Sales Funnel: What It Is, Its Types, How to Build and an Example of a Funnel
Let's imagine the situation: you run effective advertising, you create an original landing page, you post interesting content on social networks, but the sales do not increase in any way. There is an excellent tool in marketing for analyzing the reasons why you are losing customers: the sales funnel. Here's how it works and how you can use it in practice.
What is a sales funnel
The marketing funnel or sales funnel is the customer's way from the moment you draw their attention to your offer to the purchase of the product or service. Being aware of all the customer's steps, you have the opportunity to track their preferences while gently inclining them to purchase the product.
The point of applying the sales funnel is to identify the key stages in the decision to purchase, and then to build the communication with the buyer based on what decisions he made at each stage.
But if you look at customers' actual behavior, their approach can be divergent, based on different motivations. For example, customers may return to former sales patterns or lose interest in purchasing the product at all.
Thus, the sales funnel is an essential tool for marketing analysis, which helps to identify and fix problems at all stages of sales. Types of sales funnels Let's look at what types of sales funnels occur, and under what business conditions it is most profitable to use them.
Funnel for a startup This type of funnel is helpful for various seminars or online marathons. Profits are generated only when the startup is running, when the event is launched.
Funnel for events and promotions This funnel is designed to increase popularity and brand reputation. The goal is to raise the interest of the audience by posting content about an upcoming event and inviting a large number of people to exhibitions, meetings, festivals, conferences and so forth.
Webinar funnel This is a great option for information platforms or online schools. The idea is that the free online webinar is recorded for the audience interested in it, and then they are offered to buy a paid course. The very advertisement of this webinar is active all the time and it is displayed non-stop.
Direct funnel Designed for small businesses. The meaning is to show advertising. Clicking on it the client immediately goes to the website of the product/service being sold and, if they want, they can buy it.
Consulting funnel This funnel is suitable for consulting in different areas: psychology, beauty, marketing, astrology, coaching, etc. The goal is to attract people to a consultation with an expert by launching an advertising campaign.
How to build a sales funnel
The marketing funnel helps you evaluate the effectiveness of the steps on the customer's path to purchase a product and understand where you are losing your potential customers. According to the model of the American marketer Elias St. Elmo Lewis, the funnel is built on the idea of buyer behavior as follows: attention, interest, desire and action - AIDA. The top part is the initial and most extensive one, in which the user becomes interested in the offer. At each subsequent stage, the funnel gets smaller and smaller, as the closer to the goal, the more uninterested customers leave.
Stages of the sales funnel
Let's look at the stages in more detail.
Attention is the very first way to attract the customer to the product, that is, it is advertising that should interest the potential buyer. At this stage, all methods are used: advertising in social networks, Google AdWords, banners, media.
Interest is a targeted action of the client, when they are interested in your offer (a call, filling out an application form, registration, going to the store or the online shop).
Desire is the stage when the buyer understands that the product meets his demands and he wants to buy it. At this stage the key factor can be: a competent salesperson in the offline store, a sociable manager to communicate with customers in social networks, discounts and promotions, loyalty programs.
Action is the stage when the customer purchases the product: through social networks, website or in-store.
Once these stages are completed, you need to figure out the traffic which reflects the number of potential customers at each stage of the sale. This will show you how many people who watched the ads decided to buy the product. Then you should calculate the sales conversion rate using the formula: number of real buyers / number of visitors of the store or website * 100%.
The example of a sales funnel
The company offers online courses in English. Future customers are attracted through advertising on social networks (for example, VKontakte). The advertisement was seen by 20,000 people. 5,000 of them followed the link to the website. 1,000 filled out an application for a trial lesson. And only 400 of them bought the course. We need to investigate why that happened.
What the funnel shows:
75% of customers did not go to the site
At this stage, you need to understand why potential customers are not interested in advertising. Perhaps the video ads are trivial or the target audience is not selected correctly.
80% did not apply for courses
Analyze the design and comfort of the landing page or site, whether users can comfortably perceive the information, perhaps they don't like that the price isn't indicated or it is too high.
60% refused to buy a course after a trial lesson
Most likely, it is worth reconsidering the structure of the free lesson. Creating your own sales funnel, you will understand what your gaps are and how to fix and refine them.
How to automate the construction of a sales funnel
An automated funnel is a sales funnel that works through pre-planned, automatic actions from the moment the customer is attracted to the sale. While in the usual funnel a manager communicates with a potential customer at any stage, in the automated funnel these processes are robotic. These funnels are often used in online business when selling a variety of courses.
The automated funnel is created with the help of mailing lists, advertising in social networks, landing pages, targeting advertising, CRM, etc.
Let's observe an automated funnel of an online furniture store.
A user opens the store's web page. A pop-up window offers free delivery for the purchase of £150 and over in case the user subscribes to the newsletter.
The customer enters an email, and it is added to the customer database. Then the user activates his bonus card via email.
The customer makes a purchase and uses the free-delivery bonus. After paying for the first purchase, he is offered a discount on the next purchase for a certain period of time, which encourages the customer to make the next purchase in the near future.
If they don't use the discount, the client receives the store's newsletter, promotions and special offers, which will bring back their interest in the product.
How to increase the sales funnel conversion rate
When you construct your marketing funnel, you discover at which stage you are losing your target customers. Let's look at how you can prevent this and improve conversion rates.
Keep researching your target audience
You must know your audience "in person": sex, age, geography, financial solvency, interests and problems. It is also useful to conduct surveys. This way, you set up precise targeting, skipping the uninterested people.
Create and promote your unique selling proposition
A unique selling proposition (USP) will make your product/service stand out in the market and help you get ahead of your competitors through value targeting. If you don't have a UTP formulated yet, get it fixed. If you have one, you should think about improving it, because today's market is constantly changing, you need to keep up with trends and innovations in customer preferences.
Plan and analyze your funnel regularly
Take a look at what doubts your potential customers have at each stage, and figure out how you can correct them. Also, regularly (about once a month) monitor the results of the actions you've taken.
How to make your sales funnel more efficient
These all-purpose ways help you attract more customers:
Reducing the number of steps in a purchase
The greater the number of steps a customer has to take when buying a product, the more likely it is that they will never do it. Simplify the process as much as possible. But don't overdo it so that the site contains all the necessary information for making a purchase (e.g., product description and its benefits, information about the return process).
Usability analysis of a website or a landing page
This analysis helps to determine the convenience of the visitors to use the site and optimize it. A low conversion rate can be a reflection of a poor website design: a long registration form, no price, too much extra information, an obscure CTA button, and so on.
If the user finds it hard to perceive the interface of your site, quickly find the necessary information about the product, delivery, payment, and so on, you are likely to lose a client.
Dividing customers into segments should be done to display unique offers to each segment. For example, a segment of new users will find it helpful and interesting to learn about the exclusiveness and benefits of a product, while a segment of regular customers needs to provide information about loyalty programs, promotions and discounts.
A sales funnel is a well-defined model that represents the stages of sales and the customer's movement from getting to know a product/service to buying it. The funnel helps to find problem spots and work them out through analysis. A great way is to calculate microconversions - intermediate stages of users before performing a targeted action. If microconversion decreases at any of these stages, it means that some actions need to be optimized.
You can improve the funnel by thoroughly studying your target audience and their needs, desires, fears and doubts that arise when making a purchase. It would be useful to create targeted content to divide consumers into segments and further convert them into buyers. And to test the effectiveness of changes in your sales scheme, A/B testing is a proper way to show which change works better.