What is a Sales Funnel?

The “Sales Funnel” is the visual representation of process of taking potential customers from awareness to consideration through to purchase of a company’s product or service.

It is a way to visualize, measure, and optimize the performance of a company’s sales and marketing efforts.

Commonly broken down into early, middle, and late stages, the sales funnel allows company’s to see the various aspects of acquiring, converting, and keeping new customers.

While some have argued that the sales funnel is dead, we believe the original intent (to visualize the number of inquiries, leads, and customers) is still a valid and important part of demand generation best practices.

But we also embrace the view that the customer or buyer journey from problem to resolution, or from need to solution, is a circuitous one possibly better represented by a flywheel or a loop.

Why Are Sales Funnels Important?

In a nutshell, building a “conversion funnel” can help businesses improve their relationship with customers and develop an efficient strategy to nurture prospects right through to the end of the buyer’s journey.

This is where inbound and some outbound marketing techniques come into play. Marketers should think of the sales funnel as a device you can use to create customers.

While it seems that many businesses find customers, a closer look will show you the process involved in generating sales. Simply put, a sales funnel conceptualizes the process of turning prospective leads into loyal customers.

How Should Marketers Use Sales Funnels?

Paying attention to your sales funnel can improve marketing performance because it provides an ideal process for a customer’s life cycle. It helps marketers to understand:

  1. Are we getting enough prospects into each stage of funnel?
  2. Are the leads converting?
  3. Are they converting fast enough?
  4. Are the leads valuable to us (quality vs quantity)?
  5. Are they staying on as customers?

When I was at software company SAP, we used to talk about the 4 Vs of the sales funnel: Volume, Value, Variety, and Viscosity:

  • Volume: do we have enough prospects at each stage
  • Value: what is the pipeline value of these prospects
  • Variety: do we have enough large, small and medium sized leads? Is each sales region covered? Each product line? etc.
  • Viscosity: are the leads moving through the funnel? Where are they getting stuck

We also looked at the 4 V’s by source and the cost per lead of all these permutations. And we made sure to give thje sames team what they wanted, when they wanted it. We learned that every year, Sales wanted lots of leads to call on in the beginning of the year. But by the end of the year, they only wanted high quality leads.

It sounds like a lot to measure. But we were able to optimize the sales funnel so that our most important stakeholder (the sales team!) was happy with what we were doing.

From a customer perspective, the sales funnel guides the marketing team on the steps needed to improve a prospect’s experience—from considering the product to maintaining loyalty to the brand.

A consistent flow of leads into the sales funnel’s pipeline keeps the sales cycle steady and reliable.

Stages of a Sales Funnel

The original theory of the sales funnel started with mainly company-focused acronym, AIDA:

  • Awareness: the prospect becomes aware of a company
  • Interest: They are interested in what the company sells
  • Decision: They compare various solutions
  • Action: They make a purchase

Here’s one of the many examples of a sales funnel visualized:

The Buyer Journey Needs to Focus On Buyers

We prefer to think of the funnel in customer terms because it is simply more effective to align marketing and sales efforts to customers.

Quick side story: in my very first job, I was an account manager at the Nielsen company and I was assigned a set of customers to both manage and sell to. I never thought of myself as pushy and found the process of selling awkward to say the least.

But as a young, ambitious, and inexperienced person, I eagerly explained our products and services to the accounts I called on.

No one was interested. But when I stopped “selling” so hard and started listening to my accounts and understanding their challenges, I found I was able to position our solutions in a much more natural way.

At the end of my first year, I was one of our top sales people.

So instead of AIDA, I like to think in terms of questions:

  • What: prospects are not necessarily aware they they have a need but are feeling the pain of some perticular problem or challenge
  • Why: The real light bulb moment happens when they realize that this is an important problem to solve. It can help them with their job, their career, etc.
  • When: What events or triggers highlight the need to make a change. Change is hard so there must be a good reason and the right timing.
  • How: brands that help buyers to become more educated about the solution and also on how to navigate the many options, gain more trust with buyers.
  • Who: this is where buyers will start to seek out alternatives to compare
  • How Much: Ultimately, they need to know the cost and potential ROI of a solution

To us, the brands that answer these questions, are the ones who win. That is why our content marketing packages and annual content plans map content to the buyer journey and seek to help our clients become the trusted source of information.

Sales Funnels Optimize Marketing and Sales Teams

In a study by Regalix Research, 87% of marketing professionals said they are prioritizing the use of intent data in the customer’s purchase journey.

Indeed, analyzing what motivates prospects at every stage of the sales funnel is vital to a marketer’s or sales person’s success. Furthermore, a well-utilized sales funnel will ensure that every stage’s initiatives are well thought out and directly stimulating a specific action.

It’s not enough to simply throw generic sales promotions at potential customers. In today’s highly saturated market, rising above the noise is not sufficient to ensure a purchase.

Nurture your leads at every stage in the buying process by providing exactly what they need, when they need it most. Using the sales funnel as a foundation for your target marketing strategy ensures that you’re doing everything you can to maximize your conversion rates.

Build and Optimize Your Sales Funnel

We help our clients build and optimize their sales funnel by reaching, engaging, and converting new customers by educating their prospects at every stage of sales funnel.

We start by identifying all the questions, your customers are asking. We then create a content plan to deliver the answers they need, when they need them.

We also help some of our startup clients to build landing pages, email newsletters, paid promotion and conversion strategies so they can start to show ROI.

You don’t have to go it alone. If you are ready to get more traffic to your site with quality content published consistently, check out our Content Builder Service.

Set up a quick consultation, and I’ll send you a free PDF version of my books. Get started today – and generate more traffic and leads for your business.


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