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What is a sales funnel? 10 steps to building a funnel

The term "sales funnel" (synonymous with – sales filter) describes a trading instrument – regardless of whether it is B2B sales, working with wholesale or retail. The funnel concept is a general marketing concept, it serves to select leads through various steps. – from the first contact to the successful completion of the transaction.

Next, we'll take a closer look at the individual components of a typical sales funnel and explain its advantages and disadvantages for marketers and salespeople.

What is a sales funnel?

The sales funnel describes the individual stages of the process of selling goods or services and allows you to measure quantitative and qualitative indicators from the acquaintance of a potential client with a product or service to transforming him into a paying customer.

Using the sales funnel system, you can define separate phases for customer management and sales process automation. Depending on the type of activity of the company, it is possible to define from 5 to 20 separate steps (sieves) in the funnel.

Example of a five-level sales funnel

sales funnel hosting Ukraine

 

  1. Determination of the target group and marketing measures in relation to it. At the beginning of the process, you want to draw attention to your product or service. In a variety of ways, such as presentations, online campaigns or print ads, you draw attention to your product. There are a lot of potential customers in your sales funnel right now because you have attracted the attention of many different people.
  2. Getting leads by phone, mail, appointment, or targeted online activity. Now the interest of potential customers must be won. You need to find out who is really interested in your proposals. For example, you can send a letter by email. Only those who signal their interest in your products by exchanging email data will stay in the sales funnel.
  3. First visit or call, analysis of customer needs, analysis of needs, assessment of customer capabilities, presentation of a product or service. After selecting a general group of potential customers, you turn to specific leads. Initial calls, correspondence or visits and analysis of their needs lead to closer contact. A good presentation of prudokts is beneficial for the further development of the sales funnel. This step removes customers who see no benefit to themselves in your offerings.
  4. Specific proposal, negotiation and objection handling. This section of the sales funnel focuses on the real-world offers that you make to your received customers. Depending on the industry, you should use different sales strategies. At this stage, customers drop out for whom your offers are not suitable.
  5. Establishing a procedure for cooperation with a client and concluding a contract or regular sale. In the last step, you have finally sold a product or service. Through 5 steps of the sales funnel, you have selected the right customers and now you benefit from it. Possible further cooperation with them or subsequent orders.

Features of the sales funnel

Imagine a large number of leads at the top of the funnel. There could be hundreds or millions of people depending on what you do. These are all people who you think might need your product or service and who you have never interacted with.

At the bottom of the funnel, after several sales stages, you will see a completed order for one or more people. They paid for your goods or services and may continue to order them. – that is, they will turn into regular customers.

A common example: if I call 100 people, 50 will be willing to talk to me. Out of these 50, I will get interest from 20. Out of these 20 people, 10 became buyers. That is, we got the ratio of the first and fifth steps 1 to 10.

Remember – there is a law of large numbers! The funnel can be narrowed more or less, but ratios of 1: 8, 1:10, or 1:15 work for almost any retail business. If the ratio is less – means that you have found the secret of success for your activity, if the ratio is greater – then you need to improve your marketing.

In the area of Business to Business / B2B, especially if you have a more or less unique offer, you may not have a funnel, but a pipe. That is, when all potential clients are known and all, or almost all, of them will conclude a contract with you.

For example, the realistic value for the IT field of developing specialized mobile applications for banks is 8:10, i.e. 80% of potential customers have become service buyers.

What is a sales funnel for and how to work with it?

The function of the sales funnel is that after each stage, more and more potential customers disappear who are not interested in your products or services or do not have a budget for your offers. At the same time, the percentage of motivated clients who have every opportunity to conclude a deal is growing.

In the end, only those customers are left who send an order or buy products.

Sales funnel assessment is carried out to maximize the efficient use of the resources available to the company, as well as to effectively structure the existing marketing and sales processes.

Marketing managers can use a funnel tailored to their business and their respective sales processes to measure the success of their efforts. This allows you to know exactly where in the sales chain possible conversions are lost and how the main sales model can be optimized.

Depending on the structure of the task and the number of stages, all relevant processes (for general marketing, retail, or service presentation) can be plotted as a graph of the sequence of sales and their attendant events.

