What is a Sales Funnel and How Does it Work? (Beginner’s Guide)

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Ever wondered what on earth a sales funnel is, and how it really works?

I broke it all down in this guide.

First, have you ever dreamt of having a virtual salesman that works 24/7/365 on your business that sells and market on autopilot?

How better and relieved would your life be?

Your product is all done. It has passed through various tests. Exhaustive quality checks have been conducted to ensure there is not a single flaw in your services.

Think you’re done? Pause for a moment.

All that hard work means nothing if you have no customers flowing towards your direction to do business with you.

Without a solid marketing effort, even the best product will not sell. No sales without marketing. Obviously.

Well, there is a way you can start grabbing massive attention from people who’re likely to do business with you (think: leads) all on autopilot with the help of a virtual salesperson.

I mean, a salesperson that helps to collect leads, build relationships, create trusts, install buying beliefs, and present your products or services at the right time to hungry buyers.

Now picture having an entire sales team delivering your message and selling your products to thousands of people.

Too sad, this would cost you a ton of money to deploy and implement.

And managing an entire sales team? That’s a pain in the neck.

Guess the good news?

With the help of sales funnels, you’d be able to develop a virtual salesman that takes every one of your prospects by the hand and walk them through each step of your sales process until they turn into a customer. Turn repeat customers. Turn evangelists.

That’s where the sales funnel comes to your rescue.

This is what this article is all about.

Sales funnel isn’t something new in the marketing space, but there’s a chance you don’t understand what it means and how it works.

Sales funnel isn’t among the usual terms you hear when talking about sales, but it has been in existence for long.

So, let’s discuss it. What exactly is a sales funnel?

What is a Sales Funnel?

sales mapping

Does the combination of ‘sales’ and ‘funnel’ get you thinking of something comical? Well, the inclusion of the term funnel might remind you of a gradual streamlining of many possibilities into a smaller number of final outcomes.

That’s the very idea of a sales funnel.

Simply put, a sales funnel is the process potential customers go through to become actual customers. Then further become a loyal fan/evangelist in your business.

Looking at a real-life example you may be familiar with…

An example of a real-life sales funnel – explained…

IKEA store.

IKEA store funnel example

As an example, think of a funnel as an IKEA store. In an IKEA store, you are funneled through the entire store before you can even reach the checkout.

At IKEA, everyone enters through the same door.

Everyone walks the same steps. There are even arrows projected on the floor that show buyers where to go next. That is a funnel!

If you want to get something at IKEA, you have no choice but to go through their funnel.

Like this…

First the living room -> Then bedrooms -> The kitchen -> Office -> Patio -> Home organization…

Around every turn within the store, there is something else that they try to entice you with. Then when you think you’ve reached the checkout; you are dumped into “The Marketplace”.

This is where you are presented with an OTO (One-time Offer).

Something like:

“Want this bamboo cutting board for only $12? Grab it now, because once you turn the corner, there is no looking back!”

Then another…

“How about this faux cow skin throw rug for only $29? Grab it! Do it!”

Finally, when you have literally walked through the entire store and been presented with every conceivable offer/product they can think of, then, and ONLY then, do you get to checkout.

That is a funnel.

Unlike the IKEA store, an online sales funnel isn’t made just to get every visitor to convert.

It aims at eliminating every form of distraction to focus on the core products and ultimately turn every single prospect into a lead then to a customer using a more streamlined, systemized, and retargeting process.

Educating prospects. Capturing emails. Following up. Building relationships. Automations. Conversion rate optimization.

And lots of other things.

While most ordinary folks might not realize it, they are buying products or services because they have been driven and nurtured into a sales pipeline in one way or the other.

And this is done by using effective content marketing alongside a sales funnel builder to convert your visitors to recurring customers.

Sales funnels are used to sell everything including information products, SaaS, services, and physical products that you see every day.

Why Do You Need a Sales Funnel?

Great you asked.

You have thought of a marketing strategy to get your products to people, so why should you bother about a sales funnel?

A sales funnel is a laid down path that your audience passes through before becoming a customer. And without a sales funnel, getting your audience interested in your products might be difficult.

Because the sales funnel makes it easier for your audience to trust and buy from you.

And your sales funnel helps you serve your audience the right content they need step by step at the right time.

