The Sales Funnel: Everything You Need to Know

Intro

If you’ve ever bought or sold anything, you’ve been part of a sales funnel, whether you knew it or not.

If you’re part of a business that sells products or services, you work with one everyday, whether you know it or not.

And if you’re not aware of what your sales funnel looks like, or not constantly thinking about how to optimize it, you’re also unaware of how many potential clients and dollars you may be needlessly losing.

Table of Contents

What is a sales funnel?
How is a sales funnel different from the buyer’s journey?
The leaky funnel
Stages of a sales funnel (and what to do at each of them)
The content marketing funnel
The traditional sales funnel
How to create a sales funnel
The flywheel: A sales model for today’s marketplace
Conclusion

What is a Sales Funnel?

Most simply, a sales funnel is the route that clients take from knowing nothing about your product, to making a purchase. This route is divided into different stages based on the processes that consumers go through, and the corresponding sales and marketing techniques that encourage qualified prospects to commit to purchasing. 

How is a sales funnel different from the buyer’s journey?

The sales funnel and buyer’s journey are, essentially, two sides of the same coin, one seen from the seller’s perspective, and one seen from the buyer’s. Perhaps the difference can be best illustrated in two contrasting scenarios:

1. Mr. Jones needs to buy some groceries after work. At his office, he looks up different supermarkets, reads reviews, checks the hours and locations of a few, and then selects one, gets in his car, and drives directly to his selected destination.
2. Big Foods has six entrances into their parking lot. There are eight different streets that directly or semi-directly lead to these entrances. Big Foods has noticed that, since two of the roads have been shut down for construction, traffic into their store has decreased. The addition of a boulevard on another street seems to have also caused a slight decrease, as cars have a more difficult time turning into the parking lot. The store talks with city council and the construction company about the problem, comes to an agreement, and in a short while, all access points are open again and traffic into the store jumps back up to its normal levels.

The first of these two scenarios is an example of the buyer’s journey. It’s all of the steps an individual goes through to get to their end purchasing result, regardless of what that end result is or who it’s with.

The second scenario is a metaphorical representation of a sales funnel. Looking at the purchase process from a specific business’s point of view, rather than a customer’s, the sales funnel analyzes and optimizes all possible routes of access to a business and their product. It thinks about how to maximize the amount of customers that make it through each stage of the journey, in order that the maximum amount of customers arrive and complete the final purchase stage. However, it also incorporates filters at each stage of the funnel so that unsuitable prospects are prevented from moving on, enabling sales efforts to be better focused on prospects that are most likely to purchase the product and find success with it.

Of course, all of this is much more complicated than simply ensuring parking lot entrances aren’t obstructed by construction. Customers will never run into this problem if they don’t first know that a business exists, or if they aren’t convinced that it would be a good idea to shop there. And that’s where there is some overlap and confusion between the buyer’s journey and the sales funnel; to have a sales funnel that is strong and friction-free at every single stage, the business needs to think like an individual buyer. They need to be thinking about factors that would pull a buyer into the funnel, and factors that would cause them to leak out. They need to think about how to cater to a buyer’s needs, and how to keep potential buyers focused and enthralled with their product, rather than getting distracted and sucked into a competitor’s funnel.

The Leaky Funnel

The funnel starts with getting as many people as possible to become aware of your business. As you interact more with these potential clients, inevitably there will be mutual agreement that some of them are not a good fit for your business. There’s no one product that applies to the needs of everyone, and there’s no shame in respectfully parting ways with prospects that have landed in your funnel that aren’t actually a good fit. This is why the funnel tapers as it gets lower; it merely demonstrates a more focused targeting of best qualified prospects. However, a leaky funnel happens when there are prospects that would indeed be a good fit, but whose potential patronage is lost due to an agency’s clumsy sales and marketing efforts.

The leaky funnel is a very real danger if a company is not on top of their funnel strategy. They need to be intentionally ensuring their sales, marketing, and customer success teams are working and communicating cohesively to ensure they don’t lose a prospect at any point of the progression.

Stages of the Sales Funnel (and what to do at each of them)

While the philosophy behind the sales funnel stays fairly consistent, the way it’s divided into stages can vary. Additionally, the sales funnel can be looked at from more of a content marketing perspective, which tends to divide the stages up  differently again.

The Content Marketing Funnel

When developing content to draw customers into your business, there are three levels at which you can do this. In their acronym form, these levels are called TOFU, MOFU, and BOFU - or “top of funnel”, “middle of funnel”, and “bottom of funnel”.

TOFU content is based on widely applicable topics, and tends to be the most popular. It may not be particularly specific to your product or service, but will be in the same industry. For these reasons, TOFU content is useful for introducing your company to a wide range of people, but it is also likely to pull in a lot of people who have no need for your product or services. While click rates may be higher for TOFU content, bounce rates will often be higher too, and the prospects that are collected will show very mixed levels of qualification.

