What Is a Sales Funnel and Why Is It Important for Your Business?

Marketers globally emphasize the importance of a sales funnel, but what does it mean? In the real world, a funnel is similar to a tube with a wide top and narrow bottom used for guiding liquid or powder into a small opening.

Applying that definition to sales, you can get the pictures that a sales funnel also guides customers to purchase. Meanwhile, you will need a sales funnel strategy to increase your sales numbers significantly.

Are you aiming to grow your business quickly and want big numbers? Sales funnel marketing is what you need. Keep reading to learn how to create a sales funnel and more!

Understanding the Basics of Sales Funnel

A sales funnel is a marketing term that describes the journey that customers go through until they are ready to buy and after purchase. Generally, there are four sales funnel stages that a customer passes through.

At each sales funnel stage, you can convince customers to choose your product or service above the competition.

The Three Parts of a Sales Funnel

Although a sales marketing funnel has four main stages, it is divided into three parts.

Let’s see them in more detail below:

• The Top of the Funnel (TOFU): At the top of the funnel, you attract prospects to your business through social media content, a landing page, or a blog post. Who is a prospect? A prospect is likely to become a customer but is unaware of your brand. At this stage, they are experiencing a problem and searching the web for answers.
  
• The Middle of the Funnel (MOFU): In the middle of the sales funnel, you should create strategies to interest them in your product or services. At this stage, you are positioning your business as the immediate solution to their problems to convert them.  You can now refer to those at this stage as leads. They have shown interest in your brand and would likely buy if you do things right.
  
• The Bottom of the Funnel (BOFU): This is the stage where leads turn to customers, and customers turn to repeat customers and possibly advocates. At the bottom of the funnel, you have already convinced customers beyond doubt that you are the right choice for them, but it doesn’t stop there.

You have to over-deliver to ensure they keep coming back. With sales funnels, it is possible to convert 26% of the total number of leads with your landing page, according to recent statistics from Market Splash. 

The Importance of Sales Funnel for Your Business Growth and Success

The uses of the funnel in sales and marketing cannot be overemphasized. It is the best way to understand customers and how they make their purchasing decisions. With a defined sales funnel journey, you can identify customers’ touchpoints with your brand and the stages of each customer’s sales journey.

Keeping track of this insight will help you optimize your sales funnel and increase conversions. Remember that the numbers will likely drop as customers move from the top to the middle and bottom of the funnel.

One typical sales funnel example is a business owner struggling with sales and looking for a solution. They search for how to increase sales on Google, and the first result says, How to skyrocket your sales in 2024. Clicking on it with the hope of finding answers, they learn new strategies to boost their sales.

They also came across more helpful tips on the site. Seeing how they can get results with free tips, they became interested in this sales brand and contacted their sales team to inquire further about their packages. They loved their offers and finally purchased the smallest package, and after a month of trial, they wanted to renew. This shows that the sales company has optimized its sales funnel strategy.

Different Stages of a Sales Funnel and How They Work

Every business uses a general sales funnel with four stages, which may vary per company.

In this section, we will review the four stages of the sales funnel, so you can get familiar with it.

Awareness

The top of the funnel is called the awareness stage – the most populated sales funnel stage. Here, you are creating awareness about your brand to unaware prospects.

Awareness can come in different forms, from spotting your paid advertising to reading an article that answers their questions on your site or word-of-mouth marketing from friends or family.

The following are several to attract visitors:

• Social Media Ads: A Facebook or Instagram ad that leads prospects to your site.
  
• Google ads: You can run your own Google ads or use Google advertising services for effective digital marketing.
  
• YouTube Videos: A well-optimized how-to or tutorial video can appear on Google and YouTube search results.
  
• Infographics: Convey exciting statistics and facts with simple and uncluttered designs.
  
• Blogs and Guest Posts: Write informative and SEO articles that will show up on Google’s first SERP.

Ensure you follow trends to produce content that delights customers immediately. Additionally, evergreen content can be a great traffic source and create awareness of your business. Use the People Also Ask section on Google and platforms like Reddit and Quora to know what people are asking for.

Interest

The first content has probably hooked a good percentage of your target audience. Attaching links to other helpful content is a great way to get people interested in your brand. This way, they can easily navigate to other resources and spend more time on your website. 

To stay at the forefront of our customer’s minds, provide them with beneficial resources they won’t find anywhere else, and don’t be overly salesy.

The following are ways to pique the interests of your prospects:

• Ebooks and long-form articles: By continuously providing helpful information to your audience, they will also keep developing interest in you.
  
• Landing pages: Include links to your landing page to inform the customer of what you can help them achieve without overtly selling, which will pique their interest.
  
• Lead magnet: Through lead magnets, you can gather leads using forms.

Webinars, coaching sessions, cheat sheets, and online courses are other ways of attracting an audience.

Decision

At this stage, the customer has decided that they want to buy. They understand that they need your product or service to achieve their goals, but you aren’t the only business providing similar solutions.

In choosing your brand, they would have compared pricing, benefits, offers, and other factors specific to them to find the best option. In any case, you want customers to choose you.