A good sales funnel sustains the interest of prospective customers, for example, turning website visitors into email subscribers and email subscribers into customers or clients.

Then a happy customer into an evangelist. A loyal fan.

More to that, a sales funnel helps you adopt an organized rather than a piecemeal approach to marketing.

In other words, it helps you stay consistent with your marketing, detect leaks, and optimize for better conversions.

Also, with the sales funnel strategy, you’re able to identify areas where you are good or weak at dealing with customers.

Is it in creating public awareness, capturing their interest, or is the problem even with the nature of the products or service? Your answers to these questions will help you measure the progress you have made in each phase.

Another cozy benefit you gain from implementing the concept of a sales funnel is that you build trust and credibility in the eyes of your customers…

Offering a ton of value for free before asking them to buy is a great way to achieve this. When you make every entry point of your sales funnel an avenue to educate – you definitely, always win the hearts of your prospects.

How Does a Sales Funnel Work?

conversion funnel stages

You already know what you need from your customers. You need to have them buy your product or item for sale. To covert!

This is where a sales funnel comes in. It works by creating the public’s awareness of your wares or online services and sustaining their interest all through to the point where they finally buy from you.

To do this, it launches into action a step-by-step protocol that phases out potential but uninterested customers leaving you with your actual customers.

Let’s say more about this…

As a seller, everything you do to catch people’s attention (referrals/affiliates, YouTube, blog posts, trade shows, events, online ads, viral campaigns, etc) and their positive responses to these are summarized into the top and widest stage of the funnel called MARKETING.

It is the widest stage because it holds the largest number of people.

Marketing is a general term that accommodates the preliminary sales funnel stages —marketing campaigns, awareness, interest, and evaluation.

From this stage, the funnel starts to narrow down till it gets to the base—customers who are serious about purchasing.

In the sales process, those who liked the results of their evaluation commit themselves to purchase the item.

This is the decision stage. Buying the item, the action makes them your real customers, what we’re aiming at!

If they are so impressed, they might even refer you to other potential customers and then the whole process starts over.

One important fact to keep in mind is this:

Sales funnels are not the same for all kinds of businesses. They are adapted to the specific nature of the business in mind. The sales funnel for physical products for instance is quite different from that of someone who offers online services.

While for a physical business, there’s still a lot more involved because the transaction doesn’t end online. But for online services, it is much simpler, as the customer gets the product as immediate as when they pay for the product.

So, the transaction train is shorter.

While for the physical product or physical store business, you need to be omnichannel to make your sales funnel effective. Likewise, the sales funnel for a dentist is practically different from the sales funnel of a lawyer.

But they all have something in common. Their end goal is to get your audience to convert.

Conversion could be buying your product, registering for your course, ordering your service.

It all depends on what you want to achieve.

Not to be ignored is the fact that a good sales funnel is goal-oriented.

This is especially useful for those who offer online services on websites. You should have definite goals, know what you want visitors to do on the site then draft a funnel for it.

Have you heard people say ‘widen the funnel’ and then found yourself wondering what they meant?

Logically, widening the funnel starts at the top, not the bottom.

It’s just like widening a literal funnel at its widest point so more water can enter to be filtered out or poured somewhere else.

You can now understand that widening the funnel means reaching out to a larger audience to increase the chances of more people becoming actual customers.

The more people there are in the funnel, the wider it is.

How a Sales Funnel Works (Dental practice example)

We shall be taking a brief look at how a typical dentist funnel works.

If you are a dentist looking to get more clients (people in need of dental checkups, tooth transplant, or cosmetics), here is a typical sales funnel you can build for a dentist. While it might not be exactly like this, it must be powerful enough to convert your customers.

To start with, you need to generate awareness about your service to your audience. At this stage, a dentist can start by running an awareness Ad campaign to free teeth cleaning offer.

This brings them into your world – your sales funnel.

They become lead and a potential customer. And could be having other hidden teeth problems that require your premium services.

While offering free teeth cleaning isn’t the end goal, it would lead to bigger sales for your other paid dental services within your sales funnel. Because at this point, your prospects are confident that you can help them.

dentist value ladder

Upselling them to your premium dental services (like, monthly retainer, cosmetics, drilling and filling cavities, etc.) shouldn’t be a problem.

