What Is a Sales Funnel and How Does It Work?
by Isabel Greenfield
8 Min Read
12 Min Read
In sales, conversion—the change that happens when a potential lead turns into an actual sale— is the holy grail of metrics. As a consumer yourself, you know a myriad of products and services are always competing for your attention.
While you may be glancingly—or even actually—interested in them, you probably won’t pursue every cool shoe you see on Instagram. If you’re selling shoes, however, you need to know how to best move your prospects from contemplation to active purchasing.
That’s where the conversion funnel comes in.
The conversion funnel is a model that represents the path some prospective customers—hopefully many of them—will take to become actual committed buyers of your brand’s products. Your brand will have many prospective customers and far fewer committed buyers, hence the funnel shape. Conversion funnels are also known as sales funnels.
What is the difference between marketing and sales funnels? They are both similar, and they work together, but they’re distinct processes. A marketing funnel maps the customer journey, guided by marketing efforts, from brand awareness to conversion.
Your marketing funnel helps you first identify Marketing Qualified Leads (MQLs) as genuinely credible leads (rather than mere lookie-loos). These MQLs may fit your buyer profile, or they may simply have put an item in their cart or signed up to receive an email from your company. Once those MQLs have indicated more sustained interest in your product, they become Sales Qualified Leads (SQLs), ripe for sales outreach. At this point, SQLs enter the sales funnel, and the effort to win their business becomes the sales team’s responsibility.
In reality, marketing and sales efforts will overlap often, and that’s good—both teams share the same end goal: conversions. But there are specific techniques you can use to make your full-funnel marketing efforts more effective.
There are many benefits of a conversion funnel:
You can stop spending resources on customers unlikely to make a purchase and optimize your funnel building efforts to focus on the customers most likely to convert, producing materials like ebooks and smart videos that capture their attention and address their needs.
While marketers have different ways of conceptualizing the conversion funnel ecommerce stages, the basic progression is always the same, consisting of five classic sales funnel stages: awareness, engagement, desire, action, and re-engagement.
We’ll explore these stages sorted into upper, middle, and lower levels of the conversion funnel.
At the top of the funnel (sometimes referred to as “ToFu”), shoppers know they’re looking for a certain product, like a new mattress or bar of soap. Maybe they’re doing generic web searches or researching multiple sellers.
Your challenge here is to create a positive brand association for your own product, and encourage consumers to bridge the gap between asking, “What’s the best mattress brand?” and deciding your brand is the answer.
The awareness stage involves presenting general information related to your product. Thoughtful blog posts on the merits of a good night’s sleep, the science behind rest, maybe even clever videos about the purpose of dreams. A pithy explainer video can also help your brand stand out. The idea here is to capture attention and establish your company as an expert and/or a leading producer of the product or service.
At the middle of the funnel or MiFu, stage, customers have narrowed down their search to a few brands. They’re taking active steps to consider your product. They may be following links in your marketing emails or signing up for newsletters.
Now’s your chance to prove why your product deserves active consideration. Testimonials are a highly effective technique in moving prospects down the sales funnel. Different types of testimonials can be useful at different points of the funnel. In-depth explainer videos about your product’s merits can also move the needle during the consideration stage. Videos that highlight your sustainability processes or anything else you’re especially proud of are also effective here.
The moment of truth arrives at the bottom of the funnel (a.k.a. “BoFu”): your customer either makes a purchase—or doesn’t. They may put an item in an online cart and then neglect to click “buy,” in which case discount offers, special deals, and limited-time offers can be helpful techniques to nudge them toward conversion. At this stage, you want to combat any reconsideration about or procrastination on the purchase, as these situations may diminish the chances of conversion.
Finally, after customers buy your product, the goal is re-engagement— to create an ongoing relationship with them.
The good news here is that it’s easier to retain a happy customer than start from scratch. (Consider how many resources you’ve already invested into getting customers to the sharp end of your funnel.). Good customer service, ongoing discount offers, emails, and videos that extoll the value of your product—not to mention your customers’ brilliance for choosing it—are all good strategies here. As most social media platforms have begun to merge with ecommerce functions, lower-funnel videos on platforms like TikTok have become increasingly important to encourage consumers to take that final leap.
How do you build an effective marketing strategy for your conversion funnel? Conversion rates are statistically low, with a median conversion rate of 2.5%. What kind of effect can you really have? Luckily, there are methodical steps you can take.
Create an ideal buyer profile. Start with general demographic factors, such as age, gender, geographical location, income level, house ownership, and education level. Then narrow the field by identifying your potential customers’ characteristics—social media habits, hobbies, professions, and so on. Your audience may change based on your product, too; for example, you may offer casual sneakers to a broad audience, but high-performance athletic shoes to runners in a certain economic bracket.
If your company doesn’t have any existing customer data, make use of your competitors’ demographic profiles to give you a sense of where you should focus your efforts. Then create distinct buyer personas and gear your strategies to reach that audience.
A lead magnet is a way to get prospects’ emails and contact information via a product discount or other special offer, like a giveaway or even access to valuable information. If you’re wondering whether your lead magnet is effective, ask yourself if it’s addressing your customers’ pain points. If it does, your customers will not only provide their contact information in exchange for the offer, but they’ll share the offer with people they know, generating more leads for your company.
A landing page is a subpage on your website you can use to capture your leads’ contact information, a stepping stone that often offers a form of goodwill (like an ebook, discount or whitepaper) in exchange for information before leading the customer further into the sales funnel. A good landing page is well-designed, uncluttered, engaging, and inviting.
