What Is a Sales Funnel?

As a business coach I see some interesting tactics small business owners take to avoid certain business tasks, one of these is sales.

I get it, we all hate being on the receiving end of a high-pressure sales spiel, it’s fake, tacky and leaves a sour taste in your mouth, but that only shows you how important it is to get it right!

When you have a journey mapped out, from the initial enquiry right through to them signing on the dotted line, you create a sales funnel that doesn’t feel like a hard sell at all, it feels like you are helping someone to reach their goal.

Guiding customers down the sales path to your door, either in person or online, is known as a sales funnel. 

As well as helping grow and scale your business, having a charted sales funnel is an accurate way to track a customer’s journey and understand where the best place is to introduce other products and different price points.

So do you need a sales funnel in your business? This blog aims to answer that very question as well as give you some pointers for what each stage of your funnel needs to address to help move your customer or client forward on their journey, no matter if it is their first interaction with you, or their 50th.

What is a sales funnel?

A sales funnel is a way to structure your messaging to guide your target audience down a path to a specific goal. It works just like a funnel does, with a large open end that’s easy to get started with and gently guides towards a specific destination in a way that allows everything to move smoothly without friction. 

When matched correctly with your audience needs, product or service suitability and realistic price point, your prospect will follow the funnel to completion and become a customer.

You want to attract as many quality leads as possible, so that’s your starting point. From there you’ll need to guide customers to your offer, which might mean filtering them towards the most ideal product if you have more than one.

Is a Sales Funnel Important and Do I Need One?

Yes, you need a sales funnel. It’s an important aspect of reaching and exceeding sales targets as well as helping your customers find the right products and services.

Without it, you are really just flying blind in your approach as well as in your success. You will have no idea where your strengths and weaknesses are, what is working and why it works well. 

The other important aspect of a sales funnel is it allows others to do your work for you – so that you can leave the system in the hands of your capable team, step away from the operations side and move towards being a manager, a leader and eventually a true entrepreneur.

Some business owners I’ve worked with have been great at having conversations that lead people in and secure a sale, they are naturally charismatic and have amazing people skills. There is a problem with this though, it’s pretty limited. Short of standing on a stage, you can only talk to a limited number of people in a week, to reach more, you’ll need a team of some kind and in order for them to support you, they need a structure to work with. 

What that business owner does needs to be replicated somehow, with the same results. You can’t achieve more sales and more success without a plan in place that includes a sales funnel.

A well-crafted sales funnel can:

• Define a customer’s buying journey
• Help your team execute the steps they are responsible for
• Highlight flaws and areas for improvement in your sales methods
• Bring unity to the team, even new recruits, as it’s widely used and well well-known
• Allow you to step aside and let the business run without you when you are ready

The benefits really depend on how well structured your model is and how well it matches your audience’s needs.

When done correctly there will be four unique stages you will set up and see your prospects move through.

What are the 4 stages of a sales funnel?

To create a sales funnel you need to consider your audience and what your offer is. From there you will move through the four stages you can gain the attention of a large volume of suitable people and guide them through your offer and what you do so they can decide if they want to close the deal

The four stages are:

1. Lead generation
2. Qualification
3. Negotiation
4. Closing the deal

Understanding the four stages will also help you identify any weaknesses you might be facing in your sales processes and give you a targeted way to turn things around and strengthen your approach.

I’ll walk you through each of these in detail so you can replicate it yourself in your business and get a stronger grip on your sales communications and results.

Lead generation

Lead generation is a way of gathering interest. To be effective your audience needs to be able to find your offer and information either online or in person (or both) and trust that what you have to give is authentic.

The best way to generate leads is to offer something attractive with little to no risk.

Some popular strategies here are to provide a free trial, to give away valuable information on an industry topic as either a downloadable or as a webinar or podcast or to create an engaging gateway through social media. 

In exchange, you gain a database of people who are actively searching for a product or service like yours. At the same time, you are also giving people exposure to who you are and what you do and showing them that you know what you’re talking about.

When you have a great offer to entice someone in, they have an open invitation to discover or join in so you lead them down the funnel into the next stage.

Qualification

Now that you have their attention and trust you need to prove that you have something no one else does – or that you do it better than the rest.

Smart customers will use this stage to test the waters. They will compare you to competitors and other offers to see what else is out there and how you stack up.

This stage isn’t a one-way street – while they are assessing you, you need to be assessing them too – is there any reason this person might not qualify as a great customer? 

How this fits will depend on what your business is but there may be cases where someone falls out of a delivery zone, or you know will be disappointed if they go ahead with a purchase because it won’t suit their needs or lifestyle. Nipping these issues in the bud early can help redirect these people to a product that is a better match and stop them from feeling they’ve wasted their time. Yes, you might make a quick sale but it’s not worth the negative attention you might get and they won’t be coming back to try you out again.

