Learning how to create and manage a sales funnel is akin to learning how to increase online sales. Simply by learning the way a customer interacts and engages with your business on their journey toward becoming a customer, you’ll pick up valuable insights into your sales and marketing processes. There are, however, some major questions that need answering first, namely what a sales funnel actually is.
In this article, we’ll share insight into:
- What Is A Sales Funnel?
- Why Do You Need A Sales Funnel?
- What Are The Key Stages Of A Sales Funnel?
- Developing A Sales Funnel Step-By-Step
- Managing A Sales Funnel
- Sales Funnel Metrics
What Is A Sales Funnel?
You’ve been inside a sales funnel dozens and dozens of times. So has everyone you know. You, and they, might not have known it at the time, but you might have been part of a company’s carefully orchestrated steps of progression that drove you step-by-step toward becoming a customer.
A sales funnel is the process that a customer goes through to go from the beginning (where they barely know you as a company) right through to the end (where they become a regular loyal customer).
Most funnels are called so because there are the most people at the higher stages, where people begin to become aware of a company’s existence or show mild interest. The further down the funnel, the more people fall out of it and don’t convert. Leaving you with just your customers themselves in the spout of the funnel.
Almost every business will have a sales funnel of some sort. Even if they haven’t actually formalized one into a document or a process, there will be a semblance of a funnel that prospective customers naturally enter into.
Why Do You Need A Sales Funnel?
In order to be successful in your marketing strategy, you need to understand where a person is in their purchasing journey. You need to identify their precise location in the funnel so that you’re able to best serve them the content that they require.
You also want to be sure that you’re going to be investing time in the prospective customers that best fit your products or services. The further down the funnel they travel, the more likely they will be a qualified prospect that is far more likely to convert. That’s because they’ve begun to know what you offer inside out, they know how it will help solve their current issues, and they are aware of your pricing.
The last thing you want to do is to spend a large proportion of your time trying to sell or market to the wrong people. Without a sales funnel, the risk of this happening is far greater, as you simply have no real idea who you’re talking to.
What Are The Key Stages Of A Sales Funnel?
It’s important to note at this stage that sales funnels aren’t one size fits all. They’re different for every business, every product, and every service. They require adaptation and evolution depending on current market conditions, your customer base, and even the people within your team. What works well for one business isn’t guaranteed to work well in another.
There are, however, some recognizable sales funnel stages that feature in the majority of funnels. These stages, even if not explicitly visible, will form some part of the funnel. Typically, there are 5 core stages to every funnel: Awareness, Interest, Evaluation, Engagement, Action, and Retention. Each requires a slightly different set of tactics, mindset, and strategy.
Right at the top of the funnel sits the awareness stage; it’s the widest part of the funnel with the most people within it. You might not consider those within the awareness stage as prospects, in fact, chances are you don’t actually know who these people are at all. The people within the awareness stage are, as the name suggests, aware that your brand exists, but that’s about it.
Another way to consider the awareness stage is that the customer is beginning to become aware that they have a need or problem, and they need to find a solution to it. That means they might spot that something is irritating within their lives and realize that they’d like to fix it.
The aim of a business at this stage should be to put itself on the map and let people know that it could provide a solution to their woes. Education is a key part of the awareness stage. That’s especially true when a customer is aware they have a problem but has no idea how to fix it.
Most people, when they enter the awareness stage, do so with a simple Google search. That’s when your business wants to be visible and relevant. As the prospect begins to understand the information out there, you need to be on their radar.
Often businesses will focus on content marketing, social media campaigns, SEO, and paid advertising.
As the name suggests, the interest stage is all about making customers grow their interest in your products or services. That means taking a step further from knowing that your business exists, to understanding how what you offer can provide a solution to their problems. Think of the awareness stage as the moment when you grabbed their attention, now in the interest stage you need to keep it.
The majority of the time this happens through the content on your website. Your content needs to be tailored so that it builds empathy with the reader. They should be able to see themselves using your products and consider your values a match to theirs. You’ll also share stories from previous customers or clients to show precisely what it would be like to work with you.
Moving towards the middle of the funnel, we reach the evaluation stage prospects are considering and evaluating their options. At this point, businesses want to still be sharing as much valuable information as possible.
Personalization begins to come into play as much of this information can be given in exchange for something as simple as their email address. You might begin to know a little about them in exchange for some information that better helps you market towards them. If you do decide to engage with customers via email (and you should) it’s worth your while considering standard sales email best practices.
