What is a Sales Funnel?

What is a Sales Funnel?

The journey from prospect to customer takes many forms, but it is generally known in marketing as the “sales funnel.” The term funnel comes from how narrow the road to being an actual customer becomes the closer people get to buying. If everyone who had ever heard of your brand made a purchase, you would have retired to Tahiti by now.

The purpose of the funnel is to build a process that will help move as many people as possible from the first stage – generally known as the “Awareness” stage – through to the purchase stage (also called “Decision”). The stages of your funnel depend on several factors, including your industry, process, team, and resources. We’ve seen funnels with ten steps and funnels with three. We tend to think of our funnel as a five-step process.

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

We’ll dive into each step, but it’s important to note that these stages are not all in the realm of sales. Really, the first two are mostly up to the marketing team, numbers 3 and 4 are up to the sales team, and the last one is a combined effort. We’ll give a brief overview of the marketing steps, but today we mostly want to focus on the sales steps (you can read more about the marketing funnel here).

For now, we want to just make sure this point is clear: while the marketing funnel and sales funnel are different parts of a whole, it’s important not to mix them up. The marketing funnel is about capturing the attention of people and getting them to take an interest in your company. The sales funnel is about closing the deal. It’s very easy to confuse the two and start trying to close the deal from the first touch, but coming on too strong is the best way to chase off valuable prospects.

In other words, let marketing do its job and let sales do its job. Avoid conflating the two. That road leads to disappointment on your end and alienation on the users’ end.

One other note: the sales funnel is not the same thing as the sales pipeline. The pipeline is where your sales team tracks the information on leads such as current number of leads, size of each lead, close ratio, and more. The funnel where you bring prospects in from Awareness and all the other fun stuff, which we’ll get into right now.

Awareness

At the Awareness stage, strangers become prospects. Remember when you lived with your parents, when you didn’t even realize that you would need to buy paper towels at some point in your life? Basically, this is the point where people graduate from that blissful world where paper towels just magically show up every time the roll runs out and begin to need paper towels.

As we said before, this stage of the funnel is handled by your marketing team (or person), so we won’t dive too deep, but this is an absolutely essential stage in the process. The entire funnel begins here. If you’re not catching the eye of 20-somethings when they first realize they need paper towels, how will you ever close them?

Content that will engage people in the Awareness stage

Types: Blog posts, ebooks, quizzes, surveys, conversations on social media, email newsletters.

Topics: Keep it high level and speak to the problem your prospects face. Think about what people would type into Google to find you. “What is…” “How do I…” This is the stage where all that keyword research you’ve been doing finally pays off!

Interest

At this point, the prospect understands their problem and has decided that your brand is in the running among those that may earn their purchase. Basically, they’re on their way to Target to buy paper towels. They have stepped into your funnel, but could fall out at any moment. It’s a delicate balance here because Target doesn’t just carry paper towels. They carry normal towels and other options like the Shamwow (okay, maybe Target doesn’t carry the Shamwow, but you get the idea).

At the Interest stage, prospects know you exist, so now it’s up to you to prove that your particular type of solution is the right one. Your prospects know what their problem is and now they’re considering multiple ways to solve it. Again, this step is largely the marketing team’s responsibility, so you don’t want to come on too strong.

Content that will engage people in the Interest stage

Types: Webinars, ebooks, blog posts, email drip series, email newsletters.

Topics: Compare your type of product vs. others. If you were selling software, this is where you would compare your software solution versus outsourcing versus manual solutions. Don’t get too granular yet.

Consideration

All right, now it’s the sales team’s time to shine. This is where your funnel should turn from a marketing focus to a sales focus. Your prospects understand their problem and they want your type of solution, now you have to make them want your product. At this point, your prospects turn into legitimate leads.

Content marketing is largely built around the idea that if you educate consumers well, they will recognize you as a trusted brand and come to you when they’re ready to purchase. At the Consideration stage, your interactions with them can still begin with education, but you also want to start working in some persuasion. This is where your sales team should be sending prospects product comparison guides, demo videos of your product, and other items that plainly spell out the value of your specific product.

Imagine our paper towel shopper in aisle 7, overwhelmed by the myriad products available that all seem to accomplish the same task – cleaning. This is where you have to prove that your particular brand is the right choice for the shopper. Notice, it’s not necessarily about being the best product out there, it’s about being the right product for that customer. Maybe the guy in the flannel shirt on the logo caught the customer’s eye or the cartoon bear on the package made him smile. Whatever the reason, you want your brand to connect with the right prospect.

