November 19

0 comments

What is a Sales Funnel? Definition,Stages, & Examples

By Hanson Cheng

November 19, 2020


What are sales funnels?

That’s the question I want to answer today.

Sales funnels are the secret of multi-million brands and every thriving company that churns profit month after month. As an entrepreneur, you must take time to understand your sales and marketing process so you build a winning money-spitting funnel. 

In this post, I will define what sales funnels are, explain the stages of a solid funnel, and describe how to create converting sales funnels.

Let’s dive in.

What Is A Sales Funnel and How Does It Work?

A sales funnel is a predetermined pathway of interconnected steps you’ve delineated for your prospects to follow in their journey to becoming customers.

A well-built funnel takes total strangers unaware of who you are and what your business does and moves them stage-by-stage to a point where they become buying customers, or better still, brand evangelists.

Marketers derived the term sales funnel from a pipe that’s wide at the top but becomes narrower as it moves to the opening at the bottom. A funnel guides a powder or liquid down into a container below.

sales funnel image

Source: Mailmunch

Similarly, a sales funnel guides prospects down the channel until they become customers. Prospects get fewer and fewer as you go down because some people drop-off along the way.

Very few people cross the purchase line at the bottom compared to many attracted at the top of the funnel

That’s how a funnel works.

It’s important to realize that the stages are interdependent. If one stage doesn’t play its role well, prospects remain stuck there, unable to move to the next stage.

Why Do You Need A Sales Funnel?

Your sales funnel is a visual map of the entire customer journey.

Through it, you can easily trace:

  • How many people you attract to your brand.
  • Which activities draw (and keep) people in your funnel.
  • Where prospects get stuck on their customer journey.
  • How many people end up buying your product.

Once you understand the framework, it’s easy to allocate your budget and calculate the Return On Investment (ROI).

How Do You Build A Sales Funnel Fast? The 4 Sales Funnel Stages And How They Work

Now that you understand what a funnel is and how it works, let's get into the specifics of how to build one. We have already established that a funnel has related stages. 

Let's drill deeper into these 4 stages from the top of the funnel to the bottom.

Stage 1: Awareness

At the beginning of the funnel, you have cold prospects. 

They are cold, indifferent, and completely unaware of the solutions your business provides. 

You must attract them to your brand so they know it exists. Remember the adage: people do business with people they know, like, and trust. 

So this stage is crucial because it's the gateway into your funnel and world. Get it wrong and you have no prospects to move down your selling pipe. 

Brand awareness and discovery are the primary goals at this stage.

TOFU Content Flavors To Try

You can attract your prospect’s attention through these top of the funnel aka TOFU content assets:

  • A video on Instagram, TikTok, or YouTube where you introduce your brand to the world.
  • A podcast interview where they mention your brand or you feature as a guest.
  • A tweet or Facebook post where you talk about what you do in entertaining ways.
  • A blog post you published on your site or a guest post on a popular niche site.
  • A sponsored post published on a respected high-traffic-blog in your industry.
  • A paid advert on Facebook, LinkedIn, or Google.
  • A handy checklist or roadmap that solves a common problem in your niche.
  • A smart social media contest where contestants get more votes by sharing the competition’s link with friends.

Remember, the content you produce at this stage isn’t a hard sell. The only thing you are selling here is your company’s existence. Your sole goal is to show prospects you are alive and can help them solve their problems.

TOFU content must be delightful and relevant enough to force people who have never heard about you to stop and take notice.

That's it.

Don’t come too hard at prospects at this stage and start selling your products straight away. You’ll put them off. It’s like proposing marriage on the first date. That’d be weird and unsettling, right?

TOFU Content Example: Dollar Shave

DollarShaveClub sales funnel

Source: YouTube

Dollar Shave generates tons of brand awareness through their hilarious YouTube videos. This video, posted eight years ago, now has a jaw-dropping 27 million views.

In short, the awareness stage is all about:

  • Intrigue: fascinate prospects with your brilliance so they feel the urge to find out more about you.
  • Interest: woo prospects until they pay attention to who you are and what you do.
  • Introduction: introduce your brand memorably to prospects so they become keen to develop the relationship.

Stage 2: Interest

Now your prospects know you exist. 

Great. 

What next? 

You must keep them engaged with your brand using every tactic at your disposal. They’ve given you a chance to talk to them and grow the relationship, so don’t blow it. Sustaining your prospects’ interest in what you do is pivotal so:

  1. They don't retreat and forget you in a flash since you've just introduced your brand to them. 
  2. They fall deeper in love with your brand, stay in the channel, and eventually move to the next stage.

