by Frankie KarrerCustomer Acquisition Cost (CAC): What Is It & How to Calculate
by The MNTN Team
Min Read
8 Min Read
Marketing—the art of converting your target audience into your buying audience—is a complex business. It makes sense, then, that techniques have evolved to make marketing as targeted and effective as possible.
Breaking down the steps of your marketing and sales efforts can help you evaluate whether your campaign is achieving the results you’re looking for. You can also pinpoint the exact places in your customers’ journeys where it could be strengthened. How? By working with a sales funnel.
In this article, we’ll discuss what a sales funnel is along with the benefits of a sales funnel.
What Is a Sales Funnel?
A sales funnel is a model that represents your target audience’s journey from a potential customer to someone who purchases your product or service.
Why is a sales funnel important? It’s a conceptual tool that helps you to convert potential sales leads into actual sales. The funnel shape represents the practical fact that you will begin with many potential leads and clients at the top of the funnel who will consider buying your product, but only a small percentage of those will actually move down to the bottom of the funnel to the point of making a purchase (or several).
The goal of building a sales funnel is, of course, to move as many potential customers through the stages as possible. And one of the best ways to do that is through funnel optimization.
Sales Funnel vs Marketing Funnel
Your marketing funnel is where every potential sale begins, but it represents a more abstract part of your customer’s journey as they go from being vaguely aware of your product to actively engaging with your company. For example, your audience may begin as visitors who stumble across your website, but the further they progress through the marketing funnel, they’ll take actions like subscribing to your newsletter or downloading gated content.
By contrast, your sales funnel takes active engagement—for example, when a customer has decided they like your brand and want to buy something from you—and moves that engagement toward the concrete action of making a purchase. There are benefits to both funnel types.
Here are eight advantages of using a sales funnel for your business.
1. Helps Streamline the Customer Journey
While much of shopping has largely moved online, it can still be a complex process from your point of view as the seller. How do you give helpful information to your customers when they range from people who are actively looking to buy your product to people who have accidentally tapped on your Instagram ad and only have the vaguest of interest in what you’re selling (if any at all)?
Having a clear sense of your funnel helps to streamline the customer journey. Knowing exactly where your customers are in their decision-making process can help you determine what you’re serving them and how you can help them make up their minds. For example, you can use your sales funnel methodology to determine whether a visitor needs precise product information when deciding between options (as a mid-funnel strategy) or just a gentle nudge, like an offer of a 10% discount or a reminder that “you left something in your cart” (at the end of the funnel).
2. Sorting and Ranking Your Leads
The sales funnel approach can help you determine who your most realistic leads are as they move from the marketing funnel to the sales funnel. Sales Qualified Leads (SQLs) are prospective customers ready for your sales team to target. Every stage of the sales funnel can be broken down further in granular detail. Having benchmarks based on digital data left by your customers helps you sort the sheep from the goats, as it were.
As a business owner, even with generous marketing resources, you can’t focus on everyone. If your business is more niche, your funnel should focus more on customer retention. If it’s broader, you’ll want to make as big a splash as possible. Either way, a funnel can help you look at who’s moving from general to specific interest in your brand, and prioritize from there.
Sometimes, a lead is looking to buy something now but needs specific guidance; other times, a lead is less sure of their needs (or their organization’s) and requires more long-term cultivation. It benefits you to know how to distinguish, and ultimately treat, your leads.
3. Better Allocation of Resources
Having a clearly-defined funnel will allow you to focus your resources where they can most effectively move the needle. That could mean focusing on the last stages of the funnel, or it could mean allocating greater portions of your time and budget toward initiatives such as making video content that speaks precisely and clearly to different stages.
4. Precise Forecasting of Sales Volume
Funnels are an excellent way of forecasting how many actual sales you will have. Most marketers believe that a 3.1% to 5% conversion rate from visits to sales is the right range to aim for. Of course, you can then use all of your strategies and data to increase those odds. Your marketing efforts can either be aimed at increasing your pool of possible customers at the top of the funnel or focusing your efforts on the bottom of your funnel. Either way, your metrics and KPIs will be accurate and allow you to then measure and optimize your marketing efforts.
5. Better Measurement and Optimization
Funnels allow you to work smarter, not harder—allowing you to start with a general picture of your target audience. By knowing your target audience’s social media habits, for example, you can build awareness on their favorite sites, leading some potential customers to your landing page. This then gives you an email list of engaged subscribers to whom you can send interesting and appealing content and provide a discount to people who actually buy your goods.
For your next cycle, you can examine each step, see where you lost potential targets, and then plug the “leaky” parts of your funnel.
6. Improved Customer Targeting
Customers at different points in your funnel will require different kinds of content and engagement. By breaking your funnel into stages, you can target customers in specific and concrete ways. These four stages are:
- Awareness
- Consideration
- Conversion
- Retention
There are even ways to further subdivide these stages, but the general pattern—from “just looking” to “buying a case”—is the same.
Your content will look different across these stages. For example, during the awareness stage, you’re raising recognition of your brand, so you may wish to make videos highlighting your company culture or behind-the-scenes experiences you’re proud of. By the conversion phase, you’re looking to demonstrate that using your product is as frictionless as possible. Here, you might want to consider product spotlight videos, how-tos, and testimonials to convince any skeptics.
By getting an accurate picture of your customer at different key decision-making points, you can address the real concerns they may have.
7. Increased Conversion Rates
One of the most important benefits of a sales funnel is that by focusing more intently on techniques to target your clients and push them to the point of action and retention, you will increase your conversion rates. Having a conversion funnel plan and being methodical gets results, as opposed to a haphazard approach to marketing and sales content.
At the start of your funnel—if you’re selling mattresses, for example—your content will focus more on articles like “Why getting a good night’s sleep is important.” By the end of the funnel, you’ll be telling consumers more about the specific advantages of your mattress, and offering discounts to entice them. But all of this content will have a single focus: to convert potential customers to actual ones.
8. Increased Customer Loyalty
Your sales funnel doesn’t end when a customer makes a purchase. You also want to consider retention. Once you know a customer has bought and enjoyed your product, you can sell them accessories that complement it, follow up to make sure they are satisfied, and find ways to keep them as a part of your brand’s family.
It can be easier to retain clients than find new ones, so while your task as a marketer is not done, at least you know you’re engaging with a receptive audience.
How CTV Advertising Can Keep Your Funnel Full
Connected Television (CTV), or TV delivered via the internet rather than traditional broadcast and network channels, is a vital part of how we consume entertainment. While TV advertising has traditionally been seen as a tool for raising awareness at the start of your funnel, CTV has changed the game. Now the biggest screen in any household can be a performance marketing tool that is excellent at retaining and re-engaging existing customers.
MNTN has helped transform CTV from a branding-focused marketing channel into one that allows you to launch self-managed campaigns that focus on conversions. By working with MNTN, you can ultimately combine the power of TV with a suite of optimization, attribution, and targeting tools to help drive customers from awareness to purchase.
Importance of Sales Funnel: Final Thoughts
The sales funnel is a powerful visual representation of your leads and the journey they take to become customers, and there are many sales funnel benefits to consider. To keep your funnel full and make your campaigns a success, make sure that you are engaging with all of the tools at your disposal—from sorting leads to Connected TV.
Sign Up for the Connected TV Report
Subscribe to the report Apple, Amazon, NBC and more use to get their CTV news.