Thus, the funnel allows you to create a group of mathematically accurate tools for assessing and presenting differentiated costs and efforts to attract customers and options for increasing their loyalty when planning sales.

For example, in a regional mail-order pharmaceutical company, the sales funnel looks like 1:20 on weekdays during the day (from 9 to 18), and expands to 1:10 on weekends and evenings.

It follows from this that during working hours on weekdays it is necessary to attract the best salespeople and make promotional offers to customers to increase profits.

Benefits of a classic sales funnel

A structured and well-defined sales funnel has the following benefits:

Clear orientation

Reviewing the individual levels of your existing sales funnel can help you better align all marketing efforts with your desired target group.

It provides a pictorial view of a phased model and often results in entrepreneurs having an “Aha!” Effect when they see that their pre-existing sales funnel was not designed specifically for the targeted target group.

Clear responsibilities

The individual stages of the sales process give managers a clear idea of which organizational functions are responsible for which stage.

Simply put, in a typical sales funnel, the marketing department takes on the lead generation task (ToFu & MoFu), during which the sales department is responsible for preparing and approving proposals in the subsequent procurement phase (BoFu).

Measurability

The funnel helps you identify the individual phases of the sales process and its performance. For example, it is relatively easy to answer the question - where do potential customers jump off along the sales funnel? Based on this information, the individual phases of the sales funnel can be optimized or changed.

Ongoing sales funnel management also enables early root cause analysis in the event of a decline in sales, allowing timely countermeasures to be taken long before the company suffers significant damage.

Simple potential optimization

Numerical knowledge of measurements, for example, the bounce rate, along the funnel, allows you to take measures for its expansion, starting from the mouth.

Thus, you can increase the capture of new parts of the old target audience or even a completely new target audience. The more potential customers turn into real buyers, the higher the profitability of the measures taken – and, accordingly, vice versa.

What does an online store's sales funnel look like?

Let's assume that a newly created startup wants to sell their products through a website.

What does an online store's sales funnel look like? hosting Ukraine

 

The steps involved in a possible sales process would look like this:

  1. Attracting visitors. In order for people to come to you, your website must deliver relevant and high quality content. In addition to organic user reach through search engines, visitors can be attracted through a wide range of communication measures, such as social media, paid advertising campaigns, sponsorships, PR events, etc. For example, we are going to trade construction workwear – working overalls. In this case, our target audience – builders, foremen, construction supermarkets and construction firms.
  2. Converting visitors to leads. The next step is to turn the visitor into a lead. The visitor can do this, for example, by subscribing to the newsletter offered on the website, by making a call to clarify the range of products, or by downloading the product catalog in PDF format for a closer look. In the case of overalls, it will be sent out a description of the advantages of our workwear, recommendations from past customers and successful brand positioning. For example, the slogan: "Overalls for professional builders."
  3. Encouraging leads to make a purchase. Leads have already shown a deeper interest in the product or manufacturer by interacting with the contact elements on the website. The next step is to turn a potential buyer into a real buyer. For example, you can send a lead a promotional offer, a price list with an updated range of products, or a discount code as a greeting after registering in the newsletter. At this stage, price and quality play a role. For example - our overalls do not tear, and at the same time they are slightly cheaper than those of competitors. Or vice versa – our overalls are slightly more expensive than competitors, and do not tear for ten years, and are also very resistant to the penetration of cement dust.
  4. Implementation of the transaction. The fourth stage can take place in different ways. In most online stores, the client himself calls the manager after deciding on a particular purchase. With active sales, the manager himself calls the lead and tries to get the order. In the case of using the aggressive sales model, the manager not only calls once, but reminds of the product or service according to the established schedule. At this stage, the client bought a jumpsuit, and we also gave him two carabiners and sold a canvas construction belt at half price. Or vice versa – the client bought a jumpsuit because he was flattered not only by the declared price and quality, but also by free carabiners and a discounted construction belt.
  5. Maintaining the established relationship with customers. The last step of the sales funnel is often overlooked by the marketing department. After all, the main focus of marketers is on winning new customers. But this is not only difficult, but also expensive - acquiring new customers costs ten times more in terms of resources, compared to convincing existing customers to make planned, repeated or additional purchases. Remember - managers should always consider post-sales activities. In the case of a website, this can be accomplished using classic advertising redirection measures, congratulations, reminders, analytical reviews and product tops, or the provision of technical services (e.g. through a customer forum) If we talk about overalls, then, in addition to choosing other models, we can offer other construction workwear – for example, unloading, fashionable foreman cap or sturdy boots.