The qualification stage is a great way to expand your offer with more diverse products that fit outlying markets.

To help get the exact match you need for customer satisfaction you can use the qualifying stage to send a series of newsletters, social media messages and instructional videos with tips and tricks that educate leads on what your product is and what the benefits are.

Create an open channel for questions, have a helpful FAQ section online and make it easy for people to contact you with queries or concerns.

Testimonials can be really helpful in assisting people through the qualifying stage by showing you as reliable and trustworthy from people who have gotten actual results.

The aim of the funnel is not to pull everyone in, only those who are already looking to make a purchase. Rather than convincing them to buy, you really only want to convince them to make either purchase with you, and not someone else.

Some of your leads will drop off naturally at this point because the timing is not right or it’s not a good fit. It’s absolutely okay. There is no point trying to sell to someone who isn’t interested, even if they do make a purchase, they are likely not going to feel like they’ve been given an amazing experience. Let them go gracefully and stay in touch with helpful information and offers so when they are ready you are in their mind and associated with positive experiences.

A great offer provides excellent value with no risk. Your quality leads get to know and trust your brand so they’ll remember you when it comes time for them to make a purchasing decision, which is when they move into the third stage of the funnel, negotiation.

Negotiation

Your customer is ready to buy but what can you offer to get them over the line?

Sometimes sweetening the deal can help override any hesitation, especially for new customers. If they think about it too long you may lose them so finding ways to encourage a commitment helps.

You can accelerate negotiation by considering how you can offer something extra such as:

• Bulk discounts
• Extended subscriptions
• Money back guarantee
• Extended warranty
• After-sales services
• Member discounts
• Free shipping over a certain amount

Think about what the biggest hesitation spots might be that prevent someone from closing the deal and find ways to eliminate or reduce these. Listening to feedback and having conversations through a sales prospecting system is a great way to find these sore points if you don’t know what they are off the bat.

Closing the deal

The last and most critical stage of a sales funnel is closing the deal This is the part where both of you are rewarded.

Yes, you will get the sale or subscription you were aiming for but you want to make sure your customer gets what they were hoping for too.

While this is the end of the funnel it’s not the end of the customer experience with you or your relationship with them. Ultimately you want them to stay close so you can introduce them to your next funnel or have them refer family, friends and colleagues back around to you.

How can you build a sales funnel?

A big part of getting the sales funnel right is great communication and knowing how to speak specifically to the group who will get the most out of what your business does. Once you know your audience, how your product fits and how to remove obstacles that allow a fast close, you can build a successful sales funnel of your own.

You will most likely need to develop a new sales funnel for each of your products and offers and may also find that different sales funnels are needed to draw in different kinds of people, even for the same product, it really depends on how your business is structured, so think about what design will work best to target and entice the people most likely to buy.

Here are the steps to go through to prepare your own sales funnel and get more target direction towards your sales goals.

#1 Know Your Audience

Knowing who your audience is, where they hang out, what they value and what they are looking for is essential for getting your messages right, communicating through each of the funnel stages and being present where your target market will be looking.

Knowing who your audience is gets you the best Return On Investment

When you can match your business offer to your customer preferences you enhance their buying experience, leaving them with a feel-good glow they want to share with others or experience again. This includes knowing what payment methods your audience prefers as well as how soon you need to follow up and what negotiations will be enticing to close the deal.

If you don’t know, start the conversation and research as widely as you can to figure it out. Previous customers will be willing to help when you explain that you are working to improve your services and customer experiences so be proactive about reaching out and asking for their opinions. 

#2 Design a lead magnet

A lead magnet is an enticing risk-free offer to draw potential customers in and get them warmed up to your brand.

A lead magnet can be used to get someone on a mailing list where you can nurture them with emails, offers and newsletters or you can use it as part of closing. 

Some options you might like are a:

• Free strategy session
• Discount code
• Free audit
• Community Group

Think of a way you can enhance your offer that will cost very little for your company to supply but will give enormous value to your client. In return you get an email address or phone number you can use to follow up and keep the conversation going.

#3. Increase Brand Awareness

Your brand isn’t just about one thing. There will be multiple ways your clients can interact, discover and engage with you. As well as the product or service they are interested in, look for ways to give them a broader perspective on what you do and what the benefits are.

You don’t want your audience to experience just one thing, give them variety.

Once you have the lead magnet or sale completed, reach out with other opportunities to help them. Try newsletters, tips, instructional videos and complementary products or services as well as discount codes and customer rewards.

You want them to see that you have more to offer than just their original first step. They will see real value if your business supports them beyond one purchase.

