A sales funnel is a powerful marketing model designed to build trust with a prospect and increase the likelihood they make a purchase. With a well-designed sales funnel, businesses can better handle objections, properly angle their offers, and continuously track performance to optimize the process.
So what exactly are the stages of a sales funnel, and how can you create one for your business? In this article, we’ll be exploring:
- What is a sales funnel and why it’s important
- The key stages of a sales funnel
- Plus, key tips along the way
Read on to learn about sales funnels and how you can keep potential customers from slipping away!
What is a Sales Funnel?
A sales funnel visually outlines the stages a prospect goes through from being a lead to becoming a paying customer. Ideally, every interaction with a potential customer should follow the framework of your sales funnel.
Different companies will have a different number of stages in their sales funnel (anywhere from 4 to 7 depending on the company size and industry), but typically there are 6 stages worth noting, them being:
Designed like a real funnel in shape, a sales funnel diagram is broad from the top accommodating lots of potential customers, to then narrow down as fewer make it through to becoming customers. That’s because a company starts out exposed to many potential buyers, but as prospects learn more, engage with your company, and decide to take action, and it’s natural that fewer come out making a purchase.
What is the importance of having a well-designed sales funnel?
A well-built sales funnel is just like a well-built water pipe. If there are any gaps or holes, you’ll have customers leak out of your sales pipeline much like water does from a faulty real one. But why is that so?
Here are a few top reasons.
Delivering the Right Message at the Right Time
Once you know where your prospect is in their journey to becoming a customer, you can better align your message and handle potential sales objections along the way.
Selling to a potential customer that has just walked into your store involves a different approach than selling to a repeat customer. Their different levels of awareness, interest, and positions in your sales funnel will involve a different set of questions, objection handling, and selling approach.
Build Trust and Loyalty
At the beginning of a prospect’s sales journey, they research and learn about the options they have to solve their problem. When your company shows up, having a detailed sales funnel will allow your sales team to address any concerns early on that a prospect may have.
As a result, trust is naturally built as prospects get closer to the end of the funnel and, if you nail the final sixth stage, will convert into loyal customers.
Align Marketing with Sales
One of the greatest benefits of a well-built sales funnel is how it can involve marketing to close more deals. For example, if prospects reach a certain landing page but decide to leave without taking further action, the marketing team can use retargeted ads to reel in those prospects.
Based on your data on the potential reasons for their inaction, your messaging with retargeted ads or social media posts can be angled to dispel any doubts or hesitation. If the issue is price, perhaps a discount offer might help. If the issue is uncertainty, a powerful guarantee may win them over, and so on.
6 Essential Sales Funnel Stages to Know + Tips
Sales funnels come in all shapes and sizes depending on your industry and the services or products you offer. However, here are 6 sales funnel stages that every business should be aware of.
A sales funnel's first stage is all about building awareness and attracting leads. It’s here that customers with a problem become aware that you have a potential solution to their pain point, be it a service or product they are currently in need of.
In this stage, you can build awareness and generate leads in a variety of ways, such as:
- Paid advertisements.
- Lead magnets and landing pages.
- Sharing and promoting social media posts.
- Referral programs or word-of-mouth marketing.
This stage is populated by the largest number of prospects that are now coming in contact with your business.
Here is where your newly-aware prospects will spend time learning more about your company. They’ll check out your product catalog or services, browse your website, and see reviews to learn more.
This is a critical stage that can be highly optimized through:
- Using a site heatmap to see where and what users click on when visiting your site.
- Having a website layout that is easy to navigate.
- Displaying social proof such as testimonials, reviews, and case studies.
- Optimizing your landing page copy, offer, and CTA
Learning about the behavior of prospects at this stage, their motivations, and tracking the number that move forward are all part of sales funnel metrics you should be keeping an eye on.
At this stage in the funnel, your prospects are armed with knowledge and are now willing to take further steps to better evaluate your company and offerings. This can be in the form of reaching out to access more information, filling out a form, or opting to try a free trial.
Keep in mind your prospects are likely comparing your services with competitors at this stage. You must have answers ready for frequently asked questions and a way to convey how your offer stands out.
At this point, it’s likely your prospect has a high level of intent to make a purchase, but a few things are keeping them from taking action. Sales engagement at this stage is where last-minute objections are handled, negotiations are made, and guarantees are promised to dispel any hesitation. Common points of contention are price, doubts over outcomes, and terms of the agreement.
The Action stage is where the deal is closed, and the prospect becomes a paying customer. The easier it is for customers to take action, the better and more likely you can close more deals. The nature of your offer will largely dictate how quickly and easily customers will take action. If you can create an offer so good that saying yes would be a no-brainer, taking action will be an easy step for prospects.
Some say a sales funnel stops at the Action stage. Unless you are selling a strictly one-time product with no after-sales support or customer service involved, then retaining customers should definitely be part of your funnel and a top priority.
Customer retention is one of the most important aspects of running a business and is how you will compound your growth. That means delivering on your promises, regularly upgrading your services, adding value through helpful product-specific content, and providing great customer service. Even if you’re selling a one-time product, make sure to gather customer emails and keep the opportunity to turn them into repeat customers later on.
A sales funnel is a simple but incredibly effective way to map your buyer’s journey and be prepared for every step of the way. It equips sales and marketing teams with the right set of knowledge and tools to:
- Properly guide customers to take action.
- Be prepared to answer questions and handle objections.
- Appropriately market to customers at various stages of the sales funnel