What’s a Sales Funnel and How Does It Work?
When researching this term online, you might see it referred to as any of the following:
- Sales funnel
- Sales process
- Purchasing funnel
- Consumer journey
- Revenue funnel
However, they all describe the same process, the journey through which customers travel as they transform from strangers to loyal customers.
Definition
What steps do customers take as they discover your brand and then buy products from you? If you think of a physical store as an example, it might start with a stranger walking past the shop window. While some people walk past, others take a risk and step inside. From here, the next stage of the funnel begins as they start looking through the amazing products.
After testing the products and deciding that they will add to their lives, they take them to the checkout, thus beginning the next phase. If all goes to plan, they’ll spend their hard-earned money, and the journey is complete. The person went from a stranger to a new customer.
This is a very simple example, and you can probably imagine that sales funnels are far more complex now with the internet. For example, one single customer might encounter a business through social media ads, landing pages, website browsing, product pages, emails, and various other channels.
Importance of Sales Funnels
Why is it important to even think about sales funnels? Well, it describes the typical paths taken by customers before they spend their money. With an understanding of your funnel, it’s easier to highlight the blockages, gaps, and other problems causing people to fall out of the funnel.
Currently, people are slipping through the cracks because gaps encourage competitors to steal leads away (sometimes at the last second). By understanding the sales funnel, you can plug these gaps and ensure that all prospective leads have the right resources and content to pass through smoothly. In other words, you create an environment that welcomes all leads and ensures that they spend their money at the end.
With no understanding of the sales funnel, it’s impossible to optimize it. Therefore, you’ll always know that inefficiencies and failures exist without doing anything about it. You’ll have to live with the fact that the business isn’t encouraging as many sales as it could.
Four Stages of a Sales Funnel
Often, the stages of the sales funnel are broken down into four sections: awareness, interest, decision, and action. As a business or marketer, you need to address each stage equally and encourage prospects to pass through the stages before then taking the required action. We’ve focused heavily on customers buying products, but your desired action might instead be signing up for a newsletter or something else.
Awareness – Here, the customer encounters your brand for the first time. They might see a Facebook ad, your link on Google, or a tweet. Either way, they become aware of your service and products.
Interest – Rather than just understanding a problem, the interest stage is where consumers shop the market and look at the various solutions. At this stage, you’re still trying to inform rather than sell. Make yourself the most attractive option without directly selling.
Decision – Now, the customer is finally ready to spend their money. However, they haven’t decided whether they will buy from you or another service. You need to persuade them that you’re the best option with free shipping, promotions, discount codes, and other special offers.
Action – Even though the customer has reached the bottom of the funnel here, your work isn’t done. You’ll need to follow up with customer retention techniques – emails, social media messages, tutorial videos, and support.
