Sales Funnel: How it Works, Definition, Stages, and Importance
Sales funnel also known as a revenue funnel or sales process refers to the buying process that companies lead customers through when purchasing products. The definition also refers to the process through which a company finds, qualifies, and sells its products to buyers. Keep reading for more details.
In the digital marketing industry, the sales funnel is one of the core concepts which can take your business from the unknown to a multi-million-dollar marketing machine.
If you want to take your business from zero to hero in no time, you must learn what a sales funnel is and how it works.
Did you know some marketers have built a career around implementing this single marketing concept?
Simultaneously, many entrepreneurs, coaches, influencers, and even marketers find it hard to wrap their heads around this concept.
So, we decided to develop a comprehensive blog post, explaining the sales funnel, its importance, and how it works. We also added ways you can create and optimize your marketing funnel to make the maximum impact for your business.
Why Is Sales Funnel Important?
A sales funnel helps you understand what potential customers are thinking and doing at each stage of the purchasing journey.
These insights allow you to invest in the right marketing activities and channels, create the most relevant messaging during each stage, and turn more prospects into paying customers.
From the moment prospects hear about your product or service until the moment they make a purchase (or don’t), they pass through different stages of your sales funnel.
That journey through your funnel may change from one prospect to another, but in the end, they’ll evaluate it based on their interest level.
They’ll think about the problem they’re trying to solve and conduct competitive research to make sure your offering is the best solution.
Before you start building your sales funnel, it is essential to have a clear business vision, develop an e-commerce marketing strategy, and then define your target audience to work towards your business growth.
If, for example, you are looking at how to create an online clothing store, you need to follow specific steps to develop your business and stay successful.
Stages/Phases of a Sales Funnel
The typical sales funnel is divided into multiple steps, which differ depending on the particular sales model. One of the most common ways of dividing a sales funnel possesses seven phases including:
Stage 1: Discovery/Awareness Phase.
Stage 2: Interest Phase.
Stage 3: Decision Phase.
Stage 4: Action Phase.
Each funnel pushes qualified leads into the next stage and removes those that aren’t a good fit for your products or services. Let’s discuss the stages of a sales funnel to understand how sales funnel works:
Stage 1: Discovery/Awareness Phase
In the awareness stage, your ideal customer may realize they are going through a problem.
But they’re still struggling to identify their challenge. This person could have many questions about their problem and how your business can solve it. At this point, they need to seek resources that could educate them about the problem.
This is where having additional content will come in handy. You want to have content about your products or services that your potential client can find on the web or on social media.
If you’re a life coach, your prospects at this stage might be asking this question: what is the purpose and direction of my life?
Or, if you sell mattresses, your prospects at the awareness stage might be asking: why do I wake up with lower back pain?
So, at the top of the funnel, your audience needs information so they can articulate their problems and ask the right questions.
Your job at this point should be to create content that educates them on their challenges or problems. That’s the way you convert untouched prospects into leads and move them one step down the funnel.
Stage 2: Interest Phase
At this stage, your prospects understand their problem and know something about your business, but they want to learn more.
However, they’re not yet ready to buy or sign up for your products. They’re still looking for possible solutions.
People usually take into account all available solutions to solve their problems.
For example, they’re sure that they need to do something to fix their back pains, but they’re not quite sure whether or not your mattresses are the right product to buy.
In other words, they’re looking for types of solutions rather than evaluating solution providers.
This is where you need content that tells how your mattress can help them get rid of back pain and why they should buy them.
Stage 3: Decision Phase
This is where your potential clients are ready to buy. They might be considering you as well as your competitors. Now your potential customers are at the bottom of the funnel knowing everything about their problem and potential solutions.
And, most importantly, they’re ready to select the business to buy the solution. Their questions at this stage are vendor-driven. This is when you should be making your best offers.
Small factors like free shipping, a bonus product, or a discount can set your offers apart from your competitors.
Whatever you offer, make it so attractive that your website visitors or audience will rush to become your customers.
Stage 4: Action Phase
At the very bottom of the sales funnel, people take action. They buy your products or services and you finally convert a cold lead into a customer through a well-defined process. At this stage, you should be thinking about turning one purchase into five or ten.
If they decide not to do business with you, your efforts can still produce results. Create nurture campaigns to stay top of mind.
Also, make sure to create some remarketing audiences and lookalike audiences to get back in front of your ideal customers one last time.
You can further engage with your customers and encourage them to leave feedback. You can have another stage in your sales funnel that deals with customer retention.
Your story doesn’t end once someone buys your products. A customer can be turned into a repeat customer and brand advocate.
To keep your customers happy, you have to help them thoroughly with all aspects of their problem.
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