What is a Sales Funnel?
The “sales funnel” (sometimes also referred to as a “sales pipeline”) is a key idea in sales and marketing strategy. It helps your business look at its sales processes from a high level, by tracking each prospect’s journey in interacting with your company. Understanding and utilizing the sales funnel efficiently can help your sales and marketing team scale revenue, boost your R.O.I. on marketing campaigns, and forecast results.
To start, think of a funnel that you would use to fill a car’s engine with oil. The top of the funnel is wide, allowing you to easily pour in the oil. As the oil travels down the funnel, the opening gets more and more narrow, until it reaches the engine. Ultimately, the oil enters the engine, which allows the car to operate properly.
Now compare this example of oil and a car engine to the sales and marketing process – where the oil is revenue from customers and the engine is your business.
Your marketing reaches lots of prospective customers who start as “browsers.” If your business catches their eye, they will enter your sales funnel – for example, by clicking on your site. Once they enter the funnel, it’s up to your sales and marketing teams to keep the prospects interested, by building relationships and offering information. As each prospect interacts with your company, if their interest remains, they move farther down the funnel. Your goal is to convert browsers into buyers. In other words, move that prospect down the funnel and ultimately filter them into the “engine” on the other end (a purchase).
Different parts of the funnel represent different positions in the sales process. Typically, sales and marketing teams will refer to three positions as –
- Top of the funnel – The prospect is interested in your company, but still browsing
- Middle of the funnel – The prospect has expressed interest in doing business with you, and is still in the process of interacting with you
- Bottom of the funnel – The prospect is very close to making a purchase decision with your company
To use this concept to your advantage, you want to come up with efficient sales and marketing strategies that will work best during each stage in the funnel.
How to Use a Sales Funnel to Set up Future Business
Start tracking your sales processes using a sales funnel. Depending on the size of your company, there may be a lot of prospective buyers in the funnel at a time. That’s why using a tracking system – like a CRM – is crucial. A CRM lets you enter notes and details about each prospect. Details might include how many interactions you’ve had, what information was exchanged during those interactions, and what stage of the funnel they are currently in. Without a comprehensive lead management system like this, it’s almost impossible to keep accurate records of your sales funnel and set up future business!
Remember to track your leads regularly, through all stages of the sales funnel. In sales, it’s easy to become hyper-focused on closing. Let’s face it, there’s an adrenaline rush that comes along with closing a deal. But it’s important to keep in mind that prospects’ levels of interest vary. Only a small percent make it all the way through the process to become paying customers. That’s why the most important thing a sales manager can do for the team is urge them to manage the entire sales funnel on an everyday basis. Think of how much potential revenue sits in the top and middle of the funnel. If you’re turning a blind eye to these prospects because you’re spending all your time on the bottom of the funnel, you’re neglecting the potential for tons of revenue opportunity down the road.
A good way to get into the habit of this is to map your “funnel value.” Instead of only thinking, “We’ve closed over $25,000 this month,” also think about how much potential revenue is sitting in the funnel. Maybe you closed $25,000 this month, but there’s $100,000 worth of revenue in clients that have already expressed interest in your company. You need to spend sufficient time on selling them, too, so the months to come are lucrative.
How to turn Browsers into Buyers
In order to track your funnel efficiently – and convert those browsers into buyers – you must understand what each stage in the funnel represents. There are four stages of the sales funnel. We’ll start with the top of the funnel and work our way down.
Awareness brings in prospects
You are attracting the largest number of leads at the very top of the funnel. Here, prospective customers have determined what they need and are in search of a solution. They enter your sales funnel because your brand has reached them through your marketing efforts, and what you offer may meet their future needs. During this “awareness” stage, it’s useful to know that 81% of prospects begin their buying journey with a simple internet search. Coming up with a digital marketing strategy for these potential buyers lets you provide information about your company that speaks to their personal or professional needs.
Interest generates opportunities
In the second stage of the sales funnel, inevitably some prospects have turned to other sources to fulfill their buying needs. But there is still volume here that remains interested in what you have to offer. An easy way to think about this stage is that prospects are interested in opting-in to your content. For instance, they may have filled out a form to request more information. Or they may search your site for whitepapers, buyer’s guides, blog posts, or similar informative content. Here, your prospective customers are actively looking for information that helps make the buying process easier. If you can provide them with the information they need, they’re likely to keep moving down the funnel.
Decisions lead to quotes and proposals
By now, the prospect trusts you. They have moved far enough through the sales funnel to make a tentative decision and ask for quotes or proposals. The idea here is to offer them brand-specific content that gives them confidence in your company. If your content is well-prepared, hopefully it will motivate them to act!
Action creates new customers
The final stage of the sales funnel is “action.” The prospect makes up their mind and makes a buying decision. If they decide to buy, they become a new customer and your relationship with them evolves. They may become a repeat buyer with a strong lifetime value! But, keep in mind that the “action” stage is never guaranteed. Even if the prospect seems to have made a final decision, you must put the work in to make sure the prospect doesn’t back out or second-guess your company at the last moment.
What marketing strategies work for each stage?
Buyers have different levels of interest in your company as they move through the sales funnel. Therefore, different marketing tactics will be needed to target their interest effectively. For instance, you wouldn’t immediately send a contract to a prospect who simply clicked on your page from a Google search! They simply aren’t ready for that kind of engagement you’re your company yet. It’s important to be methodical when creating your marketing strategy for each stage of the funnel.
Top of the Funnel
When marketing to prospects at the top of the sales funnel, you want to “cast a wide net” and demonstrate opportunity that will catch their eye. Remember that 81% of prospects start their search online. You want to provide content that stands out and provides a strong call to action on web-based platforms. For instance, during this stage, the most effective marketing methods will likely be:
- Blog posts with catchy headlines
- Social media updates
- SEO strategy
- PPC campaigns
- Video or podcast material
Middle of the Funnel
In the middle of the funnel, the prospect expresses interest and is moving toward a decision. That’s why your engagement with them should be very strategic. Focus on building a rapport with the prospect and showing them you are a company that can be relied on. Add value by helping them come to a decision. You can send them:
- Whitepapers and e-books
- Industry reports
- Buyer’s guides
- Statistics or case studies.
They will appreciate you giving them valuable material to look over, and will get in touch with you when ready.
Bottom of the Funnel
Bottom of the funnel prospects are just about ready to purchase. They know and understand your brand by now, and will soon decide to either do business with you or not. The idea is to help them get to know you better and develop a confidence in buying from you. When they reach the bottom, it’s wise to send them:
- Client testimonials
- FAQ pages
- Customized presentations
- Sales proposals
- Live demonstrations or trial services
Remember that sales funnel is something you have to keep track of on a daily basis! Once you set up a strategy to monitor your funnel and market to each stage, next you’ll want to get statistics and results. As mentioned, a CRM is a great tool to help you track and get results from your sales funnel management.
360Connect is also here to help by giving you “best practices” for sales and marketing, and feeding you true-intent leads that will move down your sales funnel easily! Get in touch with us to find out more, or take a look at your potential R.O.I. with our program.