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In the past, you may as well have used a crystal ball to link marketing campaigns, sales initiatives, and customer service strategies to retention and revenue growth. Then, like a miraculous Marvel superhero, the internet presented our business leaders and sales teams with the holy grail—measurable customer data. According to research from Gallup, brands that effectively leverage customer data outperform peers by 85% in sales growth and 25% in gross profit margin. Carefully crafting the customer journey is key. 

The sales funnel has been around for eons—since 1898, to be precise—but now you can harness the power of data to precisely pinpoint which initiatives deliver results at each stage. In this article, we explore the sales funnel and explain how its insights can help you optimize customer experience, nurture potential customers into loyal clients, measure success, and grow.  

Understanding What The Sales Funnel Is

You've likely traveled through the stages of a sales funnel (so-called because prospects narrows down as they move through it) many times. To help visualize, let's put you in a customer's shoes: Remember the time you saw that billboard ad for a popular streaming service? You'd seen plenty of the network's shows and heard it was great from friends and influencers, so you looked at the website. That was the top of the funnel.

During the next stage, the streaming company engaged you with a slick and simple website design, eye-catching content, and an FAQ section that answered your top questions. You felt pretty certain you wanted to sign up for a new service but hadn't decided which one. Tempted, you left the site to explore search engines and social media. Using Google search, you found a bunch of compelling articles about popular TV shows and movies the service features on IGN and Esquire.  

At the final stage of the sales funnel, a retargeted ad for the streaming service appeared while you were watching YouTube. You signed up for the email list, and a week later, the brand sent it along with a link to a customized landing page. Near the bottom of the page, a case study and testimonials from happy customers provided social proof, and a call to action offered a 30-day free trial. You signed up and never looked back.  

Here's a breakdown of the different stages of the marketing funnel buying process:

  • Top of the funnel: This is the discovery and awareness stage when prospective customers take an interest in a brand.
  • Middle of the funnel: To form a connection with customers, a brand engages with them as they conduct research.
  • Bottom of the funnel: At this stage, you take steps to convert curiosity and interest into action.

We'll dive into a more detailed description of how the sales funnel works later on in this article. First, let's find out if sales pipelines and sales funnels are the same.

What’s The Difference Between A Sales Funnel And Sales Pipeline?

There are key differences between sales pipelines and funnels—and neither is related to plumbing or chemistry. Both relate to the sales process but from different perspectives. The sales pipeline is actions sales reps take, such as making cold calls, scouring LinkedIn, and scoring an upsell. The sales funnel is touch points along the buyer journey, such as clicking social media ads, interacting with blogs, and signing up for free demos.

Sales pipelines are nifty tools for business leaders because they provide clear-cut visual representations of how people perform across every stage of your sales cycle. This lets you make crucial tactical decisions about where to place salespeople for maximum ROI. What's more, seeing where prospects drop off provides insights into where the customer journey needs tweaking and suggests training requirements for the team.

A sales pipeline might look like this:

  1. Lead generation: Database optimization, lead magnets, and email marketing are top tools for finding qualified leads, along with marketing efforts such as social media, webinars, and blog posts that target specific buyer personas.
  2. Prospect qualification: Every salesperson has been hoodwinked by that prospect who just loves to chat but will never buy anything. Leaders must make sure this risk is minimized. 
  3. Meeting: Once qualified, it's important to move quickly and aim to meet a prospect in person. Rather than focusing on a hard sell, prioritize listening to them and wanting to solve their pain points.
  4. Proposal: After a successful meeting, follow up promptly with a proposal.
  5. Closing: Close the deal and make a plan for customer retention.

Why Is the Sales Funnel Important To The Sales Process?

An effective sales funnel can be the difference between a prosperous company that can offer employees generous incentives and perks and a business that just scrapes by. It encourages business leaders to take the time to get to know their target audience better than they know their own family—or at least as well. The more you understand each segment, the easier it is to guide them toward clicking the button at checkout—and inspire them to share a pic wearing your awesome brand on their socials.

Benefits of the sales funnel include:

  • Helping your business leaders build effective marketing strategies based on real-world purchasing behavior
  • Offering behavioral insights to customer service and sales teams to help them improve CX, build stronger relationships, and sell more
  • Showing every department which pain points arise most frequently at each stage of the sales process
  • Taking pressure off sales and service teams by anticipating doubts and appeasing them while the prospect is higher up in the funnel  
  • Aligning messaging with output accurately based on data insights to flush out bad new leads ASAP
  • Improving customer experience at every touch point of the customer journey

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The 4 Stages Of The Sales Funnel

Below is a breakdown of the four stages, with a real-world example for each. 

1. Awareness

At the top of the funnel, your company aims to attract as many people as possible while filtering out bad leads. Your aim is to make them aware that they have a problem you can solve. People aren't even prospects at this stage. They don't know much about you, but they're curious.

Groupon has an excellent strategy for generating top-of-the-funnel awareness. It uses SEO and discounts to attract search engine users looking for deals. The brand also offers a $10 discount for referrals and a 10% commission for affiliates.   

