Before a potential customer buys your product, they have to go through a journey that includes becoming aware of your business, learning about your products, and deciding to buy one from you. This journey is also known as a sales funnel because it typically starts with many potential buyers and ends with only a few who actually make a purchase.
It’s crucial that you manage your sales funnel effectively. Otherwise, prospective customers could find out about your company, reach out with questions, and then disappear without buying anything. Luckily, there are a range of CRM platforms available to help you do just that.
In this guide, we’ll explain everything you need to know about how a sales funnel works and help you build one for your business.
Key Takeaways
- A sales funnel is the process that potential customers follow from becoming aware of your business to learning about your products or services to making a purchase.
- An effective sales funnel can help you increase revenue, reduce the costs associated with making sales, and enable you to more accurately forecast revenue.
- A sales funnel consists of three key stages: awareness, interest, and decision. It’s funnel-shaped because leads fall out of the funnel at each successive stage.
What Is a Sales Funnel?
A sales funnel is the process that potential customers, also known as leads, go through on their way to purchasing from your business. It typically includes several steps, including customers becoming aware of your business, expressing interest in your products or services, doing deeper research, and making a purchasing decision.
While each customer goes through the sales process individually, the process is funnel-shaped from the perspective of your business. It starts with many leads at the top, narrows to a handful of highly interested prospective customers in the middle, and finishes with only a few customers making a purchase.
The Importance of a Sales Funnel
Having an effective sales funnel is critical for your business for several reasons:
- Driving revenue: Your sales funnel helps you shepherd leads through the journey from awareness to purchase, increasing the likelihood that they buy something from your business. It also helps your sales team know where each prospective customer is in their journey, enabling them to follow up with next steps and keep customers on the path to a purchase.
- Reducing sales costs: It’s all too easy for your sales team to waste time and money pursuing leads that don’t pan out. A sales funnel helps your team determine which potential customers are closest to purchasing so you can push them across the finish line.
- Improving revenue forecasts: Your sales funnel enables you to determine the potential value of each customer and the likelihood that they’ll make a purchase. This information is very useful for forecasting your revenue and making strategic business decisions.
The 3 Stages of a Sales Funnel
A typical sales funnel can be divided into three stages: awareness, interest, and decision. Let’s take a closer look at what each of these stages entails.
Stage 1: Awareness
Awareness is at the top of your sales funnel. It involves leads becoming aware of your company and its offerings. Awareness can be triggered by a prospective customer seeing one of your business’s ads, hearing about your business from a friend or colleague, or even receiving a cold call from your marketing team.
To move leads from awareness to the next stage—interest—it’s important to hook them. For example, your marketing campaign could pose your product as a solution to a problem they have. Alternatively, you could offer free content, like access to a webinar or a chance to win a prize.
If you want to make your marketing effort as targeted as possible, check out our guide to customer segmentation.
Step 2: Interest
During the interest stage, customers will engage more deeply with your company and consider whether you have a product or service they might want to buy. Customers in this stage will often compare your product to competitors’ offerings and explore a free trial if you offer one.
It’s important that leads in this stage have access to information about your product or service. You can point them to resources on your website, like features pages and case studies. Your sales team can also reach out to high-value leads directly to answer their questions and explain the unique selling points of your product.
Step 3: Decision
The final stage of the sales funnel is where a lead decides whether or not to buy something from your company. If they do make a purchase, you can fulfill the order and hand over the newly won customer to your customer support team to keep them engaged.
If a lead decides not to purchase at this point, they’ll fall out of your funnel. However, you can continue to engage them to ensure your business is top of mind the next time they need a product like those you offer.
Tips for Creating an Effective Sales Funnel
Building a sales funnel that attracts high-quality leads and pushes them toward conversion is key to your business’s success. Here are three of our top tips to ensure your funnel is effective.
Advertise in the right places
One of the most overlooked aspects of crafting a sales funnel is ensuring that the leads entering the top of your funnel are high quality. Leads should have problems that your business’s offerings can solve and should be highly motivated to make a purchase.
The key to finding high-quality leads is to advertise in the right places. Think about where your target audience is—whether that’s on social media, listening to the radio, searching for specific terms on Google, or somewhere else. It’s often helpful to generate buyer personas, which are fictional profiles of your ideal customer, to determine what types of marketing efforts you need to bring strong leads into the first stage of your funnel.
Offer value to leads
Once a lead finds out about your business, your next goal is to add them to your sales email list. That enables you to follow up with marketing campaigns, personalized offers, and more to push them deeper into your sales funnel.
The best way to convince a lead to hand over their email address is to offer value in return. For example, you could offer them a coupon code, access to a webinar or report, or even a free trial of your service. All of these “lead magnets,” as they’re sometimes called, have the added benefit of engaging prospective customers more deeply with your brand.
Use automation to keep leads moving forward
Your sales team can’t engage with every lead each time they make an incremental move deeper into your sales funnel. However, you can use automations to ensure you’re keeping leads close and nudging them through your sales process consistently, ensuring nothing slips through the cracks.
Most top CRM platforms make it easy to set up custom triggers like a customer clicking on a product page or adding an item to their cart. In response to these triggers, you can send pre-made marketing emails or personalized offers to show customers that you’re serious about winning their business.
Final Thoughts
A sales funnel represents the customer journey from awareness of your brand to making a purchase. It’s important to have a sales funnel to encourage purchases and help your sales team focus on the most high-value leads.
Check out our complete guide to building a successful sales funnel to turn your business’s leads into customers today.