At this stage your prospects are beginning to grow their knowledge, they’ve looked around the market and know what they’re looking for. They begin to feel that they know a thing or two about the potential options and are evaluating them against each other. Chances are they’re also spending time looking at your competitors too. That means you need to provide the clearest and easiest-to-understand solution out there.
During the engagement stage, people are looking to spend time getting to know your brand. This stage can morph and spread across other stages and is often not seen as a discrete stage itself. It does, however, stand to reason that this stage is towards the lower half of the funnel. Those engaging with your brand are more likely to become customers eventually.
Engagement can take many forms, through digital channels such as email, social media, and advertising or more traditional means of communication like face-to-face meetings or phone calls.
The stage that everyone wants their prospects to get to. Action is when a prospect goes through the act of making a purchase. They either contact you directly and you create an invoice, they make a purchase through your sales team, they make a purchase online, or they use a physical shop to complete a purchase.
This stage is also known as the decision stage. The customer has finally made a choice, after all their research, who to go for. Your aim, as a business, should be to make this part of the process as straightforward and simple as possible. Creating unnecessary roadblocks (accidentally or not) can lead to missed opportunities. Simple things, like allowing guest checkout rather than forcing customers to make an account, can make a huge difference. The very last thing you want to happen is for a customer who was set to make a purchase to stop at the final step.
On your website product or service pages, you need to make it clear precisely what the prospect has to do to make the leap from prospect to customer. If it’s adding to the cart, make that obvious. If they need to book a call, make it a streamlined process. Whatever the act of purchasing is, it has to be straightforward.
Sometimes known as loyalty, the retention stage is the gold standard. Action might be the poster child of a funnel, but retention is really where you want your customers to be. This is the repeating stage, where a customer is so happy with your product or service that they use your business time and time again. A customer has found, purchased, and enjoyed your offering.
Just because this is positioned at the base of the funnel, it doesn’t mean it is the end of the journey. The aim now is to keep that customer retained for as long as possible. Expand on your interactions with them, develop and nurture a relationship, and naturally increase their lifetime value.
Developing A Sales Funnel Step-By-Step
Creating your own sales funnel is a major process, it’s not going to be a simple overnight task. The best approach is going to be to focus on one key question at a time. This will help you to craft your funnel and mold it in your mind before documenting it. We’ve created these questions to help you along your funnel creation journey.
What’s The Problem?
Start right at the beginning. What is the problem that the customer has? This means getting to know your audience and understanding their pain points. This should be one of the easier questions to answer because you will have done this when you first began creating products or services to offer.
What’s Your Solution?
Now that you’re aware of what the problem is, you can present your solution. The more insight that you gained from the last question the more likely your solution will be aligned with your prospective customers.
What Do You Want To Achieve?
In order to have a successful marketing and sales campaign you need to set yourself clear and achievable goals. Think of the various stages of the sales funnel and attribute goals and targets to each of them. These goals will help keep you and your team focused on the task at hand. They’ll also serve as useful benchmarks that you can use to measure performance. Essentially, by setting goals and targets, you’ll be able to check if your funnel is functioning as it’s supposed to.
What’s Your First Offer?
One of the best ways to generate leads is to have something that will draw people in. That’s your first offer. These offers don’t have to be worth a great deal but should deliver some sort of value to the recipient. Many businesses offer free trials, tasters, demonstrations, or eBooks, something that won’t break the bank but will entice the prospect further down the funnel.
How Will You Qualify?
Remember, it is important that your business is a good fit for the prospect, but also that your prospect is a good fit for your business. You should have a robust lead qualification structure in place so that you know, as prospects move through the funnel, you’re spending time on the appropriate opportunities.
Considering your offer in the previous question, is their engagement with that offer a good indicator of interest? Do they match your typical customer or buying persona? Does their problem mesh well with your solution?
There’s a whole separate process where you can learn how to qualify sales leads.
How Will You Convert?
As people move down the funnel, you’re going to have to think about how you’ll get them to move closer to becoming a customer. Converting from prospect to client. Many businesses see customers visiting their blogs, downloading their value-driven content, and engaging with them on social media, only for that person to completely disappear. That was a lead, but it wasn’t nurtured the right way.
Email is a fantastic way to nurture leads. Of course, you’ll need them to have given you their email address and consented to marketing, but once they have you’ll have the opportunity to send them the occasional email from a campaign that specifically aims to draw them further toward conversion. With the right sales engagement platform, you’ll find that much of this process can be automated!
