What is a sales funnel and how do you build one?


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What is a sales funnel and how do you build one?

If more sales is your goal, and marketing is the muscle you’re trying to exercise to get there, you’ll want to get familiar with the process of building out a sales funnel. A sales funnel is a marketing concept that describes a potential customer’s journey from first becoming aware of your product or service to ultimately making a purchase.

Businesses with effective sales funnels are more likely to see growth in revenue and customer base. According to a study by MarketingSherpa, businesses with a well-defined sales funnel see a 50% increase in conversion rates compared to those without a defined funnel.

In this article, I will explain what a sales funnel is, why it is important, the different stages of a sales funnel, and how to create an effective sales funnel for your business – and I’ll even share some examples based on different business models.

What is a sales funnel?

The goal of the sales funnel is to guide the customer through each stage and ultimately convert them into paying customers. Essentially, it’s a marketing model that outlines the stages a potential customer goes through to become a paying customer. The stages typically include awareness, interest and evaluation, consideration, purchase, and retention.

Why is the Sales Funnel so Important to marketing?

Defining marketing’s role in supporting sales is often unclear within small to medium-sized companies. Ultimately, a sales funnel brings the two departments together by identifying each department’s actions during each phase in the customer journey.  

From an ROI perspective, the sales funnel is critical because it provides a framework for understanding the customer journey and allows you to optimize each stage of that journey to improve conversion rates and decrease the cost of acquisition. 

What are the Stages of a Sales Funnel?

The exact stages of a sales funnel can vary depending on your business model and target audience, but they generally include the following:

  1. Awareness: This is when potential customers first become aware of your brand, service, or product. It might involve seeing an ad, reading a blog post, or hearing about your product from a friend.
  2. Interest: At this stage, potential customers seek more information about your product or service. They might be researching online or requesting more information from you directly.
  3. Consideration: In this stage, potential customers compare your product or service to other options. They evaluate features, pricing, and customer reviews to determine if your product meets their needs.
  4. Action: This is when potential customers decide to purchase your product or service.
  5. Retention: After a customer makes a purchase, it’s essential to focus on retaining them as a customer. This might involve providing excellent customer service, sending follow-up emails, or offering loyalty discounts.

How to Create an Effective Sales Funnel for Your Business

To create an effective sales funnel for your business, follow these steps:

  1. Define your target audience: Before creating a sales funnel, you must know your target audience. Identify the demographics, interests, and pain points of your ideal customer.
  2. Map out your customer journey: Use the sales funnel stages to map out the customer journey for your product or service. 
  3. Identify drop-off points: within your customer journey, identify where customers are currently dropping off and formulate your tactics within each stage to increase conversion. 
  4. Build out your new and improved funnel: Understanding the customer journey and where and why drop-offs occur, map out your new and enhanced funnel with actions defined within each stage.
  5. Create content: Develop content that addresses the needs of potential customers at each stage of the funnel. This might include blog posts, social media posts, email campaigns, and landing pages.
  6. Optimize for conversion: Use data to analyze your sales funnel’s performance and identify improvement areas. Optimize your content and calls to action to improve conversion rates.

Sales funnel examples

  1. B2C: A B2C sales funnel might start with an enticing Facebook ad promoting a product, followed by a landing page that showcases the product’s features, and finally, a seamless checkout process that makes it easy for the customer to make a purchase.
  2. B2B Sales Funnel: A B2B sales funnel might start with a LinkedIn ad promoting a white paper or case study that highlights your company’s expertise, followed by a landing page that offers a free consultation or demo of your product, and finally, a sales pitch to close the deal.
  3. SaaS Sales Funnel: A SaaS sales funnel might start with a blog post that provides information on a common pain point for their target audience, followed by a landing page that offers a free trial or demo of their software, and finally, a sales call or email to close the deal. 

By understanding the customer journey and optimizing each stage of the funnel, you can effectively guide potential customers toward purchasing. As always, remember it’s essential to continuously track and analyze data to identify improvement areas. If you want extra support in developing your sales funnel, know we’re just a quick Cat Chat away. 

Nicole Hayden,

Marketing Strategist + Client Relations | CreativeCat.Co

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