Everything You Need to Know About Sales Funnels

Marketing Sales Funnels

People visit your site. Prospects become leads. Then the smallest hiccup occurs. And you're back to square one.

You get frustrated, even infuriated. But we can't get mad at our site visitors. Without a seamless customer experience, it's impossible for a prospect to take the necessary steps to become a customer.

Did you know that the average conversion rate is 2.35%? This shows that it's not easy to create the kind of experience that leads a prospect through the buying process.

But optimizing sales funnels does just that. Let's explore how it's done.

Why Do We Need Sales Funnels?

What do you think your most important tool is to get new business? Is it your telephone system? Is it the Internet? Is it social media? Is it YouTube Ads?

Actually, it's none of these. The single most important tool is a tool that you can't touch or see in a physical way. It's your sales funnel.

And yet the sales funnel remains one of the most misunderstood tools across industries and businesses large and small. That's why those who harness its power truly have that competitive edge.

Because of their lack of understanding, your competition wastes time, money and human resources ineffectively trying to drum up new business. They spend too much for too little.

Their businesses don't thrive as they should.

But you can be different.

You can learn how to optimize sales funnels to make all your efforts more effective with greater ROI.

How Doesn't the Sales Funnel Work?

To demonstrate how sales funnels work, let's first look at what doesn't work.

Imagine This

Pretend you're a potential customer for a moment.

Someone just called on the phone (yes, it still happens). You don't know who this company is. They launch into a sales pitch about why you need a tankless water heater. You listen for a minute -- just to be polite.

But then you get off the phone as fast as you can, saying over and over that you're not interested.

What's Wrong with This Scenario?

Is it that a tankless water heater is a worthless product? No.

Is it that you couldn't benefit from one? No.

What is it then?

This company made a very common and detrimental mistake. They tried to sell you something before:

  • You even knew you needed it
  • You decided to buy it
  • You considered who you would buy it from
  • You know who they are

If you don't know you need it, why would you listen? If you don't know who this company is, why would you trust anything they say?

In other words, in an effort to get a quick sale, they've darted through the stages of brand awareness and building rapport. And they've jumped right into selling.

Cold calls have never been an effective sales tool. And even if you're not cold calling, you're likely engaging in similar tactics.

They don't work because you're not meeting people where they are and guiding them through the buyer's journey.

How Do Sales Funnels Work?

Sales funnels meet customers where they are with the right message at the right time.

According to research, 57% of a customer's decision to buy is made before they even contact you.

The sales funnel guides this buyer through that first 57% of their journey so that by the time they do contact you, they're close to becoming a customer. In other words, they're a very highly qualified lead.

If a customer is still trying to figure out if they need something? The business is there, providing content that helps the customer evaluate their needs and reach the "desired" conclusion.

They do need your service. All you have to do is guide them through the sales funnel to seal the deal.

The Components of Sales Funnels

Different thought leaders label the components differently, but the funnel is more or less the same, regardless of how you label it.

The primary components of sales funnels are:

  • Prospects
  • Contacts
  • Leads
  • Final decision-making
  • Sales

Prospects /Awareness

We call prospecting the top of the funnel. It's also known as the brand awareness stage. This is where you work to increase your visibility among potential customers.

At this time, you're not focused on selling anything. Instead, you're talking about your customers' challenges surrounding your offerings and providing solutions.

You provide helpful, free content that attracts potential customers to you through search engines and social sharing.

For example, if you sell weed eaters, you might create a YouTube video that tells customers how to replace the weed eater line. You might create content on how to effectively use a weed eater.

You might even go as far as to show them how to fix one.

If you're a roofing company, you could create a helpful blog that explains how to look for roof damage. You can create content on how to raise the value of your home and include roofing.

You'd create compelling social media headlines and share your content.

Contacts / Interest

Now that you have their attention, it's time to turn a website visitor into a contact. Make an offer to this person in exchange for their email.

This would include content that people really want. But you're not sharing cat videos. It should also align with your brand.

It will vary a little B2B and B2C, but would include things like:

  • eBooks
  • A set of videos
  • A report on a social/environmental issue that you and your customers care about
  • White papers (B2B)
  • Case studies (B2B)
  • Workbooks

This is referred to as gated content. Once the prospect gives you an email, they'll be able to download this content for immediate use.

Leads / Consideration

Now that they have engaged with you, you have a lead. You will further engage this person to turn a lead into...

A highly qualified lead.

If you thought that we were going to say "turn them into a customer", then you're putting the cart before the horse. This is where many businesses lose people.

Micro-conversions are the best way to lead people through the sales funnel. With micro-conversions, you ask people to make very small commitments before asking for a big commitment like buying your main product or ordering your service.

Now that you have an email, you can begin sending your lead emails that contain content they will find of interest or use to them.