Other methods tend to rely on paid advertising and retargeting campaigns. These paid adverts are the ones that you feel follow you around the internet. You’ve visited a website, suddenly it feels like that product or service is everywhere. You’re being retargeted. As a business, these adverts are a great way to keep in front of a potentially interested prospect. Just don’t overdo it, or you’ll come across as a stalker.
Whichever strategy you choose to nurture your leads, remember to always deliver them something that will draw them a little closer to closing. Special offers, discounts, and limited-time options work wonders here.
What’s Your Closing Strategy?
By the time you reach the action stage of the funnel, it is time to start thinking about closing. For those that are about to become customers, what does that process look like, and how do they complete their transaction? This should be as simple as it possibly can be. You’ll then want to think about what happens next. What can you do to keep them as customers and move them into the retention stage of the funnel?
If they aren’t going to become a customer, and have made a decision not to purchase, think about what you can do next. The best course of action is to try and continue to nurture the lead. Set up a process to reach out every few months by email and see how you can engage with them. Just because they didn’t convert right now, it doesn’t mean they definitely won’t down the line.
How Will You Do Better?
The best businesses ask themselves this question all of the time. A process of continuous improvement is key to a growing and sustainable business. In order to truly understand how successful your funnel is you’ll need to be able to track some core sales funnel metrics.
We cover this below, but ensure that when you track these metrics you act on your findings. If you find that people are visiting your website but never your product pages, investigate why. Are people reading lots of blogs but never signing up for free trials or demos, maybe there are some issues with your call to action. There are usually reasons for issues and discrepancies, the metrics are a great way to spot them and work on them.
Managing A Sales Funnel
Managing a sales funnel is a major task in any business. If it isn’t managed properly it is all too easy for leads to slip through and go unnoticed or unnurtured. This is an all too easy way to leave money on the table and miss out on potential business.
Using a management system or CRM is a great way to keep track of all of your leads. Lots of these tools allow you to complete a huge number of marketing activities from within them. You’re able to clearly mark what stage of the funnel a lead might be at, track correspondence, and even manage sales team calendars.
The best management systems will include a level of automation to maximize your team’s efficiency and win back valuable time. Other tools, such as an email marketing tool, make parts of the funnel incredibly streamlined and offer the greatest chance of conversion success. These tools allow you to cold email prospects near the top of the funnel and also set up whole email campaigns for stages lower down the funnel too. All in an automated way.
Sales Funnel Metrics
We mentioned above that you need to track a number of sales funnel metrics if you want to see how successful your efforts are. Without these metrics, you’ll be wondering if the new strategies that you’ve implemented have really made a material difference or not. The following metrics are a good starting point, but each business is different and might look to track its own focused set of metrics.
- Lifetime Value: This is the measure of the revenue generated by the average customer. It’s a necessary metric to establish what each person or business in your funnel is worth to your business.
- Average Order Value: Similar to lifetime value but focused on individual conversions. It’s a good way of putting a revenue figure on an individual transaction.
- Cost Per Acquisition: A measure of how much it cost to bring a person from prospect to customer.
- Entrances: The number of leads that enter the funnel over a period of time.
- Conversion Rate: Of the number of entrances, how many of those converted into paying customers? This is typically displayed as a percentage.
- Engagement: Not a standalone metric, but an umbrella term for all the various types of engagement in your funnel. Email replies, newsletter signups, open rates, and social shares, all of these are great engagement metrics that should be tracked if appropriate. Each campaign will have specific engagement metrics to track based on the marketing and sales activities taking place.
- Total Revenue: The big ticket metric is your overall revenue generated thanks to the funnel. This isn’t an average, it’s the actual revenue.
Sales funnels are a major part of any sales and marketing strategy. Streamlined sales funnels can be the key to a successful business growing to the next level and expanding its capacity even further on top of its solid foundations. The more organized and automated your sales funnel the more successful and streamlined the business will become.
- Marketing and sales activities will vary at the different stages of the funnel.
- The more defined you can make your funnel, the more strategic you can get with your operations.
- Automating activities, organizing prospects, and tracking metrics are all important aspects of funnel management that are all benefited from a quality management tool.
If you’re keen to automate email activities at every stage of the funnel, Instantly is going to be a top choice of email marketing tool. From initial cold email outreach to regular nurturing campaigns, Instantly will deliver. Why not see how your business can grow with Instantly by getting started for free?