What is a Sales Funnel?

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.

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What are the sales funnel stages?

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.

In general, there are four main stages:

Stage 1: Awareness

The first of the sales funnel stages is called the “awareness” level, because it's where people first become aware of your product or service. They may hear about you from your advertising, social media, even word of mouth.

How and why those people move down the sales funnel depends on your own sales and marketing ability, of course. The leads in the middle and lower sales funnel stages are those that you want to pay the most attention to, because they've moved beyond awareness to interest.

An example of the awareness stage would be a prospect learning about your company for the first time. Perhaps they clicked on one of your ads, read your blog, found your website via a Google search, or heard a colleague talking about your product or service.

Stage 2: Interest

Once prospects have learned about your brand, 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.

Stage 3: Decision

Armed with information about your company, prospects will dig deeper into your pricing and packaging options. Sales pages, webinars, and calls are helpful in this stage to help sway prospects to make a purchase.

Stage 4: Action

All your work comes down to this stage: whether the prospect makes a purchase or not. If they didn’t, the deal isn’t lost forever. You can create nurture campaigns to make sure you stay top of mind.

How to create a sales funnel for your business

For your sales funnel to exist, you first need prospects who can move through that funnel. Once you have those prospects, you can track behavior and engagement using lead scoring to identify where they are in the funnel.

Here are five steps to help you create a sales funnel:

1. Build a landing page

A landing page will most likely be the first time prospects learn about your company. If they click on an ad, sign up for a webinar, or download an ebook, they’ll go to a landing page. That page should clearly communicate who you are as a company and your unique benefits (after all, this could be the one and only opportunity you have to wow prospects). And, most importantly, make sure the landing page has a form for prospects to enter their information — you want to capture their email address so you can continue to communicate with them.

2. Offer something of value

Here’s the part where you have to give something to your prospects in exchange for their email address. A lead magnet, like an ebook or whitepaper, is an effective way to offer something of value on your landing page.

3. Start nurturing

At this point, your prospects will move from the Awareness stage into the Interest stage. And, because you have all their email addresses from the landing page, you can create an email nurture series to share educational content about your offering.

4. Upsell

As prospects move into the Decision stage, you want to offer anything that can nudge them into the direction of a purchasing decision. This could include a product demo, extended free trial, or special discount.

5. Keep it going

In the Action phase, you’ll either land new customers or hear why prospects aren’t interested in purchasing. Either way, keep the communication going. For new customers, focus on product education, engagement, and retention. For prospects who didn’t make a purchase, build a new nurture series to check in with them every few months.

Now that you’ve learned about building a sales funnel, we start to see why sales funnel management matters. Even very good prospects can leak out of the sales funnel along the way if they're not nurtured carefully. The best way to prevent that loss is to have a clear idea of the steps in your sales process—and help in making those steps happen.

In some companies, those steps to the sale might look like this:

Prospecting and marketing are all the things you do to get people into the first of your sales funnel stages. Note that stages are broken into two or more steps wherever possible. A demo could be called a single stage, but in real life it involves a lot of things: contacting the customer, sending reminders, doing the demo, and then following up. Whatever your own sales funnel stages look like, the support you need in managing them will be the same.

Once you know your sales funnel stages, it's time to find out where you're losing potential customers. Sit down with your team (or with yourself, if you're CEO, CMO and head janitor) and ask yourself:

• Where are the bottlenecks in my sales process?
• Where do I tend to lose track of potential customers?
• What are the positive trigger points—the specific actions that typically result in a sale?

Look carefully at the cracks where your chosen steps may not be working. Then get ready to fix your funnel.

What does the flow of automated emails look like in the sales funnel?

Let's say you often encounter two separate objections to your sales pitch: "We don't have time to implement" and "We're not sure we need it." You can craft a series of emails to respond to each, and set them to be delivered over the next few weeks or months.

Depending on the objection, you may want to send different materials at different times: testimonials from other clients, videos showing how easy your system is to set up, or just friendly check-in emails.

Now your marketing automation funnel is giving you a boost at every stage: It responded within five minutes of their first contact, and that helped get you the chance to make your pitch. Now, after the pitch, you're ready to stay in contact and respond to objections in a friendly, targeted way. (And if they love the pitch, automation can help you stay in close touch until closing.)

It's best to have a customer relationship management system involved here. A good CRM has the power to pull in every piece of information you have in your database, so it can be used to make every email perfectly personal.

Sales funnel management is about more than being organized. It's about giving every potential customer the personal treatment they crave. It's about making sure you follow up at the right times, every time. So you can spend more of your time doing the most rewarding thing of all: closing sales.

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