At this stage, the previously cold prospects warm up to your brand. They get to know a bit more about you and the problems your product or service solves. Now you must deepen the relationship.

How?

Offer something of value to them in return for their info.

That info may be an email address or phone number. You need these details so you can follow up and engage them more later in a more personal context. Research by Salesforce shows people buy after they’ve had 6 to 8 engagements with a company. That's why follow-up is central to the success of your sales funnel strategy.

Middle of The  Funnel (MOFU) Content Types

Here are the content assets to capture your prospects:

  • A case study that shows prospects how your product or service helped a person with a profile similar to theirs.
  • A whitepaper that’s packed with data and addresses a problem your target audience cares about.
  • A webinar or online event where you discuss an important topic and engage with prospects through a Q&A session at the end.
  • A comprehensive how-to post or ultimate guide that decisively deals with a vital topic in your niche.
  • An ebook that addresses a common problem your audience struggles with.
  • A free consultation that solves a nagging problem and sparks a desire for a paid solution.
  • An email sequence to educate prospects on a particular topic.

In the middle of the funnel, your goal is to:

  • Educate prospects about the problems you solve and the solutions you provide.
  • Show prospects you are an expert aka thought leader capable of helping them.

MOFU Content Example: OptinMonster

Opt In Monster funnel case study

Source: OptinMonster

This is an excellent case study offer from OptinMonster because they featured a popular client, Snack Nation. Plus, they used hyper-specific numbers to make it convincing.

In the second stage of the funnel, prospects turn into qualified leads.

A qualified lead is a prospect who has shown serious interest in what your brand has to offer that you now see them as a potential customer based on criteria you set beforehand. 

You deem a lead as qualified or more likely to become a customer if:

  1. They fit your customer avatar.
  2. They’ve shared their info with you.
  3. They’ve engaged many times.
  4. They meet the criteria set by the sales/marketing department.

Note: there is no universal set of characteristics for qualified leads. You determine your criteria based on your company’s experience, niche, and sales process. 

That said, there are two types of leads, marketing qualified leads (MQL) and sales qualified leads (SQL).

MQL vs. SQL

While MQL and SQL are closely related, they are not the same. Here are the three major differences between the two.

  1. MQLs are vetted by the marketing department, while SQLs are assessed by the sales team.
  2. SQLs have completed a sales-related action like requesting a demo or providing their phone number, while MQLs have completed a non-sales related action like downloading a free report or watching a free webinar.
  3. MQLs aren’t ready to talk to the sales team yet, but SQLs want to talk to the sales team.

MQLs and SQLs are important because they ensure you talk to the right people. You don’t waste time engaging people who aren’t likely to buy. Having a preset criterion that helps you see if a lead is qualified or unqualified and increases your sales and retention rate because you talk to the right people ready to do business with you.

Next comes the decision stage.

Stage 3: Decision

When a customer shows the intent to buy, things heat up.

Your lead is close to buying. Everything you do revolves around getting leads ready for your offer.

Leads who have reached this stage:

  1. Know they have a problem that needs to be solved.
  2. Think your company (among others) can provide the solution.

For potential customers to pick you, convince them you are the best option. Show them you will meet their needs better than your rivals. Your uniqueness must outclass rivals. 

To win the sale, you must craft a captivating, unique selling proposition.

In case you are wondering, a unique selling proposition or USP is a short value-packed statement that shows how different (and better) you are than your competitors.

Some popular examples of catchy USPs include:

  1. Domino’s Pizza “You get fresh, hot pizza delivered to your door in 30 minutes or less or it’s free.
  2. FedEx “When it absolutely, positively has to be there overnight.

Weave your USP into your content and conversations in the decision stage to sway potential customers to choose you, not your rivals.

BOFU Content Types

  • Publish comparison posts where you pit your product or service against popular alternatives with an inclination towards your admirable qualities.
  • Post in-depth product reviews to lay bare your product’s brilliance and capabilities.
  • Share testimonials from satisfied and elated customers as social proof your goods or services are quality.
  • Case studies show the superiority of your product or service.
  • Schedule product demos with prospective customers to show your product in all its glory.

BOFU Content Example:

Consulting Customer Reviews

Source: Consulting

Entrepreneur and business consultant Sam Ovens dedicates an entire page to 3,759 video testimonials, exactly the proof you need at this stage.

In summary, the decision stage primes your leads for the sale. 

For those who go past this stage, only one thing is left.

Stage 4: Action

What action are we talking about here?

One word.

Buy.

