people have learned about your brand, they’re likely to take an interest in it.

At this point, you’ve hooked the fish, but you haven’t yet reeled it in – which makes it one of the most important stages in the sales funnel.

During this stage, you’ll want to focus on the following types of content:

• Email campaigns
• Blog posts
• Lead magnets
• Chatbots
• Retargeting campaigns

Here are some sales funnel tools that you can use to prevent the big fish from getting away.

1. Unbounce (helps you produce landing pages that will keep visitors on your site and, eventually, transform them into paying customers).
2. CrazyEgg (heat maps that show where people are clicking on your various pages. Armed with that information, you can optimize your site for maximum conversions).
3. Optimizely (allows you to “experiment broadly across the entire customer experience, on any channel, any device, and any application).
4. FullStory (records how people navigate around your site and provides videos that you can watch later). 
5. HelloBar (enables website visitors to enter their email address so that you can contact them later. There’s a branded free version of the tool as well as an unbranded paid version).

Stage 3: Evaluation

At this funnel stage, people are taking a very keen interest in your product or service. You’ve almost closed the sale, but you’re not quite there yet. Aim for some of these content types to really reel in your customers:

• Testimonials
• Pricing pages
• Case studies
• Discount/promo codes
• Live demos or tutorials
• Product comparisons

Let’s look at some sales funnel tools to help you reach that goal when customers are in this stage.

1. Animoto (way to convince reluctant prospects that you’ve got a great product or service is with the magic of video. Animoto enables you to make high-quality videos in a snap. Then, you can use the video as a marketing tool to help you lead people further down the funnel).
2. Jing (lets you share short videos of your online activity and is great to add to your marketing funnel stage).
3. Wyzowl (create animated explainer videos, mobile app demo videos, or web videos, Wyzowl has a solution that you can use).
4. Freshdesk (helps you deliver outstanding customer service to people who are on the brink of making a purchase).
5. FunnelCRM (provides everything you need from capturing customer information to the follow-up and management of customer information).

Stage 4: Engagement

At this point, you’ve made contact with your prospect. You’re ever so close to making the sale, but still not quite there.

Since this is the “action” stage, be sure to utilize the following:

• Insider or customer success stories
• Special offers
• Bundled packages
• Follow up email campaigns

Here are some sales funnel tools to help you build a positive relationship with prospective customers.

1. AWeber (makes it easy to email contacts en masse and also tracks analytics about individual email campaigns. If AWeber doesn’t suit your fancy, have a look at competing tools such as MailChimp and GetResponse). 
2. Salesforce (a tool for managing people who are stuck somewhere in the middle of the sales funnel is Salesforce). 
3. Insightly (an excellent CRM solution that helps you seal the deal with your contacts without draining your bank account).
4. Zoho (a comprehensive solution that includes CRM, customer surveys, email marketing, online meetings, and even business process optimization to help make the final sales stages go more smoothly).
5. Heyo (it not only keeps you engaged with existing prospects but also helps cultivate new leads. So this tool could work at multiple points in the sales funnel).

Stage 5: Commitment/Purchase

And now we’re at the point where money changes hands. That’s what it’s all about, isn’t it?

Keep your customers motivated to come back with:

• Referral programs
• Upsell campaigns
• Re-engagement email campaigns

Here are some sales funnel tools that will make it easier to put cash in your bank account.

1. Flagship Merchant Services (is considered by many to be one of the best in the business. It’s used by some big names, including Subway, Avon, and Verizon for the final transaction).
2. PayPal (one of the easiest ways to generate income online and finalize the last sales funnel step).
3. WooCommerce (an e-commerce solution that sits right on top of WordPress, the world’s most popular content management system).
4. Snipcart (an HTML/JavaScript solution that should play nicely with whatever technologies you’re using on your site).
5. Stripe (making sure payments are completed quickly and securely, Stripe’s platform is geared towards building and scaling your business).

Types of Funnels to Increase Sales

1. The lead generation funnel

In most cases, this type of funnel is used for businesses who have yet to launch or are just starting out. The purpose of a lead generation funnel is to build the audience behind your brand who will, hopefully, become buyers at the end of the funnel. Out of all the types of funnels, this one is probably the most frequently used by businesses. In order to set one up, start with an interesting lead magnet (which is the thing you’ll hook your audience with). It could be the promise of a coupon if they sign up for your mailing list, a chance to enter a draw for a free sample if they provide their contact information, and more. Your lead magnet should direct interested parties to a landing page on your website with an opt-in form. In addition, set up an auto-responder email service to automatically mail out a welcome email as soon as a new audience member signs up. This will make the process of generating and nurturing leads much simpler. Once you entice them into following through from your lead magnet, you can usher them through the rest of your funnel to ultimately earn a sale.

