What is a sales funnel and what is it used for?

In sales, this process is often illustrated with the metaphor of a funnel. Just as a funnel helps you pour liquid into a container without spilling a drop, a sales funnel is designed to help you retain every potential customer throughout the buying journey.

What is a Sales Funnel and Why Use It

A sales funnel is a visual representation of the sales process. It clearly defines each stage and allows salespeople to track where a customer (lead) currently is. It helps guide them on how to engage the customer at that particular stage and move them forward, turning a lead into a paying customer.

Why is a sales funnel important? You should use it because it:

• helps you choose the right strategy to reach and convince customers in each stage of the sales process,
• shows you where and why you're losing customers,
• prevents wasting money and energy on customers who aren’t ready to buy yet,
• allows you to forecast future sales by giving you a better understanding of your marketing results.

Sales Pipeline Stages

To help a customer move smoothly through the Sales Pipeline, you need to know which part they're currently in and what you can do to help them progress. While they initially seek information, later you can convince them of the advantages of your product, and eventually make the purchase easier.

The Sales Pipeline can consist of several parts depending on how your Business process is set up. However, it generally includes these three main stages:

• top of funnel (TOFU) – awareness – new Leads who are looking for a solution but are not yet ready to become customers and make a purchase – salespeople must reach out to the Lead and evaluate whether it represents a relevant Business
• middle of funnel (MOFU) – consideration – potential customers who are already interested in your offer and are considering a purchase – salespeople engage in Business meetings with them,
• bottom of funnel (BOFU) – purchase – customers who are ready to buy – at this point, salespeople are signing contracts with customers and launching the cooperation.
  
  

Not everyone will make it through the Sales Pipeline. We describe how to identify suitable Leads using lead scoring in the article.

How to Prepare a Sales Pipeline

To create a functional Sales Pipeline, focus on the following points:

• get to know your customers and their interests, needs, and the problems they are trying to solve,
• understand their journey through the Business process – how they behave during it, which channels they use, when they make decisions, and when they need guidance to the next step,
• define the number of funnel stages you need to guide the customer through before they make a purchase,
• plan an effective tactic for each stage so you know what content to offer the customer and how to encourage them to move forward,
• test and optimize every step, monitor what works and what needs to be adjusted so the customer can easily glide to the purchase,
• use a CRM system that helps you keep track of the stages in the Business process.
  
  

Also remember that building a Sales Pipeline should be preceded by creating a Business strategy. We write more about that in this article.

Example of a Sales Pipeline

1. First Contact: Landing Page

Potential customers can enter the top of the funnel through a page reached via paid ads or social media. On the landing page, provide basic information about your product or service and its key benefits. However, the most important element of the landing page must be the form, because the next step is…

2. Get the Contact in Exchange for Valuable Content

On the landing page, customers typically download an e-book, a checklist, sign up for a webinar, download a demo version of your program, or subscribe to an Email series. This gives you the contact details of a relevant potential customer who has shown interest in your content. At that point, they become a Lead.

3. Keep Their Attention

You have the name, Contact, and company of the potential customer—now you need to ensure they remember you. A classic approach is an Email series with useful content that you send to the Lead's provided Email. It doesn’t contain sales offers, just guides, practical tips, or other added value. Meanwhile, you monitor which content they engage with and what interests them. If they regularly read your Emails or like your posts, your chances of success and progressing to the next stage increase.

4. Nudge Toward Purchase

The Lead is gradually moving to lower stages of the funnel, so it’s time to motivate them to buy. Offer a free consultation, a discount, or an extended demo version. In other words, anything that motivates the Lead to make a decision.

5. Celebrate Success or Keep Trying

If the Lead makes a purchase—hooray! If not, don’t worry. The key is to leave a good impression. Keep nurturing awareness of your brand and try again in a few months. In most businesses, the Lead must reach the decision-making stage themselves—that means a situation where they need your products or services. And if you’ve kept in natural contact and left a good impression, they’ll remember you.

An overview of the Deals you’re currently working on and the stages your Leads are in can be maintained using Sales Pipeline analysis in the CRM system. You can find out if it suits your business by trying it free for 30 days.