What is a sales funnel? The ultimate guide

The sales funnel is an indispensable tool for sales and marketing teams. See how it can help you better understand the customer journey and improve your bottom line.

By Patrick Grieve, Contributing Writer

Published June 11, 2021
Last updated December 14, 2021

The concept of a “sales funnel” is a little misleading. After all, a real funnel is designed to catch and pour out every ounce of liquid you put into it. But not every lead that enters the top of your sales funnel will come out the other end as a customer—there’s bound to be some pretty significant spillage along the way.

That doesn’t mean your sales and marketing teams should settle for a slow drip of conversions, though. With the right methods, your business can generate more leads at the top of the funnel and more deals at the bottom.

In this comprehensive guide to sales funnels, you’ll learn:

What is a sales funnel?

Sales funnel definition: A sales funnel is a sales and marketing tool used to illustrate the steps of the customer journey. It’s also often referred to as a “purchase funnel,” “customer funnel,” “marketing funnel,” or “conversion funnel.”

A sales funnel is a visual roadmap of your customer’s journey.

The concept of a sales funnel has been around for a long time. According to (possibly apocryphal) legend, it was a man named “Elias St. Elmo Lewis” who in 1898 first proposed the “AIDA model.” The oldest acronym in sales, AIDA is a four-step sales funnel model that charts the customer’s journey from initial awareness to eventual purchase.

  1. Awareness: A prospective buyer first discovers the existence of a product or service.
  2. Interest: The buyer actively expresses interest in said product or service.
  3. Desire: The buyer decides they want it.
  4. Action: The purchase is finally made, and the prospect becomes a customer

Obviously, not every potential customer makes it all the way through the AIDA process.

Think of it this way—hundreds of people may notice a sidewalk sign for a restaurant as they walk past it. But only a certain percentage will be interested enough to stop and read the daily special; a smaller percentage will be hungry for that meal; an even smaller percentage will actually go inside and order it.

The number of people in your sales funnel naturally narrows at each stage of the funnel—that’s why it’s visualized as a funnel.

While the AIDA model has long provided a foundation for sales and marketing teams, it’s been adapted or elaborated upon over the years. For example, the basic B2B sales funnel features five steps and the novel “Evaluation” and “Engagement” stages.

sales funnel stages

The “Evaluation” stage accounts for the fact that clients typically take more time to deliberate internally before making a purchase. “Engagement” refers to the sales agent’s responsibility to continue nurturing leads during negotiations and contracting.

Of course, even the five-stage sales funnel is too simple for some companies. That’s why organizations often develop their own funnels to clearly chart the typical path that their buyers take on their way to becoming customers.

A well-defined sales funnel should allow your business to develop a better understanding of your prospects. Identifying where prospects are situated in the funnel can indicate how much interest they have in your products or services. And tracking prospects as they move through the funnel can help sales reps gauge how to best approach them.

Knowing how to treat a prospect at each stage of the sales process is critical to success. You don’t want to lose a potential customer by giving them the “hard sell” when they’re still at the top of the funnel. Instead, the goal is to gently nudge a prospect from one stage to the next.

How sales and marketing teams fit into the sales funnel

Sales reps aren’t fully responsible for every stage of the sales funnel. Your marketing department also plays a large role, especially when it comes to generating awareness and interest.

The most productive funnels are found at companies where the sales and marketing teams work hand in glove. And the best way to achieve marketing and sales alignment is to establish shared criteria and a common language around the sales funnel.

First, create a system for scoring leads so your marketing team knows when to pass a prospect to sales. A lead scoring system attaches points to a prospect’s characteristics or activities. For example, a B2B company might assign more points to a lead if he’s an executive versus a manager. Similarly, a SaaS provider would award a lead more points for clicking on a pricing page than for clicking on a blog post.

With a scoring system, your marketing team can determine whether a lead is worth pursuing. If the buyer appears worthwhile, they become a Marketing Qualified Lead (MQL). At that point, the lead is passed from marketing to sales. If the sales team agrees that the lead is a good fit, they become a Sales Qualified Lead (SQL), also known as a Sales Accepted Lead (SAL).

Sales and marketing need to be on the same page when it comes to qualifying leads. One way to clearly define MQL and SQL standards is to spell them out in a service level agreement (SLA). An SLA outlines how sales and marketing should work together. Aside from clarifying the criteria for scoring MQLs and SQLs, an SLA can also designate the time frame and process that each team must follow.

