What is a Sales Funnel?
Are you looking to scale the growth of your business? Would you like to do so in an organized, cost-effective, and results-oriented approach? Using a proven sales process can be a great place to start. Consider the sales funnel. A sales funnel is a commonly used technique where a large group of leads is collected and then stepped through a process, converting a portion of those prospective buyers into paying customers.
Here, the word funnel is a metaphor for a process. In this case, one of collecting leads, and stepping them through their buyer journey or the phases of the sales process, until they make their purchase. This has been proven time and again across different industries, with both tangible consumer goods and services.
A sales funnel does not guarantee that every lead collected becomes a sale. In fact, the shape of a funnel was chosen as many potential leads will be weeded out with each step of the process, resulting in a smaller group at every stage. The resulting image is the shape of a funnel. Many of these leads who fall out at different stages, can be recycled or cycled back to a previous state in the process.
Most sales funnels have four levels: Awareness, Interest, Decision, and Action or Purchase.
If you google the term, you will see a myriad of different visuals appear, some with additional levels (or phases), or different titles for the different levels. While there are slight variations in the funnels or process, the overarching principles are the same.
How Does a Sales Funnel Work?
There are different methods for implementing a sales funnel, as the process can be manual or automated, and there are various tools companies employ to execute the phases. You might have heard of lead management tools such as Salesforce or HubSpot.
Step 1: Collect Leads
Whether using one of these tools or a manual process such as a spreadsheet, the idea is to collect a large number of leads. This forms the top level of the sales funnel. For each of these contacts, you will want to gather important information such as name, email address, phone number, and other relevant information. This supplemental data is often age, gender, work industry, as well as other demographic and psychographic information.
How Do You Collect Leads?
To collect a lead, you are asking someone to trust you with their contact information. In order to get them to surrender this information, you often have to offer them something of value. You may be familiar with these “lead magnets” including valuable content like an eBook. Other times, you might be hosting a raffle, and the cost of entry is the lead’s contact information.
Step 2: Now That You Have the Leads, It’s Time to Start Selling
In the second level of the sales funnel, and those that follow, it is time to convince and convert the warm leads into paying customers. In many examples, you will see this done through a series of emails (most of them automated). Each email or set of emails is designed to move a lead one step further.
In other funnels, this may be done through a correspondence including phone calls, or even in person appointments depending on the product or service being sold. Regardless of the sales action taking place at each level of the funnel, the basic principle is the same: Provide information that builds trust, interest, and value for the customer in an effort for them to eventually make the purchase.
Step 3: What About the Leads that Don’t Make a Purchase?
With even the strongest sales funnels, there will be customers who do not make the purchase for one reason or another. They might not be ready to make a purchase at that time. Or, they might be interested but more price-sensitive. Or maybe, they lost interest over time. Whatever the reason, the majority of these leads are not totally dead. Unless a lead has explicitly told you not to contact them or asked to be removed from your emails, they can be put back into your sales funnel at the appropriate stage.
For example, if your funnel consists of Awareness, Interest, Decision, and Action or Purchase and you lose a lead at the action stage, you may choose to put them back into the funnel at the Interest or Decision phase. This allows your team to continue to sell to this lead with minimally wasted time and energy.
Step 4: What Happens Once They Make a Purchase?
Just because someone has made a purchase does not mean that they are done with your sales funnel and you are done with them. In fact, it is much easier to get an existing customer to make a second purchase than it is to get a lead to make their first purchase. Many organizations choose to set up their funnel with multiple sales campaigns so that a lead who becomes a customer with one product can be put back into the funnel for a second product or service. This way, you can either entice them to make a repeat purchase or invest in a different product.
Are There Any Downsides to Using a Sales Funnel
Like any sales strategy or new business tool, implementing the right sales funnel will require research and strategic implementation.
The most effective ones use a lead or customer relationship management (CRM) software. These range in price and functionality and become your lead database (or the top level of the funnel). They’ll be used on a daily basis and become quite ingrained in your team, so it’s a good idea to try them out and request some demonstrations before making a commitment.
Some CRMs will have email automation built in, while others do not. If you choose one that does not incorporate outbound email, or opt for an email software that has more functionality, like Marketo or Pardot, there is an additional fee and integration to manage. There are some others that are more affordable like Flodesk, ConvertKit, or Constant Contact.
Depending on how you introduce the sales process to your team, it might look like one more thing they have to do, or like another fad that will come and go. Effectively communicating the strategy you’ve chosen and the reasons behind it will help achieve team buy-in overall. So when it comes to the implementation, training, and actual usage of the process, efforts will be more effective with less time and energy wasted.