What is a sales funnel and why do businesses need it?
Every consumer of any goods or services walks roughly the same path from the onset of a problem to the purchase of a product that will help resolve that problem. The American advertising expert Elias St. Elmo Lewis noticed and described this pattern about 120 years ago. It was he who introduced the concept of the “consumer funnel,” which eventually became the reference template for the sales funnel. Let’s find out what the term stands for, what stages it includes, and how it’s used.
What is a sales funnel?
Sales funnel is a marketing term used to describe the buyer’s journey from brand or product introduction to purchase. If you can visualize this path for yourself, you can build a clear chain of actions throughout the sales process, identify the right promotional tools and sales messages. And it will also help you understand exactly where you’re losing customers and how to resolve the issue. How the funnel works – the stages of the sales funnel:
- Interest and evaluation
- Decision making
To understand how the sales funnel works, let’s look at its basic steps – awareness, interest and evaluation, decision, action. These four steps are considered the classic diagram of the customer journey.
The widest point of the funnel is the awareness stage. At this stage, the potential customer has a specific problem or task. They may not even know what specific solution they need but are simply researching the issue, looking for solutions online.
The main goal of this stage is to make the brand and product as visible as possible to start collecting leads. At this point, we consider a lead in the broadest sense: a person who shows interest in the product or service.
Although it is important to draw attention to yourself at the awareness stage, you should not try to sell the product right away. It is better to focus on sharing useful information that can interest a wide enough audience in your segment. We are talking about informative, educational, or entertaining content.
Here are a few ways to increase your brand awareness and attract leads:
- SEO promotion with a competent blog
- interesting publications in social networks
- targeted advertising
- guest posts on blogs, special projects with the media, PR-publications
- training videos
- attending specialized conferences and exhibitions
Interest and evaluation
To a certain extent, the prospective customer has already got to know you, perhaps visited the website, browsed the online store’s catalogue, and subscribed to social media or an email newsletter.
You have somehow or other come to that person’s attention, but they are not yet ready to buy in principle, including from you. So the task at this stage is to maintain the lead’s interest and begin to build a relationship with the future buyer.
What tools to use at this stage:
- email marketing
- social networking posts
- lead magnets
- retargeting campaigns in social networks, search engines, and websites
Making a decision
At this point, your lead is only one step away from becoming a customer. They are not just interested in some hypothetical product but are considering your offer. They are in the process of studying and evaluating how profitable the investment will be. The task of the business at this point is to show how profitable and convenient it is to be your client and receive the benefits your product provides.
Here are some types of content, which will be useful for the future buyer at the “decision” step:
- customer feedback
- discounts, special offers
- demos or instructional videos on how to use your product
- consultations from the company’s manager
- tariff information describing what exactly the client will get for the indicated price
The stage at which the potential customer becomes real. It is to this point that you must lead the person through the entire sales funnel. The task at this stage: not just to sell, but to make sure that the client’s next step – the use of the product or service – is convenient and useful to them.
What can be used at this stage
- an email campaign: a series of emails after purchasing and receiving the product
- guides, instructions
- package offers
Even though the closed deal is the final point, you don’t want to disappear from the client’s sight. Now that you have gained your “warm” contact, you need to keep in touch. This will encourage repeat sales. It’s cheaper and easier than bringing in a new customer. The most common methods of dealing with “warm” customers are loyalty programs and trigger emails. These will help maintain long-term relationships and share interesting or useful information with your audience.
The middle of the funnel: what makes people decide to buy
Working with a customer in the Interest, Appreciation and Decision phases is still a challenge. After all, when people start looking for a product, they are faced with a huge choice. How exactly do consumers behave in such circumstances, how do they process information, and what ultimately influences their decision?
To find answers to these questions, Google conducted extensive research on consumer behavior. They found that one of the main factors that affect the choice of the buyer are cognitive distortions. There are about a hundred such distortions, but the researchers identified six that online shoppers are most likely to be prone to.
If basic product features are spelled out, people tend to buy faster. The time to evaluate and consider options is reduced. How to use: look carefully at the product card or service description. Ideally, find the golden mean. Do not overload them with information, but make sure to still answer the basic questions a potential customer may have.
The power of immediacy
The longer one has to wait, the less desirable the purchase becomes. How to use:
- Shorten the user’s path in the funnel;
- Optimize logistics;
- Respond promptly to user requests;
- Social proof. Research once again confirmed that people are very prone to rely on reviews and opinions of other customers in their choices.
The study confirmed that people are very prone to rely on the reviews and opinions of other customers in their choices. How this can be done:
- Display a testimonial block on the site;
- Talk about successful customer cases;
- Work on your online reputation.
The scarcity factor
A rare or limited resource becomes more desirable: a product that is about to run out, a one-day sale, exclusive offers for certain customer segments. How this is done:
- Show the quantity of the product that is left in the catalog and product card: for example, “so much left,” “already running out,” “the item is now in the cart of so many customers.”
- Conduct short-term promotions or send offers with a very limited validity period.
