What is a sales funnel and how does it work

A sales funnel is used to describe the various processes that prospective customers undergo before they are converted to buyers. The sales funnel is divided into stages. Each stage contained in the sales funnel brings the customer closer to purchasing a product or a service. If your sales funnel is planned properly, it will clearly define the necessary route for your business to take to convert prospects to customers.

An explanation of the sales funnel: How does it work?

All customers undergo a process that leads them to make the ultimate decision to buy your course,  product or service. The process usually involves the customers engaging the brand, getting more information about the service or product, making a purchasing decision, and buying your product/service.

While the sales funnel can take weeks or months, for certain products – especially consumer goods with low prices – this entire process can take place within minutes.

For example, a customer may be checking his social media when he discovers an advertisement for a pair of sneakers. He falls in love with the shoe and proceeds to click the link to get more details about the product. They soon decide that the shoes will be suitable for them.

They then end up buying the sneakers. For such products, you usually have a straightforward sales funnel which usually involves an online e-commerce outlet as well as an attractive way to lure in customers.

Also, on the other end of the spectrum are the type of products that usually have sales funnels that are by far more complicated. For instance, trying to sell innovative and superior enterprise software usually come with multiple layers like email marketing, sales calls, webinars, and several presentations. In these scenarios, the buyer usually takes months to be converted into a customer from a prospect.

The process aims to create a strategic sales funnel that can help guide prospects through the various stages to a point where they are prepared to pay for the service or the product.

The 5 stages of a sales funnel

The 5 stages of the sales funnel are based on the AIDA model. This means that the journey of the customer through the sales funnel can best be described using 5 primary stages. These are:

  • Awareness
  • Interest
  • Desire
  • Action
  • Retention

Each of these stages is categorized based on the attraction of the customer to your product/service and how soon you will make the sale. The 5 stages of a sales funnel are:

Awareness (A)

Awareness is the process of making prospects know about your brand. They see your advert, search with a relevant keyword using Google, or see your social media page or website. They like what they see and visit your website. They will be directed to the first page of your website. This is the landing page.

Interest (I)

With interest, you have now attracted the attention of the prospect. This means that they want to know more about your brand and products/services. They are now looking at your brand as the solution to their challenges/pain points.

Desire (D)

Desire is that stage of the sales funnel where the prospect is now going through your sales page. At this point, they are searching for your content. This means that they are looking for that conviction to be able to buy your product/service. They are collecting different information about your business, going through various packages/offers to enable them to make an appropriate decision. At this point, all your promotional materials such as image creatives, sales videos, and copywriting should convince the prospect to make a purchase. All the main CTA buttons should lead the prospect to the purchase page or checkout form.

Action (A)

Action is that stage of the sales funnel where the prospect finally makes a purchase. At this point, he is now called a customer. They have seen all your sales pages, watched your webinars, or browsed through your store online and have now committed to purchasing from you.

Since everything that you have in your sales funnel leads the prospects to this point, it means that you will notice increased conversions and sales. Also, nobody will want to click away, read a different part of the website and decide not to make any purchase. The funnel as a strategy to improve sales focuses on converting prospects to buyers. And this is exactly what it delivers.

Retention (R)

Retention is an important stage in the sales funnel. You do not make a single sale and stop there. You will want to recover the cost of bringing the customer to your web page. Therefore, you keep on selling to the customer. You do this to make sure that the customer spends twice as much as they normally will. This is known as cross-selling or up-selling.

What is it used for?

Sales funnels are important to businesses because they help take the customers on a journey that ensures that a sale is made at the end. A proper sales funnel is meant to easily convert a website visitor from the moment they become a subscriber to your emails and newsletters until they purchase your online course or service. The goal is to tweak it until it consequently turn these subscribers into clients or customers. It’s only goal should be to help improve conversion for increased sales.

Types of sales funnel

When it comes to the most effective sales funnel that businesses can use to increase sales, there are five common types. They are:

The product launch funnel: This is used to generate an audience for your brand and generate anticipation for people to buy as soon as the product or service becomes available.

The cross-sell funnel: Making a customer buy more from you after having previously made a purchase is another type of sales funnel.

The free consultation funnel: This is useful for businesses that offer consultations. It helps you to provide value and build a relationship with the customer.

The free sample funnel: This type of sales funnel is used to entice customers to become interested in your brand by trying your service/product for free.

The lead generation funnel: This is effective for new brands that are just starting. It involves building an audience that will eventually become buyers. 

The different parts of a sales funnel

Since we mostly deal with online courses here I’ll go over the steps that you might encounter in a course funnel.

Ad: Where you get the attention of your audience. You can also go the free route on social media and inbound on your blog with SEO.

Opt-in Page: Where you deliver a lead magnet for the people interested.

Email Sequence: After you deliver the lead magnet that you promised then you might run someone through an autoresponder to warm them up before they are willing to purchase the course. This could be a sequence of 8-10 emails in the span of a few days. I like to keep this initial burst between 3-4 days to have a faster feedback loop based on which I can adjust the sequences (headlines, open rates, button clicks etc..)

Landing page: Also called a sales page. This is where the person goes to in order to purchase the course. It should have all of the elements required to convince them that the outcome of this course is possible for them, others have done it and you’re the right person to teach them.

Check Out Page: Where the buyer puts in their credit card/payment info and email to which you will deliver the course. Some platforms make this difficult and require a two-step process. Whenever possible add social proof at this stage.

Downsell or Upsell: After the checkout page there should be two paths. For people who bought you want to upsell them extra options and ones who did not should be down-sold (A) a cheaper or lower option & (B) get thrown into an abandonment cart email sequence which is a 2nd attempt to persuade them into buying the original offer.

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