What is a Sales Funnel and how to use it?

At first glance, selling online is very simple – a potential customer goes to a website, browses the available offerings and decides to buy or not. In reality, the sales process never follows a straight line, even if the customer makes a purchase the first time they contact the company. Converting leads into customers often follows its own path and varies from company to company and from sales sector to sales sector-B2C and B2B. A very helpful tool in understanding this process and planning marketing activities is the sales funnel. What do you need to know about it and how can you use it?

What is a Sales Funnel?

The Sales funnel describes the various stages of the sales process and enables the measurement of quantitative and qualitative data about the behavior of potential customers from the first contact with the company until the first and subsequent transactions. The sales funnel is used to make the most efficient use of available resources and to effectively plan marketing and sales activities. The sales funnel provides a detailed assessment of where in the funnel potential customers are abandoning purchases.

A sales funnel is therefore a representation of the stages a potential customer goes through before they take advantage of your company’s offer. This makes the sales funnel look like an inverted pyramid (or funnel). The path starts at the top with a large number of potential customers. Then, with each step, the number of potential customers decreases until you reach the very bottom, a place that symbolizes the audience that has made a purchase.

The task of each company is to reach as many potential customers as possible (increase the audience at the top of the funnel) and improve individual marketing activities so that potential customers reach the final stage presented in the form of a sales funnel.

How do a Sales Funnel Work?

Think about your current customers: each of them went through a process and ultimately made a purchase. During that process, they learned about your brand, read about your product or your services, and ultimately decided to make a purchase. For some products – typically lower-priced consumer goods – this process may only take a few minutes. The customer went to your website, saw the product they were interested in, and immediately made a purchase. In these cases, the sales funnel is relatively straightforward.

In many industries, however, selling is a much more complicated process – for example, if you sell premium products, expensive enterprise software, or services in the B2B sector, you will likely need to use a variety of sales methods and channels to acquire new customers. For this reason, you should carefully plan your marketing efforts at each stage of the sales funnel.

Why create a Sales Funnel to get Potential Customers?

All businesses that sell something or offer a service have a sales funnel – even if it has never been officially defined. A service provider’s website, where new customers arrive, is a very simple type of sales funnel. Search engine advertising to get the attention of buyers is also a part of the sales funnel.

Although some companies are quite successful with such “chaotic” strategies, if you want to maximize the profits from your promotional efforts, you should make sure that your company’s sales funnel is much more carefully planned. Here are some other reasons why you should create an effective sales funnel for your business.

Sales Funnel Advantages and Customer Acquisition

The different stages of the sales funnel vary depending on the company, the business model, and the detail of the sales process in question. So whether you are marketing yourself or have a responsible team, your marketing efforts need to be carefully planned.

Reviewing and compiling the different levels of the sales funnel can help you better target all your marketing efforts to your desired target audience. The different stages of the sales process give those in charge of marketing a clear overview of what they need to do to achieve the company’s goals. By structuring your sales funnel, you can also make it easier to divide your responsibilities into lead generation, sales activities, and post-purchase customer contact, among others.

By defining the different phases of the sales process, you can accurately determine its performance. Based on the information gathered, you can then change or add individual phases of the sales funnel. By continuously monitoring the sales funnel and the behavior of potential customers, it is also possible to analyze the causes of falling sales early enough to prevent a long-term decline in profits. Based on the measurement results, specific changes can also be derived to increase the conversion rate of marketing activities.

What Phases does a Sales Funnel include and how does it help you reach a Potential Customer?

With a simple structure, the sales funnel consists of four phases that your potential customers go through: gaining attention and building brand awareness, building interest and acquiring leads, classifying leads, and selling and following up. This is the path that most customers take. How should you act at each stage?

Make Customers Aware of their Problems or show them that you can meet their need

In the first phase of the sales funnel, a potential customer becomes aware of his problem or need and starts looking for more information about it. So your company needs to provide him with content that makes it easy for him to find the information he needs. It’s important to think about where potential customers are looking for answers and that’s where you’ll stimulate their senses to look for new solutions (i.e., to buy your product or use your service). Here are some communication channels that can be used for this purpose: social media advertising, search engine advertising on Google, blog articles and search engine optimization (SEO), social media activity and maintaining a company profile, YouTube channel, Linked In, and other online activity.

Win the Trust of a Potential Customer

Internet users who have started interacting with your website or offer reach the second stage of the sales funnel. Now you have to make each of them interested in your offer. The best way to do this is to effectively present your product or service and direct the potential customer to purchase it.

A call to action (CTA) and valuable content on the page are very important at this stage. If your potential customer arrives at your company’s website, you need to do everything you can to get them to take the first step in the sales funnel, such as signing up for your newsletter, attending a webinar, downloading a file, or purchasing directly. If you manage to encourage potential customers to start interacting with your company, your next task is to identify and classify sales leads.

Lead Classification

The next step is to classify leads, which is to assess the attractiveness of each lead. Acquired leads are usually assigned to one of three groups, namely cold leads, warm leads and hot leads. Based on the lead classification, you can plan your sales activities and tailor them to each potential customer.

Hot leads are potential customers who are willing to buy at any given time. In their case, you need to start your marketing efforts almost immediately. Warm leads are also potential customers who are interested in the offer, but in their case the decision to buy has not yet been made.

For this group of leads various solutions are prepared to increase recipients’ engagement. Cold leads, on the other hand, are potential customers who are in some way interested in your offer or business, but are not considering a purchase or using your offer in the near future. To improve the engagement of this group of potential customers, you can, for example, present them with a personalized offer in the form of a newsletter, offer them shopping vouchers or show them in-depth product reviews.

Selling and Building Long-Term Relationships with Customers

If a potential customer finally decides to take your company’s offer, it means they have moved to the last, lowest stage of the sales funnel. This is how you achieve your goal – a sale. However, you should not limit yourself only to promoting your offer, because gaining a new customer is usually much more expensive than encouraging a person who has already bought something to make another purchase.

You need to do everything to make your new customers want to use your offer again in the future. This is how you will build a long-lasting and close relationship with them based on trust in your company. The easiest way to do this is to send a thank-you note for making a purchase. Besides, you can also offer them a discount code, a personalized offer, or offer a complimentary product.

Sales Funnels in your Company – Summary

Sales funnels find their practical application in practically every company, regardless of whether it is an online store or, for example, the B2B sector. Sales funnels are very helpful in terms of sales and make the sales process much easier already at the level of planning your marketing activities. Importantly, the use of marketing funnels is not limited to encouraging potential customers to make a purchase.

A carefully planned sales strategy based on a sales funnel also makes it easier to evaluate the effectiveness of the activities carried out. You can use Google Analytics or other tools to measure conversion. You should also think about a CRM system (customer relationship management system), a program that makes it easier to manage leads.