What is a sales funnel?
A sales funnel is a marketing term and a visual representation of the customer lifecycle. It starts at the top with brand discovery and awareness activities casting a wide net to potential customers.
If your product or service is a fit for their needs, they’ll continue to engage with your brand down the funnel to information gathering, and ultimately purchase and advocacy. Sales funnels contain multiple steps depending on the company’s unique customer journey.
For example, you’ll often hear marketers referring to the “top of the funnel,” “middle of the funnel” and “bottom of the funnel” to broadly refer to awareness, consideration and action. However, each of these stages can be further segmented to keep prospects engaged with your brand and to move them down the sales funnel to make that purchasing decision.
The sales funnel is different from a sales pipeline. A sales pipeline details what the seller needs to do at every stage of the sales process to help move the prospect down the sales funnel.
Why do you need a sales funnel?
For many products and services, purchasing decisions take time. A sales funnel recognises the journey that the potential customer goes on prior to purchase, and seeks to meet their needs at every stage to build trust and nurture them on that journey.
Sales funnels can help you optimise your sales and marketing efforts so that you’re providing the right level of engagement at the right time to potential customers. For example, you don’t want to be wasting time trying to set up product demonstrations with leads that are at the top of the funnel and aren’t yet ready to buy.
What are the stages in a sales funnel?
The simplest sales funnel has 4 stages — awareness, interest, decision and action — though B2B sales funnels may have 6 stages, as follows:
Awareness
The awareness stage is at the top of the sales funnel. It includes people who have discovered your business and had their first interaction with your company. They don’t know much about your business or products at this point, but they’re now aware that you exist.
Many customers discover B2B brands when Googling a specific solution, like “invoicing software” or “automation software.” They may click on an organic search result or ad that seems relevant to their query, which is when they move into your sales funnel.
The awareness stage is the first and widest part of the sales funnel. Many of these leads won’t move down the funnel though, as your product or service may not be a fit for their needs.
Interest
In the interest stage, prospects become interested in your business and take time to learn about your business and products.
At this stage, potential customers may be interested in landing pages that highlight product features or offer free resources like e-books or product comparisons. As they collect more knowledge, they’ll enter the evaluation stage.
Evaluation
During the evaluation stage, people shift from curious to intentional in their research. They’re considering making a purchase but they need to know more. They may read online reviews, contact the sales team with specific questions, or sign up for a consultation, demonstration or a free trial.
At this stage, prospects compare your products to your competition, so make sure your unique selling proposition (USP) is clear.
Negotiation and decision-making
Prospects at this stage have a purchase intention: your product or service meets their needs and they’ll purchase from you if the pricing, terms and conditions are right. They may look to negotiate here to get the best outcomes or to find a solution that works for their budget. This is your opportunity to shift the client from the decision-making stage to purchase.
Purchase
The purchase stage is at the bottom of the sales funnel, and it occurs when both parties agree on the terms of the sale. The prospect becomes a customer and they make the first payment.
Renewal
It’s important to maintain a positive customer experience after the first sale so you can keep customers in the sales funnel. There may be opportunities to upsell or cross-sell to them. Further, in a B2B context your contract will eventually be up for renewal, and you may want to retain the customer. Therefore, you’ll need to nurture the customer relationship whatever stage of the sales funnel they are at.
How do you build a sales funnel?
Think about your audience
Your sales and marketing activities should appeal to your ideal customer instead of trying to appeal to everyone. Assess what’s currently working well. Dive into your audience analytics to determine:
touch-points that engage customers
sources that drive traffic
content that motivates users to click
time users spend on specific pages
offers they act on.
With these insights, you can determine how to develop and refine content to drive engagement across your website, social media channels and email marketing campaigns.
Plan your content
Know your audience and plan content that they’re likely to engage with. You can use a mix of written content, infographics, videos and podcasts, for example, depending on where your audience is online and how they consume content.
You can also use pay-per-click (PPC) advertising platforms like Facebook Ads or LinkedIn Ads to get more eyes on your content. Sponsored content on sites or in email newsletters that your potential customers read may also help you reach more people.
Finally, offer something valuable to capture prospect email addresses, like a gated e-book or a webinar.
Build a landing page
Marketing campaigns — including most content — should drive prospects to a location that’ll move them further into the sales funnel. That location could be a landing page with a compelling offer.
For content at the top of the sales funnel, prioritise lead generation over sales. Use your web page to educate prospects about your business and offering, highlighting how you can best meet their needs.