#4 Nurture your leads

Nurturing your leads can result in multiple rewards and business gains. The idea is you stay in touch to keep your marketing list warm on your brand and informed about their choice… but there’s a catch; If you get the level of nurture wrong and you are going to be dealt unsubscribes rather than conversions.

Once you build a subscriber database you can lay out a strategy for an Electronic Direct Mail Marketing (EDM) sales channel where you can use a variety of different channels and media to communicate:

• Advice
• Suggestions
• Soft sales
• News and events
• Discounts
• Product updates

EDMs and nurture communications are not places for hard sales. Be genuine and sincere about sharing your knowledge and providing value that keeps your brand in their mind as helpful and trustworthy. 

Trust that they will come to you when the timing is right.

The frequency of these communications is important. Too much and they’ll opt out and you’ll have a hard time getting them back so limit it to high quality and valuable 

#5 Offer the irresistible

When your offer is irresistible you won’t have to wait long to see conversions. When the time is right your customer will make their final move and buy. By this stage, you have given them enough information on who you are and what benefits you offer for them to make a strong and fast decision. 

You need to make sure that at the very least their purchase meets expectations, ideally, you want to go above this and exceed their expectations which can be achieved through excellent service delivery, engagement and follow-up. 

When you hit the mark or excel that’s when they will be more than willing to buy from you again, refer and provide testimonials that have new quality leads knocking on your door.

Conclusion

Sales won’t just magically happen on their own, you need to put systems in place to secure your business’s future by finding and nurturing quality leads, interested in what you offer.

Knowing the mechanics of sales helps you find your unique angle and put strategies in that lean on your strengths and set you apart from the competition. When well maintained, a good sales funnel will feed back into itself helping you build and nurture an ever-increasing subscriber database.

There are plenty of places to get lost, so let our business sherpas guide the way to finding your audience, attracting them, nurturing them and closing the deal. Book a free meet and greet session to see how we can help you move forward in business.

What is a sales funnel – FAQs

Q: What is a sales funnel and how does it work?

A: A sales funnel is a visual representation of the customer journey from initial contact to the final purchase. It illustrates the stages a prospect goes through, starting from awareness, moving towards interest, desire, and ultimately, action. The sales funnel works by guiding potential customers through each stage, offering targeted information, value, and incentives along the way to drive them closer to making a purchase.

Q: How do you create a sales funnel?

A: Creating a sales funnel involves a strategic process. Here are the key steps:

• Define your target audience: Understand who your ideal customers are, their needs, and pain points.

• Build awareness: Attract potential customers through various marketing channels like social media, content marketing, advertising, or search engine optimization.

• Capture leads: Use lead generation tactics such as opt-in forms, landing pages, or gated content to collect contact information from interested prospects.

• Nurture prospects: Engage with your leads through personalised email campaigns, educational content, webinars, or free trials to build trust and credibility.

• Convert into customers: Present compelling offers, discounts, or limited-time promotions to encourage prospects to make a purchase.

Retain and upsell: Provide exceptional post-purchase support, offer relevant upsells, and maintain ongoing communication to foster customer loyalty.

Q: What is the purpose of a funnel?

A: The purpose of a sales funnel is to guide potential customers through a structured process that increases the likelihood of conversion. It helps businesses identify where prospects are in their buying journey and enables them to deliver the right message, at the right time, to the right audience. By understanding the stages of the funnel, businesses can optimise their marketing and sales strategies to maximise conversions and revenue.

Q: Why is a sales funnel important?

A: A sales funnel is essential for several reasons. It provides businesses with a clear understanding of their customer acquisition process, allowing them to identify bottlenecks and areas for improvement. With a sales funnel, businesses can analyse and measure their marketing and sales efforts at each stage, optimising their strategies to generate more leads, increase conversions, and ultimately boost revenue. It also helps businesses prioritise their resources and efforts on the most promising leads, resulting in a more efficient sales process.

Q: What is the benefit of a sales funnel for a business?

A: Implementing a sales funnel offers numerous benefits for businesses, including:

• Improved lead generation: A sales funnel helps attract and capture leads effectively by tailoring marketing efforts to the specific needs and preferences of potential customers.

• Higher conversion rates: By nurturing leads with targeted content and offers, businesses can increase the chances of converting prospects into paying customers.

• Enhanced customer engagement: A well-designed sales funnel allows businesses to engage with prospects throughout their journey, building trust, and establishing a strong relationship.

• Streamlined sales process: With a clear understanding of the sales funnel stages, businesses can streamline their sales process, identify potential bottlenecks, and make informed decisions to optimise efficiency.

• Increased revenue: By consistently improving the effectiveness of their sales funnel, businesses can generate more qualified leads, convert them into customers, and ultimately drive higher revenue and business growth.