However, I’m certain not everyone will convert to be a customer.

Even the greatest marketer wouldn’t be able to convert everyone to buy a product. Sometimes a little push with some sprinkle of nurturing is what it takes.

Since, you already got their details where you can always keep in touch, build relationships, and send promotional messages. The odds are accurately in your favor.

You can even take it a step further by running a timely discount campaign to these leads.

Understanding the Sales Funnel Stages

By now you should understand how a sales funnel works and have a clue of the possible stages.

While I have explained how a sales funnel works using a dentist as a case study, that exact sales funnel example wouldn’t work for most businesses.

But they all have one thing in common, their formula (stages). The stages of the funnel are never changing but what changes is the content/offer within the funnel.

A typical sales funnel has three sales funnel stages: the top of the sales funnel, the middle of the sales funnel, and the bottom of the sales funnel.

Top of the Funnel – Awareness

The top of the sales funnel is the first sales funnel. And you guessed right, it’s to generate awareness.

Your product is either the first product in a totally new niche or one of the options in a niche. Either of the cases needs awareness.

For the former, you will be spending more on generating awareness for your audience’s problems and your products.

If you’re in a new niche with no products or competitors, definitely your supposed prospects haven’t thought of the problem as a problem, and there are fewer chances of paying for the product.

As an industry breaker, you have more tasks to be done.

First of all, you need to make your supposed customers aware that they have a problem which they don’t see. And you need to make them aware your product is a solution.

At the top of the funnel, the purpose of your marketing strategy is to generate awareness.

And this can be done by creating informational content for your prospects.

You can do this by writing blogs, creating videos, engaging with your audience on social media, hosting free online courses, and many other forms of content creation.

You can also employ an army of affiliates to help in creating awareness and driving traffic to your funnel.

Middle of the Funnel – Evaluation

At this sales funnel stage, you have successfully helped your audience identify a problem and now they need a solution.

I would chip in the fact that the top of funnel content doesn’t have to be just one.

Just like in real life sales, you might need to persuade some prospects a few times before they give in.

This also applies online.

You might need to host webinars, crank-out posts, email campaigns, hit them with your remarketing Ad campaigns before some of your audience finally gives in.

But the main thing here is that your audience can only graduate to the middle of the sales funnel once they identify their problems and see the need for a solution.

In the middle of the funnel – our focus – is evaluating possible solutions alongside our prospects.

Once your prospects are aware of their problem, they would enter the researching phase, looking for possible solutions to their problem while comparing them to one another, and your products will be part.

But rather than having your competitors walk your prospects through the evaluation and buying stage, it’s better you keep and protect your prospects.

And you can do that by providing them the right information and all they need to know about the problem including mentioning your competitors, educating them, and evaluating the solutions together.

It wouldn’t cause you any harm.

Instead, it would make you credible and trustworthy. Between, either you let them know about other options or not, they would find out anyhow.

You can’t hide your competitors; they are also doing their best to get and convert prospects to customers.

So, the only favor you can do for your business is to be the one that walks and stands by prospects until the end of the buying phase.

The type of content that works here is to review content that involves walking your prospects through choosing the right solution.

Bear in mind that your product might not be the best fit for some of your prospects. And if it’s so, do not be afraid to refer your prospects to a competitor that can solve their problem.

Webinars, podcast hosting, blog posts, and videos are a good fit for the middle of the funnel.

Bottom of the Sales Funnel – Buying Stage / Action Stage

The bottom of the funnel is the reward stage. After spending your time and funds on getting your prospects to go through the sales funnel, here’s where we get the reward.

While the middle of the sales funnel is the stage where prospects evaluate possible solutions, at the bottom of the funnel is where they act.

Is it you or your competitor?

This is the finishing stage and requires more communication and engagement with your prospects.

Examples of content that work at this stage are free trials, free demos, sales calls, upsells, and many other strategies to get your customers to take action.

Steps to Implement a Sales Funnel in your Business

Implement funnel
Source: pexels @ Andrea Piacquadio

With all these, you should be eager to get started with creating your own sales funnel, right?

Not too fast, let me walk you through proven steps to creating a sales funnel that works.

