Sales Funnel: Definition, Stages, and Types

Anna Lomsadze

Apr 12, 2022

What Is a Sales Funnel

All business owners know the pain of losing a sale. Remember when you worked through nights to develop that amazing pitch and demo? But when push came to shove, you lost that sale? 

If you're familiar with an experience like that, then it is probably about time you learn more about the sales funnel.. 

Unsure what exactly a sales funnel is? It is a term used to describe the purchase journey of your beloved customers. 

So why call it a funnel? Well, it's because of how your prospect count reduces with every stage. As users move down the funnel, they're being filtered by their purchase intent. By the time they get to the bottom of the funnel, all of your prospects are qualified buyers that are ready to make a purchase, sounds cool huh!?   

sales funnel purpose

The process of developing a sales funnel is not always simple. Creating a sales funnel can be a wee bit more complex as a process, than building a simple landing page. But if you do it right, it can boost your business with some thought and research.

A well-developed sales funnel can help curb the number of sales you lose. 

By breaking down this sales journey into different stages, you can understand what customers are thinking at each stage. And also what they might be thinking about when they leave your site without purchasing.

In this article, we will go through the simple, yet super important stages and benefits of the sales funnel.

What are the Stages of Sales Funnel?

Even though a sales funnel is said to have 4 stages, these stages still may vary (give or take a few) from business to business, and their sales model. But for now, let’s stick to the 4 major steps:

Stage 1: Awareness

The journey of your potential customer begins with discovering your brand. Now, they may have heard about your products or services from a friend at work, or perhaps they happened to see that social media ad that popped up on their Instagram story. The awareness stage is where they merely become "aware" of you. How you get them to move down the funnel from here is dependent on how compelling your pitch is to them.

Stage 2: Interest

So, your customer saw your ad or maybe even heard about your product, but why would they be interested in you? You have to be the solution to their problem. Let's say you run a sportswear company, and a runner (your potential customer) needs to buy a pair of running shoes. And boom! They find you; just what they are looking for. But that's not it- They will probably do competitive research to make sure you give them the best product at the best price. And that's how they will reach the next stage of the funnel.

Stage 3: Desire

Once you've gotten to this stage, your reader is ready for the final push. They know what the product does, and they like it. Now all you have to do is change that attitude from "I like it" to "I want it."

And that is done by building trust. How? Just keep serving them content and value. The more value you give them, the more likely they are to say "I trust this company with my purchase." 

Pro Tip: Coming across compelling sales pages, webinars, and blogs in this step of the journey can help sway them to take action (and buy).

Stage 4: Action

The action is what it all comes down to; whether or not they finally make the purchase. If it's a near-miss, you can try a retargeting campaign. Show your prospect products that they may have checked or added to their wishlist or shopping cart. Don't hold back from letting them know just how much you miss them.

Benefits of Having a Sales Funnel

Gone are the days when your sales team could get away with saying, "We're not sure how this deal happened, but it did!"

In today's world, where sales cycles are getting longer and more complex, companies need to demonstrate a clear path that leads customers to purchase. That's where the sales funnel comes in.

Here are 5 benefits of having a sales funnel:

1. A sales funnel can help you deliver the right message at the right moment and to the right audience.

2. It also enables alignment between marketing and sales (being consistent in messaging is crucial).

3. A sales funnel creates commitment and loyalty. 

If set up correctly and managed efficiently, the sales funnel can help you build customer loyalty. Being there for your customers early on in the process, establishing trust, following up, and influencing their decision-making process - will keep you ahead of the sales game.

4. And, perhaps, the most important point… a sales funnel focuses only on hot or qualified leads. The sales funnel helps you prequalify people. 

5. You can track sales metrics that matter to you and adjust the funnel to your needs—crafting a perfect journey for your customers. 

A well-developed sales funnel can help curb the number of sales you lose. By breaking down the sales journey into different stages, the sales funnel also helps identify the customer journey gaps. 

For example, if you find any of your prospects quitting in the decision-making stage, then that could imply that they don't have enough information on you to make an informed decision. Or maybe the information they have is not working in your favor. 

When you’re trying to close a deal, there are a few ways to go about it. You could just send a direct message and hope for the best. You could call them up on the phone, but that’s scary if you’re not sure you’ll get them. 

Or, you can use these steps in your sales funnel to help nurture the prospect and make sure they convert into a customer without seeming too much effort (or maybe even without any effort at all) on their end.

An Overview of How to Craft a Perfect Sales Funnel

When you start thinking about crafting your sales funnel, you need to understand that a sales funnel is a process, not a product. It's all the ways people get from knowing nothing about your company and products to becoming loyal customers who would vouch for you and recommend you to their peers and family.

Before you can start building your sales funnel, you need to gather some data and understand your customers. You need to know where they are coming from, their interests, what problems they're trying to fix, and how you can help them with your products. The better you understand your audience, the more effective your marketing will be. And if you don't have any customers yet, you need to do some preliminary work before getting started.

Step 1: Gather the data & Understand your customers

Your sales funnel is the key to your success. It's the map that leads your customer from curiosity to conversion. The better you understand your customers, the more effective your sales funnel will be, so it's important to take the time to do research.

Step 2: Understand the stages that your customers will be going through with your funnel

You need to understand each step of the funnel in-depth to be able to offer what your customers seek the most.

Step 3: Make sure your sales team (if you have one) is on the same page

Once you understand that process, make sure everyone on your team is on board with it—you don't want a disconnect between sales and marketing!

Step 4: Grab your customer's attention (SEO, social media, referral traffic, paid ads)
You've got your product, and now it's time to get it there.

A great way to do that is to optimize for SEO.

But why SEO? You can build the greatest product on Earth, and no one will ever find it. That's why you need to optimize your website for SEO. Search engine optimization targets the right words and phrases to make sure you're found by the people looking for your product on the search engines they use most.

Step 5: Choose the channels to capture your leads
Once you've got your potential clients looking at you, make sure they stick around.  Choose channels that fit who they are (email or text) and what they're willing to give up in exchange for more information (their email address or phone number).

The sales funnel is part of the process that every company goes through when it comes to lead generation and conversion. It's a pretty long process, and there are several steps that you have to go through to do it right. But here is the good news: you can use the same funnel for all your marketing efforts to get the best possible results.

That’s it! Pretty straightforward and simple. Now you know what a sales funnel is, why you need it and what its key elements are.

We bet you want to try building one right away! But hold on, because the second part of the sales funnel article series is going to cover the  “6 essential steps to build a sales funnel that converts". So make sure you subscribe to our newsletter and don't miss out the next issue!

Written by:

Anna Lomsadze

Junior Marketing Manager

Apr 12, 2022

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