Sales funnel conversion calculation

The conversion rate is used to measure the success of a business and to set goals for the marketing department. The success of a funnel can be measured using its simple formula:

Conversion rate = (number of converted contacts / number of all contacts reached) * 100. For example, Кк = 10/100 * 100%. That is, the conversion rate is 10%.

As you can see – the formula is simple - but what drives the successful conversion of potential buyers into real ones?

Marketers use the AIDA formula to analyze customer behavior. (Attention, Interest, Desire, Action - attention, interest, desire, action).

She argues that receiving attention and interest, as well as awakening desire, is a prerequisite for the final execution of an action (purchase) by consumers.

If we speak in the language of mathematics, then the so-called direct arithmetic decreasing progression is used in the AIDA formula. This means that at each subsequent stage of the model's operation there will be half the number of people.

For example 12 –A, 6 – I, 3 – D, 1,5 – A. That is, only 1-2 people out of 12 will perform the action.

This number correlates with the classic distribution of customers in the sales funnel and serves to control it in marketing.

Remember - managers making decisions along the sales funnel must always consider the needs of the target group and follow the AIDA model to attract as many buyers as possible to the bottom of the funnel.

Automatic sales funnel

Auto-funnel is an independent automated journey of your customers on the Internet - from getting to know your business to making a purchase or ordering a service. Its main difference from the usual – it is the absence of a seller who plays the role of text, graphic or audio content of web pages or mailing lists.

The reason sales funnels have gained in popularity is because they can work for you on autopilot. An auto sales funnel is a powerful tool for driving leads to your business and converting them into repeat customers. A properly configured automatic funnel can increase conversions tenfold.

An auto funnel has a definite structure, some elements of which are more complex than others, and include not only content creation and posting, but also retargeting and elaborate email marketing.

The basic setup of an automatic funnel is only done once, but it can be customized based on the results.

Structure of an automatic sales funnel

The auto sales funnel is a complete system. It starts by organizing engaging web pages, and includes email marketing, multimedia content, order forms, call scheduling, and analytics.

The simplest structure of a WUA includes:

  • Web site;

  • service of automatic sweat mailings;

  • customized advertising services, such as Google Ads;

  • services for accepting online payments;

  • service for the automatic provision of paid content, if, for example, your product – training video.

  • customized analytics system.

In the case of sales of tangible goods, you still have to cooperate with the warehouse and carriers.

Remember – You should always use social media ads or a follow-up link to get people to your site where they can access your offer. If you have a large list of email addresses, send them frequent (minimum – weekly) updates on what you have to offer and include your link in them.

Most sales funnels have a predefined marketing deadline that is already done for 30 or 45 days. When someone hits their funnel, all marketing is processed for at least 30 days.

Then, after the 30-day period, they are either added to the next funnel (aka funnel stacking) or weekly broadcasts and newsletters take effect.

This way, your marketing messages are always consistent. – and your task is to monitor, so that you do not lose this continuity in any case.

Advantages and disadvantages of an automatic sales funnel

Benefits:

  • the possibility of increasing the permanent income from one client. It is calculated using the LTV metric. This means the profit that you receive from one client for the entire period of cooperation with him;

  • increased likelihood of making a regular customer out of every casual visitor;

  • a decrease in the bounce rate for cold and warm customers;

  • continuous increase in sales and profits;

  • minimizing the cost of attracting new customers;

  • reduction in advertising costs.