Therefore, do the following:

• Email campaigns: Email allows you to communicate with leads on a personal level, making them trust you and consider you their friend.
  
• Product reviews and comparisons: By creating objective content on product comparisons, you help customers see why they should choose you.
  
• Testimonials from satisfied customers: Showcase reviews from past customers.
  
• Direct response copy pages: Develop a sales landing page that presents compelling offers with massive deals, discounts, and coupons.

Depending on the product, a demo allows your customer to test it before paying for it. This shows that you’ll deliver on the promise and solidifies that decision.

Action

The customer has finally chosen you, but you have to take steps to ensure they are repeat customers. Market Splash says 70-95% of revenue arises from upsells and renewals. So, having repeat customers is more profitable than acquiring them.

Improving customer service by personalizing your service towards each customer, constant follow-up, and reminders will keep you on top of their minds.

The following are ways to keep customers happy and keep them coming back:

• Customer loyalty program: You can enroll them in a loyalty program with a point system for rewards like discounts.
  
• Surveys: Customers should be able to share their thoughts to help you know how to improve their experience.
  
• Email campaigns: Well-organized and personalized emails can encourage customers to buy more high-value items or a combination of products.

Depending on the complexity of products, offer them training to learn how to navigate your product. Since you know how each stage of the sales funnel works, it is time to understand the best practices guiding a sales funnel strategy.

Creating a Sales Funnel that Works for Your Business

There are some businesses that have yet to identify their sales funnel, so they don’t know which channels bring them the most customers and waste resources. This method often leads to a waste of time, effort, and resources.

In the next lines, we will provide you with the best practices to employ when building a successful sales funnel strategy.

Landing Pages

The landing pages are vital for the ecommerce website setup and are the first thing leads see when they visit your website. If you aren’t able to compel them, the first impression becomes the last impression. The key to a great first impression is creating matching messages. 

Whether paid or organic ad, ensure that the meta description on the SERP matches the landing page’s content. It should not mislead them, or it will come off as spam or clickbait. Provide concise explanations of your product offerings. Use A/B testing to know which headline and meta description works best, and lastly, use lead magnets to capture your lead’s information. 

Live Chat

Since every profitable business aims to convert as many visitors as possible, why not introduce new means for customers to reach you? Some large corporations don’t have the means for customers to get them quickly.

Through live chat, customers can promptly contact you and ask questions. Besides that, visitors don’t want to purchase from a company without talking to a real person, and what better way to talk to someone than live chat?

Your conversion rate may increase or drop depending on how you respond to each customer. You can take your live chat steps further by adding extra features, like screen sharing, to help clients navigate the new technologies you use.

Customer Relationship Management

The goal of every business is to see a return on investment (ROI), but with CRM integration, you’ll likely see a four times higher ROI with CRM tools.

Your sales department needs a real-time CRM solution to manage and stay connected to customers.

Write Compelling Blogs

Who are your audience or customers? Put yourself in their shoes and walk their walk. What would they see on the website that would keep them glued? Think of detailed guides they can’t find elsewhere and industry insights that help them answer questions they desperately need answers to.

Most consumers will likely purchase from a business after consuming early-stage educational content. Imagine studying on a site, and you keep saying, Wow, they have a guide on this? I have been looking for ways to be a better parent.

Activate Retargeting

Ad retargeting is integral to digital and omnichannel solutions, helping boost conversion rates. However, it can be challenging to convert first-time visitors who immediately vanish from your site. 

Retargeting them is a way to remind one-time visitors of your promise to them. It would likely convince someone who didn’t know about your solution but often needs your products or service.

How to Optimize Your Sales Funnel for Maximum Conversion Rates

After mapping out your sales and marketing channels with their respective content for each customer at different stages, optimizing the funnel for maximum conversion rate is essential.

Let’s see how in the below lines.

Source: Calm.com

Optimize Landing Pages

Like its name, it implies the page customers will land when they stumble on when they click your website link. Whether it’s an article, homepage, sales page, or webinar, you should optimize the page to communicate your offerings and benefits. 

You must rely on your hook and maintain consistent messaging and brand voice across channels. For example, Calm did well with the night sky image on their landing page with a caption that says: Meet Calm, the #1 app for sleep and meditation. The image and overall theme will soothe visitors and make them opt for Calm.

Optimize Your CTAs

Not including CTAs on every landing page is a waste of marketing efforts. Even if it eventually converts one person, it’s better than not putting a call to action that tells people what to do or where to go. A button directly indicates what a customer should do and cuts through the fluff. 

They can know precisely what to do on each page if they don’t have time to read every detail. A CTA button is as simple as saying, Sign up for a free trial or Jump on a call to learn more.

Capture Leads

Nowadays, when getting to many websites, a popup message appears when getting to or leaving the site. The popup most likely offers a lead magnet that gets them to input their details to show their interest in your product or service.

After collecting your lead’s details, you should nurture relationships with them with consistent and timely messages. Don’t wait until a year before sending messages; most people will have forgotten you by then. 

The key is to remain in their consciousness without overwhelming them. Delaying interaction, such as waiting a year to reach out, risks being forgotten as people’s attention spans and interests shift rapidly. Effective lead nurturing keeps your brand at the forefront of their minds, gently guiding them down the sales funnel.