That was your goal from the beginning, right? You want people to buy your product or service. That’s the action you are looking for in the last stage of a sales funnel—for people to press the buy button and become customers.

Action Stage Content

  • Use coupons to lure customers to cross the buying line by offering discounts.
  • Sales letter or video sales letter to make the main offer. 
  • Sales scripts to guide the sales team. 
  • Case studies to underline the value of the product. 
  • FAQ page to answer common questions prospective customers may have. 
  • Knowledge base to go deep into all product-related issues.

Sales collateral secures not only the sale, but it also keeps customers happy. 

In the action stage, use persuasive language to land the sale. 

No dillydallying. No vagueness. No timidity. 

Confidently ask for the sale in plain language. 

After you land the sale, it's not over yet. If you stop at this stage, you leave money on the table.

Post-purchase Stage

To cash in on all the hard work you've done to get customers this far, don't stop on the initial sale, optimize for customer retention, repeat sales, and referrals. 

  1. Retention: Since getting a brand new customer costs up to 5x more than keeping a current one, retaining your customers is vital.
    Retention hinges on maintaining product quality and having stellar customer service to keep customers happy.
  2. Repeat sales: Yes, retention saves you money, but you must make more. You do this by selling other products to existing customers. You can cross-sell and upsell them. This increases your customer lifetime value (CLV), the total amount a typical customer spends during their time as a customer.
  3. Referrals: Another powerful way to maximize profits after the initial sale is to turn your best customers into an army of sales reps. Let them join your referral program and sell on your behalf. As long as you reward them handsomely, they’ll rake in the sales for you.

How To Optimize Your Funnel In 4 Steps

For your funnel to fire in all cylinders, you must optimize it. 

An optimized funnel:

  • Boosts lead acquisition. 
  • Reduces customer churn. 
  • Increases customer retention.

Here’s how to fine-tune your sales funnel so it gives you more.

Step 1: Revisit your buyer personas

The best funnel in the world won't save you if you are targeting the wrong people. 

Double-check your customers’:

  • Demographics
  • Psychographics
  • Pain points

Align your funnel to your ideal customers' needs to maximize its performance.

Step 2: Plug the biggest leak first

Identify where the biggest drop off in your funnel is. 

  • Is it the transition from awareness to the interest stage? 
  • Is it the handoff between marketing and sales? 
  • Is it your autoresponder email sequence? 
  • Is it the connection between your landing pages and paid ads?

Wherever the glaring hole is, plug it. This single act alone will cause your biggest gains more than any other action you will take.

Step 3: Improve your landing pages

Landing pages are pivotal to the success of your funnel.

Refine them frequently so you hike conversions. Work on all aspects of your landing pages including:

  • Copy Scent: make sure the design and style of your pages match that of the traffic source e.g. paid ad.
  • Headline: try different headlines to see which one performs best.
  • Hero image: test many hero images and the position where they appear on the page and see how it affects conversions.
  • Copy length: experiment with long and short copy and see which one outperforms the other.
  • Forms: reduce or increase the form fields and gauge the difference in conversions.

Step 4: Identify and watch vital KPIs

Key performance indicators or KPIs are just that-critical markers that show progress (or lack thereof) towards an intended goal. 

Funnel KPIs cover:

  • Lead generation: these numbers cover how many prospects you are attracting at the top of the funnel and other associated metrics like form fills stats, social media traffic, etc. 
  • Lead attrition: this is the number of prospects who leave your funnel before they buy your product. 
  • Close rate: close rate is the percentage of leads that turn into buying customers. 
  • Churn rate: the average number of customers a company loses. 
  • Retention rate: is the percentage of customers a business keeps over a set time.

Decide which KPIs matter to you and watch them closely.

5 Best Sales Funnel Software To Build Your Money Making Machine

Back in the days, building sales funnels was a herculean task. Not anymore. Today there’s a range of sales funnel software tools that make the process easy, fun even. Let’s go over the five best funnel building software available right now.

1.ClickFunnels

ClickFunnels is one of the leading sales funnel software on the market.

Features

  • Sales funnels (+ templates)
  • Shopping cart with 1-click upsells
  • Landing pages built to convert
  • Autoresponder sequence
  • Simple drag-and-drop editor

2.Kajabi

Kajabi is an all-in-one marketing platform you can use to build funnels and perform other sales and marketing activities.

Features

  • Built-in sales funnels
  • Website builder
  • Automated email marketing
  • Landing pages
  • Membership sites

3.Karta

Karta is another one-stop-shop sales and marketing platform that can run your entire online business on the platform.

