One of the most common questions that budding sales professionals ask is – what is a Sales Funnel, and how does it work? Simply put, a sales funnel is a way sales/marketing professionals plot their customer journey – from initial contact to conversion. But why is it a funnel? Why not a sales line or a tumbler? We call it a funnel because it takes the top-down approach. (just as how you would see in a funnel)
Now for the second part of the question – how does it work? A marketing professional would cast a wide net to garner initial visibility of their product/service. From there, they would keep filtering and narrowing the scope of their outreach.
Eventually, they would reach a point where only a select targeted potential lead would remain in the funnel. The Sales/Marketing teams work together to close these leads to paying customers. There are different methods associated with sales funnels – one of them is called the AIDA model. We will explore more on this topic in a bit.
Sales Funnel Examples
Let’s say you run an e-commerce business – selling dog food. You know that your typical social media target audience is Men & Women aged 21-40. You even narrow them down by targeting only those who like pet pages on Facebook/Instagram.
Next, you create a landing page and run a Facebook Ad. To encourage people to share information like mobile numbers and email addresses, you give away a freebie – “A complete guide to a dog’s nutrition”. Many prospects end up downloading the PDF, giving away their details. Now they are your leads!
Notice the customer journey and how they are moving within your sales funnel. Next, you nurture these leads and send them valuable free content regularly. After a short time, you send them an offer on your monthly dog food subscription. Voila! They are paying customers now!
Of course, the above example is simple for ease of understanding. A Sales funnel can be more complex than that. However, the fundamentals of the funnel remain the same.
What are the 4 Stages of the Sales Funnel
From the first paragraph to the example above, there is a pattern to sales funnels. They are better known as the stages of the funnel.
Awareness
From the example above, the Facebook Ad that broadcasts your brand/website/business is an attraction to the larger audience that meet the target-market criteria (Ages 21-40 who like dog-dedicated Facebook pages)
Interest
From the entire target audience visiting your website (landing page), some Facebook users end up downloading the freebie you have to offer. (“A complete guide to a dog’s nutrition”). These users are interested in your brand/product/valuable content you have shared.
Decision
The users who downloaded your free PDF find it extremely useful. Their dogs now eat healthy meals and have a cheerful outlook – thanks to your magic! Plus, with your regular interactions with them via email, you keep sharing content that helps them manage their dogs better. Eventually, these users consider your brand a go-to for dog-related food needs.
Action
With ample experience of your generosity and knowledge of all things dog, the leads finally purchase your monthly food subscription offer. Voila – they are your paying customers.
In short, the different stages of the sales funnel represent the AIDA model. Some even consider Retention or Loyalty the 5th stage of the AIDA model. While others do not shout it, retaining customers is an obvious next step for any business. Customer retention is crucial because it costs 5x to get a new customer than to keep those who are already a fan of your work.
Sales Pipeline vs Sales Funnel
It can be tricky, especially if one is new to the discipline. Think of Sales funnels as an overview of how customers move through the business model – a customer or buyer journey. It covers the crucial touch-points and helps sales and marketing leaders to align their strategy for optimum results.
A Sales Pipeline is a part of the Sales Funnel. It is a horizontal line that helps the sales teams pinpoint the exact location of their leads. A pipeline constitutes different stages through which Leads pass through. These stages are different for businesses and have no one-size-fits-all approach. Examples of Stages in a SaaS product Pipeline could be Introduction calls, meetings, and Product Demos, among others. In short, these stages are activities that sales associates complete for their Leads.
While a Sales Funnel tells businesses what is working or not as an overall strategy, a Sales Pipeline helps sales associates and leaders forecast their revenue better. Of course, to successfully do that, every Deal Stage should have an allocated revenue percentage. A Sales Pipeline also helps sales leaders keep an eye on the team activities and identify crucial stages of the Pipeline so that they can help in conversion if required.