During this phase of sales funnels, make them another offer. This offer might either be free like a free trial or it may be something that's very low cost.

If you're a tutoring service, you might offer one session for $10 instead of $50. What a great deal!

"But aren't you giving away too much?" you might ask.

Keep in mind that we're not at the top of the funnel any longer. These are people who are very likely to become your loyal customers.

While it might be absurd to make this offer at the top of the funnel. Once you're in the funnel, this offer makes sense because of the high likelihood that this person will become a paying customer.


Once someone has taken you up on your low cost or no cost offer, you have a very highly qualified lead.

Continue to engage these leads through email, social and other means. Make new offers. Work your way up to your core services.

Sales / Promoter

This is the bottom of your funnel. These are existing customers. Treat them right. Continue to increase their loyalty over time as well as their CLV (Customer lifetime value.

A Garner study showed that if you increase customer retention by 5%, you can increase profit by 75%.

It's easy to see why.

The chance of selling to a prospect is 5%. The chances of selling something to an existing customer is 60-70%.

Existing customers will be the first to try your new services. You've earned their loyalty. They want to be the first to try your new things and share with others.

They're much easier to upsell and resell. They're the ones who'll write you the great reviews because they feel connected to you.

They'll help you continually fill the top of your funnel with less and less work from you over time.

Optimizing Your Sales Funnel

Maximize profitability happens when people optimize their sales funnels.

You'll obviously be giving away a lot of free content at the top of the funnel. This can seem overwhelming and fruitless. It is if this content isn't moving people into the funnel.

Use analytics tools like Google Analytics and A/B testing to determine which methods are most effective for taking people out of prospect stage and into contact/lead stages.

Only a fraction of these will move into the funnel.

As they move down through the funnel, you can narrow your focus to provide a more personalized touch. It would be nearly impossible to personalize earlier because you had a wide variety of prospects.

But as they move down through the funnel, they prove themselves worthy of your extra time and investment. You'll begin nurturing these leads and moving them through the funnel to the bottom/tip.

Continually evaluate your methods and work to improve. As you learn that certain methods work well, duplicate them to maximize your results.

Leaky Funnel? Here's How to Fix it!

After gaining new insight from this post, you may realize that your existing funnel is very leaky. Let's look at some common sales funnels leak causes and how to fix them fast.

Low Traffic

You can't feed the top of the funnel if no one's seeing you. Low traffic means you've got a visibility problem. We need to fix this traffic problem first to get more people into your sales funnel.

The Fix

Begin applying best SEO practices. Make sure your website is fast, user-friendly and mobile friendly. You could be losing people because your page takes too long to load.

Get active on social. Don't try to be in too many places. Instead, figure out where the prospects are and focus there in 2-3 places.

Partner with a micro-influencer. These are people with 1000+ followers. Introduce yourself. Show them what you have to offer their followers and then work with them to get the word out.

No Top of the Funnel Content Offerings

Maybe you don't even have a blog or a social media account. You'll need these to begin feeding the top of sales funnels.

The Fix

Begin investing in high-quality content. This should include a variety of:

  • Blogs
  • Videos
  • Infographics
  • Your gated content to exchange for an email address

These are assets that will continue to pay you back over time. They're worth the time and investment.

Poor Lead-Nurturing

Once people are in the funnel, they will leave fast if you're not giving them a reason to stay.

The Fix

Be consistent with your posting, publishing and emailing schedule. Use analytics early to determine how well you're doing. Improve your follow-up.

Create backend content to promote before you begin filling your funnel. Otherwise, you might find yourself spending so much time at the top that you can't get results within the funnel.

No In-the-Funnel Offers

You may be thinking: we just sell one thing or we're a service provider. What small offers do we have?

The Fix

Every company has something smaller of value that they can offer. It may be an app you design for your customers or a great eBook. Being a one-trick-pony will make it difficult to move people through.

Evaluate what your assets are. Begin brainstorming on what lower cost offerings you can create to help people through the funnel. Then win big at the end.

Sales Funnels Shouldn't Move at a Trickle

If your sales funnel isn't moving, it's time to begin looking for that clog and bringing in the Drano. The first step is to understand sales funnels. Then you can begin optimizing it to maximize results.

There are some common challenges to be on the lookout for. But each of them has a simple and effective solution.

If you need help getting your sales funnels flowing, contact us today.

Tell Us About Your Sales Funnel

Without a seamless customer experience, it's impossible to attract and convert.

Life is full of distractions.  Your online prospects may become leads, but then the smallest hiccup occurs. And you're back to square one.

Getting your audiences attention, again, is what optimizing your sales funnel is all about. When you understand sales funnels, you can guide customers through the process from awareness on.

You can nurture customer relationships to the point that people want to buy -- not because you're trying hard sell them. But because you've demonstrated that you have something they want.

And you're the right company to provide it.

Let's explore how it's done together

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