2. Interest

Some of the people whose attention you captured during the awareness stage will become prospects and move through to the interest phase. They'll take an active interest in your company and what you have to offer. They'll also conduct plenty of research and potentially compare your brand to its competitors. 

Semrush navigates the interest stage masterfully, with a full library of free content in the form of downloadable e-books. Putting content behind a submission form is an excellent lead magnet because it offers a prospect something tangible and free in return for their contact details. Once Semrush has the prospect's email address, they use targeted email marketing techniques to turn them into paying customers. 

3. Decision

At the decision stage, prospects have acquired knowledge about your business and are considering it as a viable solution. They'll likely take an interest in details such as pricing and subscriptions and want to see social proof that it's delivered on its promise to other people. Sales reps can have a huge influence at this point, and speed is usually a critical factor. If potential buyers can't get answers from your team quickly at this stage, they could swivel and purchase from a competitor.

Take Nordstrom as a benchmark for nurturing prospects through the decision phase via a LiveChat tool. Customers can ask a real person questions in real-time, allowing sales reps to respond instantly and match the company's solutions to the individual's needs and requirements. What's more, reps can use LiveChat to establish trust, introduce product features, and parry objections.

4. Action

At the action stage, leads are red hot. They have the necessary information to make an educated purchase decision. At this point, they're open to your brand's final pitch and just need a little convincing to part with their hard-earned cash. 

Take Basecamp, which uses a free trial to convince prospects to make a purchase. There are few better ways to show how a product can add value to someone's life than showing them firsthand free of charge. 

How To Create A Sales Funnel

Building a sales funnel won't involve meetings that require take-out and drag late into the evening. It's a quick and simple process that requires a bit of research to implement and continual small tweaks to maintain as your company grows and objectives shift. 

Get to Know Your Existing Customers

It's no secret to any decision maker that understanding target audiences is the key to long-term success. However, most companies still aren't making the most of the data gold mines that are on their website and social media pages.

By tracking and analyzing customer interactions, you can learn everything you need to know about their goals, aspirations, behavior, preferences, pain points, and how they've solved problems in the past. 

Capture Your Target Audience’s Attention

SEO (search engine optimization), PPC (pay-per-click) marketing, social media ads, videos, and content marketing are just a few tools you can use to capture your audience's attention. All output should be perfectly aligned when it comes to branding and meet the high expectations modern consumers have when it comes to quality. 

Send the Audience to Your Landing Page

Website visitors are a captive audience with a high possibility of buying if you can convince them to choose your brand ahead of competitors. Whether they get there through a link from a Facebook post, affiliate blog, or online directory, the goal is to send them to a targeted landing page. Be sure to include submission forms and clear CTAs so site visitors can continue browsing or leave their email addresses for future contact.  

Generate Leads and Upsell

It's important to think about how a buyer feels after they've made a purchase and take steps to encourage them to share if they're happy. Posting reviews or UGC on social media can help your company generate new leads for free.

Upselling is a key element of the sales funnel and is often the difference between a successful company and a less successful one. Take Netflix, which uses an open-ended contract model (you can cancel any time free of charge) to entice new customers to subscribe. This is great for attracting people on a budget, but its website also prominently displays the perks of premium subscription packages. It's an effortless upsell that captures the attention of visitors who aren't worried about pricing. 

Maintain Relationships

The final thing to remember when crafting a sales funnel is that repeat customers are the backbone of most businesses. Keep people coming back by building a community around your brand on social media and ensuring everyone stays up to date with a jam-packed, engaging newsletter. 

Important Sales Funnel Metrics

Use these KPIs to measure your sales funnel's effectiveness:

  • Average order value: The average spend customers make when purchasing via your website
  • Customer lifetime value: An estimate of how much a single customer will spend throughout a business relationship
  • Conversion rate: The percentage of website visitors who take a desired action
  • Entrances: How many times do users access a specific page first in a session
  • Follow-ups: The number of times you contact a prospect to move them through the funnel 
  • Flow rate: The number of customers going through a process at any given time
  • Total revenue: Calculated by multiplying the price of goods or services with the number of units sold
  • Win rate: The percentage of prospects who became customers divided by total deals in the sales pipeline

Knowledge Is Power

'Know thy customer' is the number one rule in delivering exceptional customer experiences and transforming leads into loyal customers. A sales funnel is a great way to map the customer journey and align sales, marketing, and customer service teams with company objectives. And as a bonus, it delivers a treasure trove of actionable data to help business leaders refine operations for the future. 

Check out The RevOps Team's guide to the top 10 best sales funnel software tools and harness the power of marketing automation for your business. While you're here, don't forget to sign up for our newsletter for revenue-boosting tips straight into your inbox.

By Phil Gray

Philip Gray is the COO of Black and White Zebra and Founding Editor of The RevOps Team. A business renaissance man with his hands in many departmental pies, he is an advocate of centralized data management, holistic planning, and process automation. It's this love for data and all things revenue operations landed him the role as resident big brain for The RevOps Team.

With 10+ years of experience in leadership and operations in industries that include biotechnology, healthcare, logistics, and SaaS, he applies a considerable broad scope of experience in business that lets him see the big picture. An unapologetic buzzword apologist, you can often find him double clicking, drilling down, and unpacking all the things.