For example, a lead’s web activity and content engagement might qualify them as an MQL. At that point, the MQL is referred to sales, which must either accept the lead or send it back to marketing within 24 hours.

sales funnel report

Keep track of your sales funnel to see how well your sales and marketing teams are converting prospects. The number of buyers who advance from one stage to the next is a good measure of efficiency.

Full-funnel tracking can also showcase which portions of your sales funnel need more work. For example, your sales funnel report may show that a lot of incoming leads are being qualified as MQLs. But if only a fraction of those MQLs are converting into SQLs or sales, it may indicate that your lead-scoring model is fundamentally flawed.

How to create leads and nurture them throughout the sales funnel

All sales funnels follow the same general pattern. Every funnel has a top, middle, and bottom—and similar expectations for what needs to be done in each phase.

Nurturing a lead all the way through the sales funnel is no easy feat. Marketing and sales teams need to know how to reach their target audience and how to establish an ongoing relationship with buyers.

Top of funnel: Attract attention and generate interest

top of funnel

The customer journey ideally begins before a buyer even thinks about becoming a customer. So, creating awareness of your brand is always the first step in any sales funnel—you need to figure out how to get on a buyer’s radar.

Consumers usually learn about a company by seeing or hearing an advertisement. Traditional advertising channels—such as billboards and television commercials—cast a pretty wide net. But today’s technology allows for increasingly targeted advertising. For example, companies can now purchase customer data that allows them to target their online ads to individuals with specific traits or interests. (That’s why after you buy hiking boots from one company, you start seeing Instagram ads for another company’s canteens.)

Marketers can also capture the attention of prospects through the lead generation process, which contains four key steps:

  • A potential buyer becomes aware of a brand through one of its marketing channels, such as a blog article or social media post.
  • The content includes a call to action (CTA), such as a “Start free trial” button or a link to a downloadable piece of gated content.
  • Clicking on the CTA takes the visitor to a lead generation form, which requires them to provide personal or professional information in exchange for access to the gated content or special offer.
  • The prospect accesses the desired content or offer by filling out the form, providing valuable details such as their name, email address, position, and company.

After capturing a lead’s info, the marketing team should be able to qualify them. If the prospect becomes an MQL, they’re passed on to sales to hopefully become an SQL.

There are several lead generation channels that companies can take advantage of, including:

  1. Blogs

    The Content Marketing Institute’s 2020 B2B Benchmarks Report found that 70 percent of B2B brands use content marketing to help generate leads. So if you don’t have one already, start publishing a blog that’s relevant to your customer base.

    Create content focused on the core topics that you want your brand to embody, and optimize it to rank for related keywords. Make sure the articles are engaging and easy to share on social media, too. You should also include a CTA near the beginning of the blog, as some visitors won’t read the entire article.

  2. Email

    There are two types of email marketing campaigns: outbound and inbound.

    Outbound marketing involves sending emails to buyers who have not initiated contact with your brand. These unsolicited messages typically don’t perform well, but there are ways to increase open rates for “cold emails” as well as free email templates you can follow.

    Meanwhile, inbound email marketing involves sending messages to prospects who have shown some interest in your brand. Perhaps they accessed gated content or signed up for a newsletter. These types of prospects tend to be more receptive and are often easier to target. For example, you might design unique email drip campaigns to send to different customer personas. Or, you might create a newsletter with information that speaks directly to a prospect’s pain points.

  3. Web

    Don’t forget that your brand’s website also functions as a lead generation channel. Potential buyers are apt to look at pricing pages, product descriptions, customer testimonials, and other sections of your site. Make sure every page includes a simple and direct CTA, such as a “Download a free trial,” “Book a meeting,” or “Talk to sales” button.

    A lead’s web activity can tell you a lot about their level of intent to purchase. For example, visiting a pricing page multiple times is probably enough to establish a prospect as an MQL.

  4. Social media

    Platforms like Instagram, Facebook, and Twitter have become multi-purpose tools for many companies. They allow businesses to gauge public perception, promote their brand, and provide quick and easy customer service.

    Paid social could play a big role in your lead generation efforts. You can pay to use cookies to track the buyers visiting your website, then target those prospects with promotional tweets and posts on their social media feeds. This type of customized marketing is more cost-effective than paying to promote one post to a large, indiscriminate group of consumers.

    Of course, there are also ways to spread the word on social media without spending a dime. For example, employees often share their company’s blog posts on LinkedIn to generate awareness and interest in their own networks.

    No matter which lead generation channel you choose, it’s important to tailor the content to the buyer personas you’re hoping to convert. You don’t want to lose a lead’s attention by sharing information that they won’t find relevant.