  • Research Your Audience

Identifying who your audience is the first step in creating a successful sales funnel.

You need to know who they are and how they digest content in order to create the perfect sales funnel.

A typical example is that if your audience is aged women, creating long-form blog posts on your sales page will be ineffective.

Aged women will not be able to go through that, instead, you need something visual to get their attention.

Or the other option is to sell to their children.

Some of them have got children that are capable of buying things for their parents. So you can make them your focus and market to them products they should buy for their parents.

  • Create a Landing Page

The landing page is a sales page that gets your customers to take certain actions.

Your landing page could be to collect email addresses, get your audience to register for your webinars, download a case study, only you can decide this.

However, studies show that businesses with more than 10 landing pages tend to have a higher conversion rate and the reason isn’t far-fetched.

Assuming you’re selling to a larger audience from different demographics and lifestyles, the way you approach them matters a lot.

And if you’re using the same landing page to talk to all of them, you wouldn’t have much success.

That’s why small businesses and companies opt in to the idea of creating more landing pages.

The more focused your landing page is to your audience, the faster they can relate and understand.

Remember that while some are familiar with the problem, some are just hearing about it; so you need different landing pages for them.

Using advanced landing page software like Instapage makes it super easy to whip out multiple landing pages in minutes with help of its pre-built templates.

Finally, ensure your landing page doesn’t distract your audience from taking action.

Having too many menus and outgoing links will distract your audience. Ensure your landing page is valuable and easy to understand. Look into the user experience.

  • Engage your Audience

Engagement supersedes all. You need to constantly engage with your prospects with valuable content.

And this explains why influencers have more success selling to their audience because they engage nearly every day with their audience. The trust and credibility are there already.

In essence, to build trust and credibility for your business, you need to engage with your audience.

Serve them the kind of content they need and assist them as much as possible.

You can do this by creating videos, blog posts, and webinars.

And further engaging and keeping up with them on social media platforms like Twitter, Facebook, Instagram, and LinkedIn with the help of social media scheduling apps.

In the end, the more you engage with your prospects, the more you get to know them better plus their needs.

  • Be Extra

Go the extra mile in satisfying your customers. That’s the key to recurring revenue.

Build a constructive and peaceful customer support team to promote and engage with your customers.

It’s much easier to lose a customer than it’s easy to gain a new customer. Ensure you provide the best service to your customers. When you do, they’ll refer more customers to you and that’s how businesses grow.

How do you make a sales funnel from scratch?

To create your marketing funnel sales funnel from scratch, it starts with identifying your target audience or avatar.

Knowing how to identify your buyer avatar is the first step to building a sustainable business. Where they congregate, their frustrations, fears, dreams, and desires.

When you get to understand what people want, figure out how and where you can help them – then it becomes easy to map out and build your sales funnel.

Then the next step of the sales funnel stage is creating the perfect bait, hook, or lead magnet to entice your customer into your world.

Which would further lead them up to your value ladder where you upsell or downsell your paid products or services.

There are quite a few solid funnel builders for making all the processes easier and creating all the pages; sales funnels, squeeze pages/lead capture pages, marketing automation pipeline for nurturing, and follow ups.

However, your choice of marketing funnel software does not fully impact the conversion and success rate of your marketing funnel.

The core conversion elements still fall back to the copy, social proof, story-line, attention-grabbing hook.

What’s Next?

No doubt…

Having a sales funnel for your online business helps solve one of the biggest problems marketers and online businesses face, which is creating an automated system to acquire profitable customers at scale.

That do the work without you coming to sit down 24/7 to control things.

While understanding the entire concept and operation of sales funnels is just the beginning – it does give you clarity and guidance on how you should go about implementing one for your company.

Followed by creating, optimizing, and perfecting your sales funnel. Which takes time, practice, and quite a few testing and tweaking.

To round this up:

The most crucial step in developing a funnel strategy is first creating your dream buyer avatar. This changes everything.

Focusing on your dream buyers and their needs brings clarity to your marketing message, your pricing, value proposition, and your copy. Which ultimately leads to a more profitable business.

Khris Steven

My mission is to equip and arm you with the precise marketing tools, resources, strategies, and tactics to help you make IMPACT, SERVE more and (of course) EXPLODE your income so you can live life on your own terms.

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