The difficulty many companies run into at this stage is that the sales team is often so eager to land the deal that they jump the gun and push the sale before the prospect is ready. Give your sales team the freedom to be patient and you will be surprised how much happier everyone is – prospects and salespeople included. A company that is willing to play the long game will earn their customers’ respect instead of being overly pushy and scaring away any possibility of repeat buyers.

Content that will engage people in the Consideration stage

Types: Product comparisons, demos, consultation meetings, email newsletters.

Topics: Your product vs. other products. This is the final stage before a purchase is made, so now is the time to really pitch your solution.

Purchase

Your prospect has made it all the way from the top of the funnel to the point where they’re finally ready to part with some money in exchange for a solution to their problem. This is where the sales team wants to live every day, but as we said above, encourage your sales team to be patient and respectful of the fact that everyone travels through the sales funnel at their own pace. Not everyone responds well to the hard sell. In fact, most folks don’t.

There are several ways to close a sale. Regardless of how your leads are closed – on a webpage, over the phone, in person, or some other interaction – it’s important that you make the purchase as simple as possible. This is not the time to ask for additional user information.

There’s a national music store chain in my town and every time I buy guitar strings there, they ask me for my phone number and address. Every time that happens, I consider walking out without my purchase. Seriously, I’m ready to give you my money, and now you’re going to put obstacles in the way of that? I understand they’re trying to stay in contact with me and track their shoppers’ habits, but the moment of purchase is a terrible time to ask for additional info (unless you need it for billing and shipping reasons, of course).

The exchange of money for goods is the point of the whole funnel – and conversion rates across industries are not the kind of numbers you would normally get excited about – so make every sale as simple as possible.

Content that will engage people in the Purchase stage

Types: Landing pages, clear and simple customer interfaces.

But the funnel shouldn’t end there. Unfortunately, many companies view the Purchase as the last stage of the funnel, leaving out one of the most lucrative stages…

Delight

After you’ve turned your prospect into a lead and then into a legit customer, it’s important that you don’t stop communicating with them. The number one source of quality new customers is referrals from existing customers. A lot of companies ignore this step, leaving thousands of opportunities on the table. Make sure you continue to delight your customers with further education, giveaways, discounts for loyalty, and more. Reach out via email to let them know about new products, upgrades, and other opportunities to buy from your company.

One great option here is a newsletter that announces company news, including new releases. Once someone has bought from you, this is a great way to stay in their mind and keep them engaged with your brand. Chances are better that customers will forward your content to their friends and family than a prospect. If you stop talking to customers after the sale is made, you’re leaving a lot of opportunities (and money) on the table.

Content that will engage people in the Delight stage

Types: Blog posts, ebooks, webinars, books, email drip series.

Topics: Additional ways your product can be used beyond the initial purchase, other products you offer, new releases, encourage referrals.

How to Know Where Prospects Are in Your Sales Funnel

Sales funnel software is one of the most popular types of products available for companies who understand the value of digital marketing, to the point that knowing which product makes the most sense for your company can be overwhelming.

A lot of software offers some form of lead scoring, a process where leads are assigned points based on their interactions with your company. Ideally, the higher the number, the closer they are to the Purchase stage. The point system is up to you. Maybe every time they hit a landing page is one point, every time they download something is five points, and every time they attend a webinar is ten points.

Based on your own research among your current prospects and clients, your marketing and sales teams should sit down together and decide when a lead enters the sales funnel. Maybe it’s a score of 50, maybe it’s 100, maybe it’s higher. But if you’re going to use lead scoring, it’s important that you have a clear path to the next step. This is a great place to implement a marketing automation workflow that automatically sends your sales team a list of new leads who crossed your lead score threshold in the past week, month, or however often you see fit.

No matter what system you use to track your leads in your sales funnel software, it’s important that your marketing and sales teams understand where the handoff occurs between the two teams. There’s no better way to exasperate your marketing team than expecting them to close leads. On the flip side, there’s no better way to frustrate your sales team than to make it difficult for them to contact leads who are clearly ready to buy.

Monitor Your Funnel

A simple sales funnel in SharpSpring.

In this era of digital marketing and automation, companies often set up their sales funnel and expect it to take care of itself. Digital marketing has automated a lot of the funnel, but in order for that to work, you have to set it up correctly to begin with using landing pages, workflows, and email marketing.