    First, find out what these potential customers want to see from your brand. B2B brands can often learn from their existing leads by examining requests for proposals (RFPs), for instance. Studying the characteristics and habits of your own customer base can also help you define your ideal prospect.

Middle of funnel: Nurture and connect with leads

nurturing leads

Pushing leads from the top to the middle of the funnel is a delicate and often lengthy process. It takes an average of 84 days to move a B2B consumer from the awareness stage to the evaluation phase of the sales funnel. Companies often need to repeatedly demonstrate their value just to earn a prospect’s consideration (let alone their business).

This is where drip email campaigns can help maintain a lead’s interest over an extended period of time. Try to send them content that’s designed to engage and educate their particular customer profile. You can use a CRM tool to schedule these email campaigns and to measure their success rate.

You don’t want to overwhelm top-of-funnel leads with too many promotional emails at once. But if you’re driving a more established lead further down the funnel, try a few of these tactics:

  • Experiment with different subject lines. Continually A/B test various options to see which subject lines lead to the best open and click-through rates.
  • Customize your message. It’s best to personalize sales emails as much as possible. Always address the recipient by name, and if possible, ditch generic opening lines in favor of something unique to the reader. For example, “Hey Susan, I was excited to hear about your company’s new initiative…”
  • Keep the text short. Brevity is the soul of sales emails. Studies have shown that messages between 50 and 125 words tend to have the best response rates.
  • Always end with a clear CTA. Let the lead know what they can do to keep the conversation going. It could be as simple as including a link to your calendar and asking them to schedule a five-minute conversation.

Ideally, a well-nurtured lead will eventually connect with a sales rep. During that first interaction, it’s imperative that the rep demonstrates an empathetic understanding of the lead’s pain points.

Research your lead in order to gain a better understanding of their particular situation. Then, develop a script for explaining the unique ways in which your product or service can help solve the challenges they’re facing. In the initial call, quickly point out your value and your ability to address their needs. Be sure to also leave plenty of time for the buyer to ask their own questions.

Sales reps should use their CRM system to document the questions and challenges that leads typically bring up during their introductory meetings. Going forward, reps can reference that information to anticipate upcoming questions and set first-call agendas.

Once you’ve established a real relationship with the lead, don’t let it fizzle out. Without being overbearing, be sure to send detailed, personalized follow-up emails every so often to keep the conversation going.

Bottom of funnel: Convert and retain customers

converting customers

Even if a deal seems inevitable, it’s critical that sales reps continue guiding a lead through the final stages. Easing up on a potential customer towards the bottom of the sales funnel can cost you a hard-earned win. Instead, usher your leads across the finish line by using the ASK process:

  • Align priorities. Once again, show your lead that you fully understand their pain points and reiterate how you can solve them.
  • Secure a commitment. Remind the lead of what they stand to gain, and offer to answer any lingering questions.
  • Keep your relationship alive. Even if they ultimately say no, be sure to follow-up with that lead at a future date. They may come around if their situation changes down the road. And if not, they still might offer valuable insight into how you can improve your sales process.

If you actively engage your lead, you increase the chances of conversion and establish a potentially fruitful, long-lasting relationship. In some cases, those relationships can prove even more profitable than the initial deal.

For many B2B, SaaS, and subscription-based businesses, the sales funnel doesn’t really end with the purchase. Once a lead becomes a customer, the sales rep turns their focus towards retention. Reps need to keep in touch with customers to make sure they’re still satisfied and to identify potential upsell opportunities.

Even if you’re not concerned with customer churn, almost all companies benefit from repeat business. Holding on to a loyal customer is always cheaper and easier than acquiring a new one. Happy customers are also more likely to provide referrals.

Sales reps should continually check in with existing customers by sending out surveys and follow-up emails. Try to find out what they like (and don’t like) about your product or service. If the relationship is strong enough, consider asking for a customer testimonial. You can also sweeten the pot by offering discounts or other rewards to customers who refer friends or post online reviews.

Elevate each aspect of the sales funnel with sales funnel software

You can enhance every stage of the sales funnel with CRM technology and automated sales funnel tools. A software solution like Zendesk Sell can help you automatically capture and score leads, schedule and personalize email campaigns, and document all prospect and customer interactions. Our sales CRM also helps you guide and track potential buyers as they graduate from leads to customers with automated pipeline tracking. It even provides funnel reports and countless metrics so you can measure and refine your process over time.

If your sales funnel is producing a slow drip of deals, try turning on the waterworks with Zendesk.

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