Blog posts and podcasts can be published at every stage of the content marketing funnel, and there are generally forms of gated content that work at each stage too. However, blogs and podcasts on popular topics are particularly useful at the TOFU stage, while informative eBooks can also be effective at catching a wide swath of traffic.

Calls to action (CTAs) shouldn’t be too pushy at this point, and the reason is twofold: many of your readers may not fit the product or service you provide, and as the content will be the first exposure many are having to your company, they likely won’t feel that they have enough information or a strong enough relationship with you to commit to purchasing so quickly. Instead, offer additional content, either in the form of a link to another article, or to related content (perhaps an infographic or case study) that you’ve gated so that you can collect readers’ email addresses and put them on a nurture campaign.

MOFU content tends to be a bit more targeted towards your products or services, or at least more specifically targeted at the people that your services are geared towards. Of course, this limits the audience of people who will be interested in the specific piece of content, but those that do click on your piece are more likely to be intrigued with your product and be well-suited to it.

At the MOFU level, case studies, as well as more targeted eBooks and blog posts can be effective, and gated content with a follow-up nurture campaign works especially well here.

CTAs here can either be gated content, or can be slightly more aggressive, such as directing readers to a sign-up for a demo. This depends on how much information you’ve included on your services in the content that hooked the prospect.

BOFU content is very targeted to your product or service, and it’s likely that people who land on this content are already looking for something you’re offering, and may have even found your content by specifically researching your company. These prospects often know what they’re looking for and will be more or less self-qualified by the time they get in touch.

At this point, CTAs can be quite aggressive, as consumers of your content are likely looking for information on your product and may even be looking for ways to get in touch about how to become a customer. Provide links to free trials, sign-up or purchasing pages, coupon codes, demos, or friction-free ways to get in contact with your sales team to take advantage of these readers’ interest and suitability towards your product.

The Traditional Sales Funnel

As mentioned above, there are several different ways of dividing up the sales funnel. They all hold to more or less the same philosophy, some just emphasize certain elements that aren’t applicable to all industries, or that others combine with other stages. For this sales funnel, we’ve included the following five stages:

1. Awareness
2. Interest
3. Consideration
4. Purchase
5. Advocacy

Each title outlines the main goal of promotion at each level. At the first stage, awareness, potential customers may not even realize they have a problem, or may not realize the scaling potential your product or service opens up for them. Your goal here is to promote that awareness, to educate about the overall state of the industry and the prospect’s place in it. This will largely be done through content marketing efforts, but could include sales calls, networking events, or tools such as Vendasta’s Snapshot Report as well.

The goal in the second tier is to promote interest, mostly in the type of solution that you have to offer (this may involve more education on the problem you solve). Examples of this may include an explanation of the benefits of your type of solution, or a discussion about why this solution is better than others. Most of the methods used in the awareness stage of the funnel can be used at this point as well.

In the third tier, you want to encourage consideration of your specific offering. This may involve sharing comparison pages, benefits analyses, case studies, testimonials, providing links to demos, having sales people personally reach out to prospects, and more. Basically anything that gets people thinking your company is the one that they want to partner with, more than any other.

Though it's important at every stage, in the consideration stage in particular, you'll want to use sales CRM (customer relationship management) software that prioritizes your leads, identifying who to reach out to and when so that you're achieving the best results. Vendasta's CRM includes a Hot Leads feature that sends you a notification anytime a potential client is looking into your company so that you can get in touch immediately and take advantage of their interest before they get distracted by someone else's product.

Now the moment of truth, the purchase stage. To get people to cross this hurdle, make the process as friction-free as possible. Offer them a free sign-up, free trial offer, or perhaps a coupon code. Have one of your sales people get in touch (ideally they already have been before this stage) to answer any questions they have, or to gently nudge them along.

While it may feel like your job is done once the client has made a purchase, don’t forget about promoting advocacy amongst your customers! First, make sure you’re checking in with them regularly, doing all that you can to ensure their success and tackling any gripes they may have. Then, politely ask for their reviews, testimonials, and depending on your industry, you may even offer them referral incentives.

Related Reading: Inject your sales funnel with a little turbo power. Find out about Product-led Growth here.

How to Create A Sales Funnel

Step 1:

So you have an understanding of the different stages, and what to do in each of them, but now what? How do you create a customized sales funnel for your agency? Fortunately, there is just one main piece you have yet to tackle. You have to determine who your ideal customer is, and in turn, what their needs, desires, pain points, and potential areas for growth are. Once you have determined who that is, you need to put yourself in their shoes (you could even interview or survey some prospects who fit the bill) to determine how to optimize each stage of the funnel so that it catches and keeps as many prospects as possible. For example, perhaps you’ve determined that your ideal clients are local cafe owners. Some questions you may ask could include:

• Do they tend to have a lot of extra time on their hands? What pain points may arise from this?
• Who are their main competitors? What edge do they have over their competitors? What edge do their competitors have over them? How can that be overcome?
• What are some of the latest trends or developments in their industry? Are they keeping up with these trends?
• Who are their customers, and what do they want?
• Are they serving their customers’ needs and desires well? Could they be doing better, and is there a way you could help them with that?
• What is the main threat to their business? What is the main thing they’re afraid of? How can you help them overcome that threat? (Sometimes what clients perceive as their biggest fear is not their biggest threat in reality. Ideally you’ll be able to address both.)
• What is their biggest area of potential? How can you help them take advantage of that?
• What is the best way to reach these people?
• Where are they looking for solutions?
• Where are they networking?
• Do they tend to be tech-savvy or not?
• What methods of marketing and sales do they trust? Which methods do they distrust?