Incorporate Social Proof and Trust Signals

Insert trust signals around your website and landing pages, such as star ratings and social profiles like reviews, to show your credibility.

For meal stores or restaurants, showcasing honest customer feedback through delivery performance ratings, visual thumbs-ups, or detailed reviews can dramatically impact a potential customer, assuring them of the quality and reliability of your service.

Optimize Conversion Stages

Many leads will not buy if the shipping, tax, and other miscellaneous fees are too high. Some customers would only purchase again if your shipping time is short and customer service is good.  Also, keep the payment process simple using a well-optimized payment gateway, and don’t ask customers to sign up at checkout. Leave that for the “Thank you” page.

Most use metrics and measurable goals to track sales performance. Some metrics, such as Opt-in conversion rate (prospects who become leads) and Sales conversion rate (leads who become customers), can help you measure performance.

Common Mistakes to Avoid When Building a Sales Funnel for Your Business

Next, we will review some common mistakes that most business owners make when building their sales funnels.

With this information in mind, you should be able to avoid the mistakes and better understand the importance of sales funnels for your business.

Failing to Identify Your Target Audience

We have emphasized identifying your target so much that we now sound like a broken record. It’s simple: you can’t sell to those you don’t know.

Even by demographics, you can speak to baby boomers the way you will speak to GenZs, so it would be a waste of resources if you don’t know who you are selling to.

Failing to Create Compelling Content

Content marketing has moved past just providing information. It’s about creating excitement and creating a seamless experience for customers. It’s what you say and your attitude. When creating content, rely on effective digital marketing strategy, as you should offer value and be memorable. 

Creating a memorable experience involves using conversation and acting like a friend who will scold you but is doing so in your best interest. In addition to those, include videos or images and provide examples. Additionally, your headline will set you apart. 

Difficult Conversion Process

A lead has chosen you and wants to pay, but your payment gateway isn’t intuitive, or the product they mustered the courage to buy is suddenly out of stock. This is called slapping oneself in the face. 

A simple payment process and ensuring product availability are imperative to converting leads into customers. Any hiccup at this stage frustrates potential buyers and undermines the trust and interest you’ve worked hard to build.

Not Offering Incentives

Once visitors become aware of your brand, you can boost their interest by offering free trials or consultation calls to learn more about them. During their conversation, you can convince them further so that when deciding, they choose you.

You can address their needs and concerns and nudge them to choose your solution by giving bonuses. Incentives are a great way to enrich the customer experience and increase the likelihood of conversion. Additionally, you get to show them what you can do in a few minutes.

Not Tracking Your Results

You cannot know whether your sales funnel works without tracking your results. Although most funnel-building tools have funnel analytics, you can also set up Google Analytics to gain in-depth insights into how people interact with your funnel.

You can identify where potential customers pull out and gauge the overall performance of your funnel. Such insights are invaluable for making informed adjustments and optimizing your sales process for better conversion rates.

Not Performing Split Tests

In the sales funnel, you should find out what makes visitors excited and what turns them off, and that’s where split testing comes in. Split testing, or A/B testing, involves comparing two versions of a webpage, landing page, email, or other marketing assets to determine which performs better.

Not performing split testing will make you uncertain of your most significant source of traffic and most effective content types.

Indeed, creating personalized messages appealing to leads and one-time customers is how you convert them to repeat customers and advocates for your brand. Without following up, you can’t convert the right people, so you may have to start from scratch to attract visitors and then convert them.

Tools and Technologies for Sales Funnel Management and Optimization

Sales funnel management software is a tool for managing and optimizing your business’s sales funnel. After using a tool like NEXT BASKET to set up your e-commerce store, you need a tool to help you manage visitors who come in contact with your site. 

Aside from popular CRM tools like Hubspot and SalesForce, the following are CRM tools that are readily available to help small businesses. 

Zendesk Sell

Zendesk Sell is a Customer Relationship Manager (CRM) tracking the complete sales funnel. It offers a lead tracking system with intuitive lead generation tools like web forms, landing page builders, and automatic lead scoring. This CRM also provides user-friendly contact management features to pull up customer information instantaneously. 

Other features Zendesk Sell provides include a customizable dashboard, goal management, lead management, campaign management, data import/export, sales dashboard, analytics tools, prospecting tools, email intelligence, and mobile access.

Leadpages

Leadpages is a non-code landing page builder and CRM with features that help grow and manage email subscribers. Like Zendesk, it offers real-time tracking so users can tell how their sales funnel is performing. 

They also offer a drag-and-drop builder that allows businesses to customize pre-made website templates with built-in conversion kits. These kits include checkout forms, alert bars, pop-ups, and AB testing. Other features include online booking tools and data import/export.

ConvertFlow

It’s a tool for building and converting pages, pop-ups, and forms. ConvertFlow is famous for re-targeting CTAs and insightful split testing. It offers tools like sticky bars for creating sales or promotional announcements and tools like survey creator to segment your potential customers. ConvertFlow also offers features like campaign segmentation and behavioral targeting to send out marketing materials based on segments like website visit history, location, and interests.