Landing pages should have a lead capture form. Create copy that details why visitors should complete the lead form, including what value they receive from doing so. Include a short call-to-action (CTA) that stands out from the rest of the copy and tells prospects what next step they should take. You can place CTAs at the top, middle and bottom of the page so visitors can take action when ready.
Launch an email campaign
Prepare email campaigns to engage prospects who convert on your landing page. Email campaigns should educate prospects on your brand, products and services. Sending emails with informative content once or twice per month can help prospects progress through the sales funnel without overwhelming them. Keep their sales objections, pain points and motivations in mind when writing email copy.
Once prospects have sufficient information about your brand, send special time-bound offers to convert them into paying customers. You can use customer relationship management (CRM) software to automate email marketing, setting up trigger-based campaigns that begin when prospects become leads.
Keep the conversation going
Continue engaging with customers after they purchase so you can keep them at the bottom of your sales funnel. Client retention is a massive source of revenue, and ongoing communication can improve retention.
Thank your customers for their purchases and offer discounts or incentives to foster brand loyalty and future sales. Make sure you share relevant content with them, and encourage your customers to follow you on social media.
Troubleshooting your sales funnel
If you’re drawing new people into your sales funnel but struggling to convert them into paying customers, you may need to assess how effective your sales and marketing activities are:
1. Review your click-through rates
Understanding how your click-through rate (CTR) stacks up against benchmarks can help identify which touch-points aren’t engaging customers.
CTR benchmarks may vary by industry, as well as the platform you’re using. For example, Facebook Ads have an average CTR of .90%, according to landing page platform Instapage.
Therefore, if your Facebook Ad CTR is under .90%, you may want to uplift your ad copy and try some A/B testing to see what style works best and achieves the highest click-through rate with your target audience.
2. Look at page bounces
Page bounces indicate visitors came to your site, viewed a specific page and then left without taking any action like clicking on links, sharing their email address, or making a purchase.
High bounce rates on a blog page or a guide may not be problematic if the content delivered what the visitor was looking for. Bounce rates on landing pages are more problematic though, as a landing page needs to persuade visitors to take action.
If your landing page bounce rates are high, you’ll need to investigate why. Sometimes, for example, the landing page doesn’t convert because it doesn’t sufficiently align with the ad copy that drove people to it.
3. Check email engagement stats
Email campaigns are essential for middle- and bottom-funnel engagement, so track these metrics closely:
the number and/or percentage of subscribers who opened your email
the number of subscribers who opened an email more than once
which subscribers clicked on a link in the email
which subscribers forwarded the email to someone
the number of people who unsubscribed after reading a particular email.
All of these metrics can provide insight into email marketing performance. If your open rate is good but you aren’t getting clicks, your email content may not be compelling enough to drive action.
Repeat opens may indicate subscribers are considering taking action but aren’t ready to buy yet, and unsubscribers may reveal that your messaging is irrelevant or too frequent. Try A/B testing the subject lines, body copy, visuals and CTAs in your emails to see whether engagement changes with a different approach.
4. Identify where you lost the opportunity
Use web analytics to identify where prospects drop off in the sales funnel; these insights may provide opportunities for improvement. For example, if you see shoppers migrate away from your ecommerce page before completing a purchase, you might need to improve your checkout process.
Abandoned carts are common, with some studies suggesting nearly 70% of ecommerce shoppers abandon their carts during checkout. The reasons for this include:
unexpected high costs or fees, including delivery or contract activation fees
mandatory account creation or mandatory credit card information for free trials
too few payment options
website privacy or security concerns.
Until you have time to thoroughly review your checkout process, consider retargeting shoppers who’ve abandoned their carts. With a CRM, you could automate emails that remind shoppers about items in their carts — and perhaps even offer them a discount if they return to complete the purchase.
5. Ask for feedback
Gather feedback from customers to understand why they did or didn’t take specific actions. You can get customer feedback from a number of sources, including:
post-purchase surveys
“goodbye” surveys during cancellations and email opt-outs
support tickets
customer service complaints
social media
online forums
email surveys to existing customers.
Optimise your sales funnel with a CRM
Streamline your sales process and deliver targeted content to your customers and prospects using a CRM that’s integrated with your business management platform.
MYOB is a business management platform that brings together the core workflows you may require to run your business — customers, suppliers, employees, projects, finance, accounting and tax. Cloud based, you only pay for the software you need, but you can have the confidence to grow your business with a platform that can scale and extend to meet your upcoming needs.
With MYOB, you can add on Tall Emu, a CRM designed specifically for goods-based businesses. Alternatively, as an open platform, you can add on a range of third-party integrations to get the tech stack that you’re looking for.
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Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.