Once your funnel is set up, it’s the sales team’s job to know who is in it and where they are. Your team should regularly report on who they’re talking to, what stage of the funnel they’re in, and how your salespeople are engaging them (this is where the pipeline will come into play). All too often, sales teams just wait at the finish line and grab whoever shows up rather than tracking prospects’ progress throughout the funnel. A proactive sales team will be much more productive than a reactive team.

Of course, this assumes that your sales funnel is longer than the length of an infomercial, which isn’t always the case.

How Long Should Your Funnel Be?

very long sales funnel

Length of funnel depends on several factors, including your industry, personas, and the expectations set forth by the C-suite at your organization. There’s no right answer here because every business is different, even within the same industry.

In the retail industry, the sales funnel is often much shorter and largely focused on the Delight stage in order to earn repeat business from existing customers. In several industries, like financial services, the sales funnel can be months long and often focuses on building business from referrals.

If your company is focused on the B2B (business to business) sector, your sales funnel may be much longer – sometimes as long as 18 months or more. The important thing is that you set realistic expectations for your funnel and communicate those expectations across your entire team. The worst thing you can do is set up an unrealistic funnel. The wrong expectations can only yield the wrong results. You’ll end up burning out your team by expecting more than can be delivered and driving away prospects by pushing them to buy too soon.

A suggestion for creating B2B sales funnel stages: equate each stage with the completion of a tangible, meaningful milestone. For example: Pitch Meeting Complete, Proposal Accepted, Contracts Delivered. Tangible, action-oriented pipeline steps strip the funnel of ambiguity and clarify sales and marketing progress.

In order to establish a realistic funnel, look at how long it’s taken to move previous customers from Awareness to Purchase. Weigh the experiences of multiple prospects, not just one or two, in order to get an idea of the average sales funnel length. If you find that you’ve set up unrealistic expectations for your funnel, don’t be afraid to re-evaluate and adjust what you have in place. So much of marketing and sales is about figuring out what works, adjusting your approach, and then continuing to test and re-adjust as needed. There’s nothing worse than a company that does things a certain way because “that’s how we’ve always done it.” That way lies ruin.

So Which Sales Funnel Software is Right for Your Company?

hubspot alternative comparison

This is a question with many answers. Every day, it seems like someone is launching a new product that approaches the funnel in a different way. Some are robust, some are simple. On the other hand, some may overcomplicate things, while others may oversimplify them.

Which software is right for you depends on several factors, including your needs, number of customers and leads, budget, and much more. A lot of solutions increase in cost based on the number of contacts you have and/or number of emails you send per month.

The more expensive options (e.g., Marketo, Pardot) tend to offer all-in-one solutions which we’ve compared with HubSpot here. With many of these, you can create a website, build landing pages, email subscribers, publish to social, track contacts, run your blog, create custom workflows, and more. While the “package deal” such software offers is quite convenient, it can come with a pricetag of more than $1,000 per month. Many companies consider this cost to be more than worth it, considering the convenience of having all their marketing materials and contact information in one place.

The less expensive options (e.g., Mailchimp, Constant Contact, Drip) typically offer several solutions and are built to integrate with other software so you can easily build a marketing tech stack similar to something you’d get if you paid more. You might use Mailchimp for email campaigns and lead scoring, Leadpages for landing pages, WordPress to build your website, Salesforce to keep track of contact info, and Buffer to manage your social media accounts – then you wrap it all together with the magic of Zapier.

Several of these solutions offer free introductory versions with limited subscribers and email sends, so you can try them out for yourself and see which one you like best. Some may feel clunkier or less intuitive to you than others, so it’s important that you dig around a bit and really find out what makes the most sense.

Start Building Your Sales Funnel

So there you have it: the stages of a funnel as well as several sales funnel software solutions. What now?

Before you sign up for anything, start envisioning your funnel so you’ll know exactly what your needs are. How will you get people to your website? How will you get information from landing pages to your CRM? How will your sales team know which leads they should call?

Write out the five stages of the funnel, how you’ll serve people at each, and how you can move your prospects from one stage to the next. How will you turn a lead into a customer? And how will you get your customers to tell their friends and family about you?

A poorly built sales funnel can lead to confusion on your team, unmet expectations for VPs, frustration for everyone, and – possibly worst of all – grapes that are ready to be picked left sitting on the vine for another company to come along and grow where you could have had the chance.

But a sales funnel built around strategy, process, and a clear flow – from Awareness to Interest to Consideration to Purchase to Delight – will allow your company to grow at the rate you want, and bring in the prospects you’re looking for.

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