2. The free sample funnel

Who doesn’t love a free sample? They’re a great way to test a product without committing to buying it. While consumers usually think they’re getting a great deal, businesses are really the ones coming out on top. In many cases, receiving a free sample requires an audience member to provide a company with their personal information, thus starting them on the path to entering the sales funnel. As the customer tries the product, your relationship with them is nurtured. And, in many cases, a free product results in a sale of the full item down the line, thus successfully drawing the customer into the bottom of the funnel.

3. The free consultation funnel

Not all businesses are able to use all types of funnels. The free consultation funnel is one such type, simply because not all businesses have a need to offer a consultation. However, for a company that offers a service (home renovations, accounting, etc.), making use of the consultation funnel is a great way to make a sale, especially in a competitive industry. The funnel begins when the consumer requests a consultation. This is your first opportunity to provide them with value and start building a relationship. After the initial consultation is over, proceed into the middle of the funnel by maintaining contact (usually with well-designed emails), creating more value, and explaining why your business is the best choice for them. If your first two funnel stages are successful, you will hopefully draw the consumer into the third stage and convert them into a customer.

4. The cross-sell funnel

The act of offering a customer a similar product to the one they’re interested in is called cross-selling, and is part of the cross-selling funnel. This sales method may generate revenue for a company in a few different ways. In one case, a customer is already planning on making a sale (and has thus completed the funnel) but cross-selling convinces them to increase their cart total. In the other, a customer completes their purchase without any add-on products but they return at a later date to buy one (or more) of the products suggested to them. The cross-selling funnel is unique in that the actual act of cross-selling doesn’t always start the funnel, depending on how you use it. If you cross-sell to a customer after they’ve bought a related product, this can either be viewed as restarting the funnel, or conducting the “retention” stage to create brand loyal customers. If you cross-sell before the customer has made their purchase, in order to make it bigger, you’re using this tactic in the second to third stage.

5. The product launch funnel

Sales funnels are also great to put in place even before you have a product to sell. They function similar to lead generation funnels, in that they create an audience for your eventual item. However, in addition to building a relationship with the audience, a product launch funnel also generates anticipation so that consumers can’t wait to make a purchase as soon as the product becomes available. Use an email list, host giveaways where a few lucky people will receive a free product, and ask for project backers to help raise funding money.

How to build a sales funnel

There are many ways to create a sales funnel, and different businesses and industries have their own types of sales funnels. Follow these steps to create a sales funnel for your business:

1. Create a landing page.

The landing page is often the first opportunity for a prospect to learn about your business and its products and services. Users will arrive at your landing page in different ways; they might click an ad or link on a social media page, download an e-book, or sign up for a webinar.

Your landing page should clearly describe your company and the unique benefits of your product or service. The landing page might be your only opportunity to impress prospects, so the copy 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.

2.  Offer something valuable.

For a prospect to provide their email address, you must give them something in return. For example, you might offer a free e-book or whitepaper with useful and informative content.

3. Nurture the prospect.

Now that the prospect has shown enough interest to provide their email address, nurture the prospect with content that educates them about your product or service. You’ll want to stay in touch with them regularly (once or twice a week) but not so frequently that they get bored or turned off by all the content. Make sure the content addresses their key needs and overcomes any potential objections.

4. Close the deal.

Make your best offer – one that is difficult for the prospect to ignore or turn down – to close the deal. For example, you could provide a product demonstration, a free trial, or a special discount code.

5. Keep the process going.

At this point in the sales funnel, the prospect has either become a customer or decided not to make the purchase. In either case, you should continue the communication and relationship-building process.

If the prospect becomes 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 customers. If the prospect does not make a purchase, stay in touch with them through regular emails. Continue to work on converting them into customers by using different email nurturing series.

6. Optimize your sales funnel.

Even though you’ve created a sales funnel, your work is never done. You should continually look for ways to improve and optimize your sales funnel, and determine where you are losing prospects. Focus on the areas where prospects move from one stage of the sales funnel to the next.

• Begin at the top of the funnel. Evaluate how well each piece of content is doing. Are you capturing enough prospects with your initial content? The goal of your content is to get prospects to click the call to action (CTA). If they are not doing that, or one piece of content is getting fewer clicks on the CTA, then rework that element or try something new.

• Evaluate your landing page. Your offer and CTA should mirror the content (e.g., blog post, Facebook ad) that brought the prospect to your landing page. Are prospects trusting you with their contact information? Test every part of your landing page (e.g., headline, images, body copy, CTA) to find out what is working and what is not.
• Test every offer in the action stage of your sales funnel. Compare the results of different offers (e.g., free shipping versus discounts). How many purchases are you getting with your email nurturing campaigns and other marketing efforts? If one offer gets much better results than another, focus on using that offer to close prospects and see if you can improve upon it.
• Track your customer retention rates. Determine how often customers return to purchase your products or services. Do customers come back more than once, and are they buying other products or services? Keep track of how often they refer others to your company.