Disadvantages:

  • significant investment to start. For example, the price of an average package with built-in auto-mailing service provider Actionetics and Backpack service, which allows you to create your own affiliate program, will cost you from $ 100 per month. And that's not to mention the budget for the website itself, copywriters, designers and direct advertising;

  • steep learning curve. You must understand the fundamental principles of auto-marketing and learn how to use at least a dozen services – even for a small project;

  • extended targeting. There are many auto funnel sites on the internet and there is a lot of competition, especially if you don't have a USP. This can prevent you from reaching your target audience in the early stages of business development.

How to build a sales funnel?

When planning your website funnel, we recommend using the following list of essential tools:

  • description of the product or service;

  • Lead Magnet / Unique Selling Proposition USP (optional but recommended);

  • Terms & Conditions / Liability page;

  • email marketing frame;

  • thank you page for people who visited the site;

  • welcome letter;

  • add a page to favorites button;

  • sales page;

  • Thank you page for buyers;

  • Upsell page / + thank you page (optional);

  • Downsell page + thank you page (optional).

Additional auto-funnel tools

  1. Distribution list. After collecting the database of emails, you should automatically set up your mailing list. For this you can use services such as Mailchimp, Unisender.
  2. Analytics distribution tools. It is important to control the percentage of openness, emails that end up in the spam folder, and the length of time that emails are read. The following services are suitable for this: Postoffice, Postmail, Roistat.
  3. Creation of smart cards. Every step of the clients, starting from the first visit, must be recorded on the map. The map shows different branches depending on the selected action of each site visitor.

This list of items may vary depending on your proposal.

For example, if your product is a webinar, you will need a webinar registration page. If your product is a consultation session, you will need a call scheduling form.

Advice: Your consent page asks for an email address in exchange for accessing the product, and you can set at least 2 triplets to try and sell more while the customer is there. As soon as someone asks for your proposal, email them thanks, inquire about it, send an email with a FAQ and a soft offer letter.

The sales funnel only works if your site has enough visitors. To provide enough traffic for your site visitors, you have to update your content often enough, write blog posts, create podcasts, use your social media feeds, and whatever else you can think of.

It is also your responsibility to optimize this content for the search engines. If you have a budget, you can advertise on Facebook or use Google Ads.

10 steps to creating an effective sales funnel

  1. Create a unique lead magnet product – or a unique selling proposition (USP) - for any available product.
  2. Create a web resource using the most relevant mastering and design trends. This is especially true of the landing page (Lending Page).
  3. Learn to use all of the above WUA tools and most importantly – evaluate their effectiveness.
  4. Create a content distribution system that communicates your USP to the maximum number of users – both the target audience and any other Internet users. This includes direct advertising and SEO optimization costs.
  5. Use the listed tools to turn leads into leads, leads – in buyers, and buyers – in regular customers. Continuous increase in conversion – this is the top priority.
  6. Distance selling is mostly faceless. Close deals so that the client wants to come back to you again. And then – more.
  7. Track all the reasons for leaving the funnel using the AIDA model and develop an effective strategy for dealing with objections. Your task – turn the funnel into a pipe.
  8. Continuously evaluate and expand your target audience by expanding your product line.
  9. Scale customer desires. Your loyal customer always wants more – so give it to him and he will be grateful to you.
  10. Don't forget to refine your original proposal. Any market has its own volume. No matter how cool USP you have, sooner or later it will exhaust itself. Retrofit your product with the Zeitgeist concept.

Remember – every point is important for sales effectiveness! You should be sober in assessing your own budget and the reaction of the target audience – and understand that the funnel cannot work instantly. Depending on the type of USP, it takes from 30 to 90 days to gain momentum.

Outcome

Using a sales funnel isn't that difficult. Its use is incredibly effective in online sales, and especially in email marketing. If you, as a business founder, are busy with other things at the initial stage, the principles of the funnel will help you and turn potential customers into real customers.

Once you set up your sales funnel, emails are sent automatically, no matter what you do at that time. You can control the number of emails, but you can also change their content and spacing at any time if necessary.

If your sales funnel is set up optimally, it works for you all the time - seven days a week, 24 hours a day.

Even if not every prospect actually turns into a customer – after all, according to statistics, only 1 to 3% of visitors end up becoming regular customers – the auto-funnel still supports your sales every day. All the best - and good luck with your online trading!

 


 

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