Features

  • Funnels and sales campaigns
  • Sell unlimited products
  • Landing pages
  • Upsells, downsells, and order bumps
  • Membership sites and courses

4.Keap

Keap (previously InfusionSoft) helps small businesses grow, boost sales, and enhance customer service.

Features

  • Sales pipelines (+ invoices and payments)
  • CRM for client management
  • Sales and marketing automation
  • Text messaging to engage customers
  • Customizable campaigns and app integration

5.Get Response

Originally an email marketing powerhouse, Get Response has grown into a versatile sales and marketing machine that does it all.

Features

  • Sales funnels and lead magnets funnels
  • Email marketing automation
  • Webinars and online events
  • Facebook ads and social ads creator
  • Landing pages and e-commerce integrations

That’s the list of paid funnel software. But what if you want to get started but don't have cash?

Don’t worry, I’ve got you covered.

How Do I Make A Sales Funnel For Free?

Here’s how to build a simple but effective funnel from scratch, without spending a dime or enduring the stinging pain of monthly subscriptions.

You will need three tools:

  • Pinterest
  • Mailchimp 
  • PayPal

These three free tools will help you drive traffic, capture leads, create sales emails, and receive payments. 

As groundwork, head over to Pinterest, Mailchimp, and PayPal and open your free accounts.

Step 1: Lure people into your funnel (Pinterest)

Traffic is the lifeblood of all online marketing activities. 

But how do you get it for free? 

For free traffic generation, Pinterest is your best bet. Promote the lead magnet you prepared in advance on Pinterest to get traffic to your landing page.

Step 2: Create a landing page (Mailchimp)

Drive the traffic to a landing page. 

A landing page is a standalone web page designed to maximize conversions. 

On your landing page offer visitors something of value in exchange for their email addresses. 

  • A free report. 
  • An ebook. 
  • A checklist.

Whatever it is, make sure it's a quick-fix solution to a common problem. You want to impress your visitors by helping them get quick results.

Step 3: Craft a sales email sequence (Mailchimp)

Next, create a 3-part sales email and send it to the people who downloaded your freebie. 

  1. Validate their decision to download the lead magnet and change their lives. 
  2. Show them that while it's wonderful they got results, there can achieve more. 
  3. Sell, sell, sell.

Persuade them to buy your paid solution because it will give them better results. 

If your lead magnet did its job, then a good number will buy your solution. 

Rather talk than write?

No problem.

Substitute the email sequence with a video sales letter. Record the video on your phone. 

But how do customers pay you?

Step 4: Process payments

(PayPal)

Log into your PayPal account and grab a PayPal.Me link. 

Insert the link in your final sales email or video sales letter page. 

Your customers will click on the link and pay you. Once you receive your first payment, you are in business. 

Congratulations. 

That's the $0 lean startup sales funnel road map for starting your journey to online riches

This funnel works well for service-based businesses.

Sales Funnel Example: Smart Blogger

Smart Bogger make $1+ million a year from selling premium courses. 

Not too shabby if you ask me. 😀 

How do they do it? They have several funnels, here's one.

Stage 1: Lead Magnet 

It all starts with the freebie 'Cheat Sheet To Becoming A Freelance Writer' they offer on their website. A Cheat Sheet fits the bill because people love faster ways of doing things.

Stage 2: Email Sequence

Downloading the Cheat Sheet triggers an automated email series that continues to pile on the value for the subscriber. These emails include:

  • A free class on how to become a highly paid freelance writer. 
  • Case studies of high-earning freelance writers. 
  • A sneak peek into the courses.

Stage 3: Closing the sale

  • The sales email is a full-blown sales pitch. 
  • A discount email for those who don't buy immediately after seeing the sales letter.

That’s one way Jon Morrow makes his millions.

What Are Sales Funnel? Answer: Money Conduits

To sum up, sales funnels are the invisible foundation of super successful brands that make money on demand. 

A solid funnel helps you structure and streamline your selling process for maximum conversions and sales. All it takes is to understand your customer and the route they take on their way to becoming customers. 

Smoothen their pathway and you will smile all the way to the bank.

Last Updated on April 3, 2021 by Hanson Cheng

Thanks For Reading!

You can get more actionable ideas in my newsletter.

 I'll give you info on actionable ideas to grow and cool things that are getting me excited.  Enter your email and join us!

Hanson Cheng

About the author

Living in Bali with my Fiancee and puppy, (Alina and Pickles). Scaling online businesses and sharing lessons learned on this website and in our email newsletter. Always happy to hear from you, so find me on Instagram if you want to say hi!

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
>