Understanding The Basics Of A Sales Funnel

See the image above shaped like a funnel or an inverted triangle? That is a visual representation of a sales funnel.

As an entrepreneur who’s looking to earn more money online, I am sure you understand the struggle of making customers out of leads.

It can be quite difficult to turn people who never knew anything about you into your loyal fans.

When you understand what a sales funnel is and why you need it for your business, you will be able to use that knowledge to increase your site’s earning potential.

In this blog post, I will be walking you through the basics of a sales funnel, its benefits, and some tips and resources for making one. Are you ready? Jump in!

What Is A Sales Funnel?

Sales funnel, also known as a marketing funnel, is a visual model (like an inverted pyramid) that represents the stages that your audience undergo as they become your customers.

Think of a sales funnel as a story that reveals how ordinary web visitors become loyal fans, customers, or even repeat customers.

This is the most basic structure of a sales funnel. It shows 3 essential parts, namely:

1. Traffic

Traffic belongs to the top of the funnel, which is the widest segment. The customer lifecycle starts here, where you make an effort to drive as many people as you can to your website.

This segment comprises of people who may or may not be interested in the products you offer. These people can be total strangers – those who know nothing about your brand.

It is your job to bring them deeper into the middle of the funnel where they become leads.

2. Leads

Leads are people who have definitely shown interest in your products or services. As they move closer to Sales, the funnel becomes more narrow because only a small percentage of people will make an actual purchase.

Along the way, people who won’t be making any purchase will be filtered out. In this stage, your marketing efforts will become more targeted and appeal to those who want to become actual customers.

3. Sales

Sales is the final segment of a sales funnel where you make actual customers. Remember that the higher the number of people you send to your website, the more buyers you get in the end.

Every Industry Has Its Own Sales Funnel

Sales funnel vary depending on the industry.

For example, the sales funnel for B2B can include many steps before reaching the bottom-most part where sales happen.

On the other hand, a B2C e-commerce sales funnel can span for just a couple of minutes. This is because the process involves fewer steps – a person visits the e-commerce site, adds items to his cart, and proceeds to check out.

Here is a table that outlines the process of a physical retail store sales funnel versus that of an e-commerce sales funnel:

Why Do You Need A Sales Funnel For Your Business?

If you don’t have a sales funnel for your business, you are missing plenty of opportunities for your company to obtain the best results.

Small Business Trends mentions that a sales funnel will help you monitor and sort out your leads.

With a sales funnel, you get a holistic view of your customers’ journey. Moreover, you’ll be able to make a better decision on which group of potential customers you need to focus more on.

Here are other benefits of having a sales funnel in place:

  • You’ll  be able to track your return on investment (ROI) better.
  • You can improve your conversion rates and put more attention on certain areas that need improvement.
  • There will be a greater chance for you to build trust and nurture your relationship with your audience.

The Sales Funnel Process

Here’s what most people go through in a typical sales process.

1. Awareness

This is the entry point of every potential customer in a sales process. You are making people become aware of your brand by using one or more of the following methods:

  • PPC advertising
  • Native advertising
  • Facebook advertising
  • Joining groups in social media sites
  • Producing content through blogging
  • Using a squeeze page to collect people’s contact details

To make the most out of this stage, you should not just be focusing on getting more traffic. That traffic must be targeted and high-quality too.

You’ll be able to drive more targeted, high-quality traffic to your site if you focus your advertising, content marketing, and social media efforts on people who are interested in your niche.

Know the right demographics and other qualities of your target audience by doing research. Also, make sure to optimize your site for SEO.

2. Interest 

Now that you have successfully sent people to your website, this stage is where you convince them that your products help solve their problems.

You will be answering your visitors’ common question: What’s in it for me? 

Arouse the interest of your visitors through your valuable blog posts. You can also give them free products (how-to guides, ebooks, training videos, etc.) in exchange for their email addresses.

Make an email list and send out engaging emails that will keep them informed of your latest offers. Be sure to stress the benefits of your offers instead of sounding pushy.

3. Decision

You are getting closer towards making a sale. Some people express a desire to buy while some abandon your website.

This is a deal or no deal stage in which the end result can either be a successful purchase or a rejection.

For your audience to be convinced that your products are worth their money, make sure to anticipate and address their common concerns.

Creating a sense of urgency such as a limited time offer for a discounted product works too. It entices your audience to commit.

4. Action

Congratulations! In this stage, you’ve made a sale.

Quick Tips For Creating Your Sales Funnel

  • In the process of creating your sales funnel, you can add more levels to encourage more people to buy.
  • For every level of your sales process, it would be best to assign measurable key metrics to accurately track the performance of each level. These metrics can be one or more of the following:
    • Reach
    • Impressions
    • Engagement and clicks
    • Subscribers
    • Opens
    • Sales
    • Revenue
    • Profit
    • Conversion Rate

Getting Started

Having your very own sales funnel chart makes it easier for you to visualize every stage of the sales process in your business.

You can create your sales funnel chart using Excel or through SmartDraw’s customizable sales funnel charts to save you more time and effort.

According to Kissmetrics, you can also use funnels not only for understanding the sales process of your business but also for tracking the conversion of one of your web pages (for example, your landing page).

Basically, you can use a funnel chart for anything about your business you wish to track!

Final Thoughts

A sales funnel is an indispensable tool that helps you monitor the growth of your business and improve your earnings. With a sales funnel in place, you’ll be able to analyze key metrics and identify which areas need improvement.

You can use a funnel for other areas of your business too like social media marketing or tracking the performance of your landing page.

I hope this article has provided you with a good understanding of the basics of sales funnels.

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