Trust in authority
If a company or person looks like an expert and is a significant figure in the eyes of CA, customers tend to buy what that person advises faster and easier. How to accomplish this:
- Advertise through bloggers with a small but active audience;
- Build a loyal community around your brand;
- Promote personal brands of company owners or top management.
The magic of free
This still works: the desire to get something for free makes people spend money. This can be done through:
- Mini gifts and gift cards for purchases;
- Promotions such as “1+1=3”, “every fifth manicure for free”;
- Prize draws among customers.</div>Trust in authority. If a company or person looks like an expert and is a significant figure in the eyes of CA, customers tend to buy what that person advises faster and easier.
How to build a sales funnel
To set up a sales funnel and automate the process of passing a customer through it, it’s important to work through a few basic points. Let’s consider each of them in turn.
Research potential customers
Before you move on to building your sales funnel, determine exactly who you want to attract to your website. To build a portrait of your target audience, start by answering these questions:
- What are her interests and concerns?
- What problems does she want to solve?
- Where and how is she looking for a solution?
- What is she afraid of?
Formulate what your product is useful for
Describe for yourself, and then for the audience, exactly how you can solve your potential customer’s problems. Answer these questions:
- What benefit do you bring to the customer?
- How is it achieved?
- How are you better than your competitors?
- This will become the basis for your USP – a unique selling proposition, which you will broadcast to potential clients through different communication channels.
Set up channels for getting traffic
When you understand whom to approach, how and what to talk about with your potential audience, it’s time for you to meet them. The model for attracting potential customers depends on your business goals, budget, and audience. Here are a few methods:
- PPC advertising
- Social media
- Content marketing
- SEO optimization
Engage the visitor
A possible customer has heard about your brand and product through going to your website or signing up on social media. Now it’s time for the next step – get them interested enough to start considering your product as a solution to their problem.
Help engage the potential customer with:
- a demo
- a free trial period
- special conditions for new customers: discount, bonus for the first purchase
- free training materials
Convert a visitor into a client
There are two steps to complete to make it easier for a potential customer to become a real customer. First, make sure it’s clear to the user what targeted action they must take. To do this, add to the pages of the site or landing block, a button and a call to action – buy, send a request, register.
Secondly, make sure that the action you want to take can be done quickly and easily. For example, simplify the registration form or add the possibility of guest purchase without having to register.
It’s important not just to set up your sales funnel but to constantly monitor its effectiveness to find weaknesses in it and rectify them. Pay attention to how long it takes the lead to move from one stage of the funnel to the next. Look at where the biggest churn of potential buyers is taking place. Evaluate the channels for attracting traffic – which sources bring in the most leads, and analyze the cost of attracting one customer for each channel.
To assess the effectiveness of your funnel and to optimize it, you need to acquire analytics tools. A tool that is the most commonly used, accessible, and free is Google Analytics. If your funnel has a simple chain of actions and a small number of channels, you can set up goal tracking on your own in GA. For example, you can use the following scheme: Facebook ad – landing page – application. But if there are many channels and you need end-to-end analytics, you may need the help of a web analyst.
Why can a potential client drop out of the funnel?
You wanted to reach too wide an audience: you need to narrow down the targeting; texts of advertisements are misleading and do not exactly match the product; irrelevant keywords are used for promotion.
Lead-magnet does not correspond to the product
A lead-magnet is a product/service or information that you offer for free to grab a potential customer’s attention and further lead them to the purchase stage of the main product.
Too many steps from first contact to purchase
A complicated funnel with lots of activities can tire you out and scare away the customer. Here are a few things that can make a potential customer leave:
- A constantly popping up chat or feedback form saying “leave a number, we’ll call you back in a second” on every page;
- An overabundance of pop-up banners with promotional offers or other lead-magnets, especially if it’s all dumped on the visitor along with feedback forms;
- Too much-branched page structure: the customer needs to “drop” deep into the site for a long time to reach the final target action.
These are just three common reasons why the funnel loses its effectiveness. To get to the root causes and understand the subtle nuances that affect user behavior, you need to analyze each step of the funnel.
Sales funnel: example
The sales funnel will differ depending on the type of business, the field of activity, and the product. Let’s analyze several funnel variations.
Example of a funnel in B2B, personal selling
- Awareness: contact with a potential customer – a cold call from a sales associate;
- Interest and estimation: acquaintance with the product features – personal meeting and presentation;
- Decision: consideration of a specific commercial offer from the company;
- Action: signing the contract and payment.
Example of B2C funnel, automated online sales
- A potential customer sees an ad on Facebook;
- Turns to the landing page;
- Researches information about the product on the landing page, but leaves;
- Retargeting in social networks/ search results;
- Returns a potential customer to the landing page with a promotion/special offer;
- The customer adds the product to the cart;
- Pays for the order;
- Email about successful payment and order confirmation.
Creating and constantly optimizing your funnel is a time-consuming process, but it will definitely yield results and eventually help to debug, automate and optimize your sales process. And if you are just starting to plan online sales and build an automated funnel, we are ready to help you with competent and high-quality content, as your dialog with the client is an important part of the sales funnel.