Email is an effective, direct way of creating a relationship with your leads and moving them down the funnel—particularly if the email includes video. Tailor your message’s tone to your brand, and use emails to reinforce your brand’s virtues and help establish it as the authority in its field. You never know when their need to buy a new pair of shoes, for example, may turn into an urgent one; when that happens, you’ll want to be top of mind.
Seasonal content, user-generated content (UGC) like testimonials (or videos shot to look like UGC), and any content that has the potential to go viral can help you stand out.
Creating a psychologically compelling offer is paramount to keeping clients in the sales funnel. Your offer must be clear, offer great value, require an immediate response, and provide a warranty or guarantee without any fine print.
A sales page is a standalone part of your website meant to turn potential customers into buyers. It should include a short description of the product or service, its benefits (including reviews and testimonials), special offers that might sway an uncertain buyer, and any other relevant information. Your sales page should paint a clear picture of your product or service, both literally (if possible) and figuratively. A clear call to action (CTA) is also important here.
A sales page should be direct in its tone, but also remember that you are still trying to nurture a relationship with your lead, so avoid pushiness or abrasiveness.
Order forms are simple pages that detail the sales transaction. As a consumer yourself, you’re likely familiar with these from shopping online. After you click “buy,” you’re taken to a page that clearly defines how many items you’re buying, allows you to fill in your credit card information and shipping/billing address, and tells you how much you’re paying in additional tax and shipping fees.
Order forms should be clear and straightforward — you don’t want customers falling out of the funnel during this last step. Analytics can be helpful in telling you if there’s something about this page that’s putting customers off, be it higher-than-expected shipping fees or a confusing design.
A post-purchase sequence (or flow) involves the emails and communication you engage in with your customers after they’ve made a purchase. These can be part of the fun of making a purchase —for example, tracking something they’re excited to receive through the mail—as well as the logistics of making sure the item is delivered.
Businesses that value their customers can provide alerts in case of delivery delay. Some businesses follow up with a survey, though many consumers find these irritating (or ignore them entirely). Better to balance these out with surprise and delight emails that offer additional coupons and special deals “just for you,” as well as any informational videos that might be helpful, like a product demo/tutorial. Offering an easy return process if the product doesn’t meet expectations is also a great way of building trust.
It’s impossible to build a perfect system, let alone right away. But over time, you’ll amass enough data and insights to see what works for you and what doesn’t. If something is not working, or there’s an obvious point in your conversion funnel where customers are getting lost, you can take the necessary actions to correct your issue.
There are multiple funnel optimization techniques proven to help you improve your conversion funnel.
What’s your conversion rate? Of course, you want it to be as high as possible. Is it higher than the above-quoted median of 2.5%? Or lower?
Investigate your sales funnel’s strengths and weaknesses using Google Analytics or a similar platform. Have you defined your ideal buyer? Do you have a poor lead magnet? Is your landing page confusingly designed? Find where customers are falling out of the funnel, and try to figure out why. User Experience, or UX, surveys can help, but simply examining your data can put you on the right track for honing your funnel.
Key Performance Indicators (KPIs) are concrete measures of how well your business is doing. Remember that a good goal is SMART: specific, measurable, achievable, relevant, and time-bound. So something fuzzy like “raising awareness” is not as good a goal as “improving our click-through rate (CTR),” a metric that indicates how many people actually click on your banner ad, and can tell you if you’re expending your resources wisely.
Try out different lead magnets and landing pages simultaneously. Direct traffic at random to one or another—for example, to one of two different offers—to determine which strategy works best.
Email success can be simple to measure. Are your readers opening them, or are they ignoring them? When they do open them, are they reading them all the way through? You may be sending too many communications, which can border on spam. Your information could be too dense or even unrelated to your customers’ needs.
Keep analyzing and honing your emails until you’re satisfied with the metrics you’re seeing.
Sales pages, too, can be divided into two styles, so you can see what’s resonating with your audiences. Consider variables like:
You don’t want to have taken your customers on a journey only to have them tune out before the conversion point because of an overly complicated checkout process. Make it as user-friendly and frictionless as possible.
While you may start with an ideal buyer model, keep in mind that models aren’t people—the more customers you amass, the better you’ll understand actual buyers and their actual needs. They may want more or less communication from you, more hard offers or more friendly communiqués—but you won’t know until you experiment. See what types of communication methods resonate best with your customers, and adjust your strategy accordingly.
Many conversion and sales funnels are built on their lead magnet. Sales funnel examples include “the tripwire,” which starts with a low-priced special offer, and “the webinar,” which starts with an informational webinar to lure customers.
But different industries require different models for conversion funnels. These can include:
You can tailor your own conversion funnel to your needs, audience, and industry.
There are many ways of measuring your conversion funnel’s success. Choose one that aligns with your goals now; then, if those goals change, you can change your KPIs to match.
Obviously, the end-all goal of a conversion funnel is your conversion rate. But to get there, you could also consider your customer acquisition cost (CAC). Are you spending too much to get one sale? Can you use your resources in wiser fashion to get to your goal? A high click-through rate (CTR), a low CAC, and a high conversion rate are all signs of a healthy conversion funnel.
Connected TV (CTV) advertising—ads delivered on TV services that are no longer bound by traditional broadcasting and cable methods—combines the prestige of the big screen with the data-rich qualities of digital advertising, enabling you to keep improving your offerings.
While TV advertisers once considered the medium effective only during the awareness stage, today CTV is a full-funnel solution. Now, smart and nimble companies like QuickFrame by MNTN can help you target consumers at every point in the conversion funnel and keep them moving along to the action stage.
Conversion funnels are only as good as the information you feed into them. CTV lets you access meaningful data while creating campaigns that are winning—and fun.
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