Equally important, you have to determine who your customer is not. Sometimes to serve one group really well, you have to rule out another. Determine how wide or narrow your targeted customer base will be, and think about how many different client personas lie within that range. For each persona, go through the questions again, recognizing that each will have different needs and will interact with your product differently. Think about their stability as customers (will they be long-term, repeat purchasers? Or are they in a particularly volatile and unpredictable industry?) and be realistic about how this will affect your agency. Reflect on whether or not you’d like to alter your idea of a target client, or if you need to adjust your sales and marketing in light of your client’s stability.

Step 2:

Now that you have an idea of who your customer is, you can approach them on their level to introduce your agency to them. Depending on who your customer is and how knowledgeable they are about their industry, this will likely be reaching them at either the awareness, interest, or consideration stage. Make yourself present and active through the mediums they’re using, providing resources that hit all stages of the funnel as outlined above. This should be the time you’re showing prospects that you understand their business, their fears and struggles, so you need to be addressing the things that are on the top of their minds, the things that they’re the most concerned about. You need to demonstrate that you have the passion, understanding, knowledge, and experience that they can rely on to swoop in and save the day when that’s needed, but also you want to show that you’re a valuable and reliable partner for them to form a more long-term relationship with as well. To establish this reputation for yourself, you’ll start by publishing a body of content on topics that are relevant to your prospects, while reaching out using tools such as Vendasta’s award-winning Snapshot report to deliver a personalized run-down of prospects’ businesses, highlighting gaps in their sales strategies and emphasizing the need for your services.

Step 3:

After making contact, you need to ask questions of each prospect to find out what stage of the funnel they’re in, and what they’re top concerns are, then simply follow the rest of the funnel, promoting awareness, then interest, then consideration, the purchase, and finally, advocacy. Don’t rush through any stage; though you will inevitably be talking at your prospect for some of the interaction, be sure to keep asking questions to determine if there is any concern or confusion that keeps the prospect from getting fully on board with what you’re telling them. Once you’re sure you both see things eye-to-eye, move on to the next stage. Perhaps the most important thing to remember in all of this is that you genuinely want to deliver success to your clients. If your first concern is just making the sale, you may have short-term success, but you’ll be missing out on a lot of long-term energy your sales funnel can develop if you’re neglecting the customer success factor in your formula. Whatever videos, sales calls, tweaks to your product, email campaigns, or blog posts you create, always do so with the goal of making the experience more positive, friction-free, and “sticky” for the prospects already caught in your funnel. After every single interaction, reflect on any areas that could have been smoother for the client. If you consistently maintain this practice, you may eventually start having prospects slide right through the funnel to that purchase and advocacy stage with far less cost and effort than you ever believed was possible.

The Flywheel: a sales model for today’s marketplace

The sales funnel is a concept that is almost universally recognized in the sales world, but that might be partially due to how long it’s existed - it’s been around since 1898, after all! While some of the ideas it’s built on are timeless, the world and the way we buy and sell has changed so much over the past 120 years; it only makes sense that some adjustments need to be made. Interestingly, funnel devotees seem to recognize this, as the sales funnel has actually recently evolved, adding “advocacy” as a new final stage. The increasingly popular emphasis on the customer experience factor in sales is more evidence of new ideas that have been brewing in response to the changing marketplace. These new inclusions are an acknowledgement that a successful sales strategy does not end with the purchase (as the original sales funnel modelled), but rather it needs to look at the bigger picture of the entire customer experience.  These realizations were first formally popularized through Jim Collins’ work on the sales flywheel. See the video below for a further explanation of what a flywheel is, and why some argue that it officially makes the sales funnel obsolete.

Conclusion

However you realize your sales model, rest assured that you can build your plan on both a rich history of tried-and-true sales theory, as well as an active group of thought leaders responding to the way the world marketplace is changing everyday. Taking advantage of both, you are armed with all you need to skyrocket your team to new heights of sales success.

How Vendasta can help

Pull prospects right through to the bottom of your funnel in next to no time at all. Cut down your cost of acquisition. Provide your clients with data-backed proof of your value. All this and more with Vendasta’s award-winning Snapshot Report, an automated, personalized rundown of your clients’ and prospects’ online presence. Show prospects what people are saying about them, what search engines are reporting inaccurate information, how their website is performing, how they can be more visible, and much more!