What is Sales Funnel?

A sales funnel is a marketing concept that describes the journey of a potential customer. This journey typically begins when the customer discovers the product and continues even after they make a purchase. 

The structure of the sales funnel will vary depending on the company’s sales strategy. But the goal remains the same. The sales funnel guides prospects through the buying process smoothly.

An effective sales funnel minimizes gaps that could cost businesses potential customers. If a customer is about to drop off before they buy the product, the sales funnel helps you know where they are in their buyer journey. With that, you can figure out what type of content they need to push them to take the next step. A bad sales funnel that is poorly optimized can lead to lost sales.

Synonyms

• Conversion Funnel
• Purchase Funnel
• Marketing Funnel
• Lead Funnel
• Revenue Funnel
• Sales Process  

Why is the Sales Funnel Important?

The sales funnel represents the step-by-step process businesses use to attract, engage, and convert leads into paying customers. It helps marketers determine the stage of a customer's journey and get insight into their buyer process. 

This reveals which marketing strategies and platforms will encourage a customer to make a purchase. By analyzing customer behavior, businesses can adjust their messaging to align with their audience.

The 6 Stages of Sales Funnel

Not every company will have six stages or phases in their sales funnel. The elements of your sales funnels will depend on your company, industry, and goals. Nonetheless, there are six stages that make up a standard sales funnel. You can use this fundamental structure as a model to create a sales funnel that works for your company.

1. Awareness

The awareness stage is at the top of the funnel. This is where potential customers become aware of your brand, product, or service. At this stage of the sales funnel, the individual is not actively considering a purchase. They are simply learning about the existence of your brand.

2. Interest

Some people might move from the awareness stage to the interest stage if your product draws them in. After the first interaction, they may take an interest in your brand. Those who have their curiosity piqued will take the time to learn more about your business and what you offer. They may explore your catalog or website, read your blogs, or go through customer testimonials.

3. Evaluation

Equipped with the information acquired during the interest phase, your prospects will keep discovering more about your business and products. They might submit a form to obtain additional information or reach out to ask questions. At this stage, your prospects actively compare your offering with competitors. You need to respond to their inquiries and explain how your products or services meet their needs.

4. Negotiation and Decision

The potential customer is on the verge of deciding to buy your goods or service. They may start negotiating over the terms of the purchase, the price, or both, depending on what kind of goods or services you're offering. 

5. Sale

Here, the transaction is completed, and the prospect officially becomes a customer. But, the sales funnel doesn’t end here. You still need to provide a smooth onboarding experience and maintain excellent customer support. 

6. Renewal or Repurchase

The sales funnel continues long after the purchase. Businesses need to encourage repeat purchases, subscriptions, or contract renewals. To do this, you can engage existing customers with personalized offers. This strengthens brand loyalty and increases customer lifetime value.

Benefits of a Sales Funnel 

Building a sales funnel had many benefits. Here are five of them:

1. Relevant and Timely Messaging

By understanding where a customer is in their buyer journey, you can deliver relevant messaging that aligns with their needs and concerns at each stage.

2. Marketing and Sales Alignment

If a customer is too high up in the funnel to reach a salesperson, they can still get the information they need through marketing outreach. An efficient sales funnel allows marketers to respond to inquiries from customers. They can do this without involving a salesperson in the process.

3. Time and Effort Savings

With the help of an effective sales funnel, marketers can identify and eliminate unqualified leads at the beginning and allocate resources to prospects who have the best chance of becoming paying customers.

4. Improved Forecast Accuracy

Sales funnels can forecast the amount of money your company will make in the future. Tracking conversion rates at each funnel stage helps businesses predict revenue.