Lastly, a Sales Funnel is the brainchild of the marketing leader. Sales teams work with marketing to improve the Funnel. A Sales Pipeline is the brainchild of the Sales Leader. The marketing teams can work with the sales teams and help them move the Leads forward. For example, a Marketing Qualified Lead or MQL moves a Sales Qualified Lead Stage or SQL when the Lead completes the qualifying criteria. These Leads are then handed over from marketing to sales to take forward.
Types of Sales Funnel
With due clarity of what a Sales Funnel is, discussing the types of sales funnels should be a self-driven exercise (and a simpler one). If you are curious about the various sales funnels, you are directly asking how customers interact with different businesses. In such cases, I want you to ask yourself a few questions.
What product or service is the business selling? Is it online or offline? How do prospective customers come to know of the business and its portfolio? How will these prospects approach or connect? What happens once they reach out? How and when will they buy our products/services?
Once you answer these questions for any business, you will have identified the various sales funnels. For example, a Gym Membership Sales Funnel will be very different from a SaaS subscription-based Sales Funnel. Essentially, there can be unlimited Funnels depending on business models.
What is Sales Funnel in Digital Marketing
Sales Funnels became more prominent thanks to Digital Marketing awareness worldwide. In an age where everyone wants to sell digital products, it is critical to understand what Sales Funnel mean from an e-commerce perspective.
Since the fundamentals of sales funnels do not change, it is easier to apply the same to the online world. Let’s look at an example to understand better.
Let’s go back to the dog food business we discussed earlier in this article. Now, let us assume that today is the first day of your business, and you have no Sales Funnel. As an online store owner, you know your target market. You know what your prospects like to do when they are online – for example, visit their favourite pet pages, and watch youtube videos on pet parenting, among other things.
You want to dig deeper, and you do more secondary research. You find out the most popular keywords they use to land on various dog-related content. If you remember, we discussed that a Sales Funnel is more of a macro strategy to fulfil business goals. As an online store owner, what could be yours? You want more website traffic and paying customers.
Using the information you already have, you will craft a sales strategy to bring people to your site and help them purchase. Voila – you have created your Sales Funnel from a Digital Marketing perspective.
You can have many sales funnels for your online business. However, all roads should lead to home – everyone should eventually buy your top-class dog food. For example, one of your funnels could start with a newsletter to your subscribers or mass-cold emails to potential prospects.
Sales Funnel Strategy
There is no magic potion or a defined formula to craft the perfect Sales Funnel Strategy (since no two businesses are the same). However, asking some strategic questions to yourself can help you get started. Let’s go back to our dog-food online store.
For example, how will you generate revenue? Will you sell dog food as a one-time purchase or on a subscription model (recurring)? Who is your key competitor? How are they selling? What digital marketing channels are they using to reach their prospects? For example, are they heavy on social media – YouTube Videos and Instagram? Do they prefer organic search or paid ads to bring traffic to their website? (and so on).
Once you have identified the buyer milestones, you understand the buyer journey. Ensure you add value for your potential buyer in every milestone until they purchase. Voila – there is your Sales Funnel Strategy (and you know how to create a Sales Funnel)
Sales Funnel Template
To get started, you need to keep the AIDA model in front of you and list down everything you will do to cater to that stage of the model. For example, the first one is Attraction/Awareness. Let us go back to our dog-food online store. List down everything you will do to attract your larger target audience. Or things you will do to create brand awareness for your products. Do the same for the remainder of the model.
Conclusion
Sales Funnels are not static, and there is no one way to create one for your business. However, they are crucial if you wish to succeed. Identifying the buyer journey correctly and hand-holding them during each milestone they pass – is the best way to create Sales Funnels.
Also, Sales Funnels need to cater to market conditions. If something is not working, one must make a change, try and test to make the Sales Funnels leaner, meaner and more fruitful.
Simple One-Page Sales Funnel Template
Use this simple yet effective Sales Template to get started
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