What is a Sales Funnel?

Abe Dearmer

Apr 25, 2022

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6 min read

Email-Marketing

A "sales funnel" may sound like something you'd find somewhere at the back of your kitchen cupboards, but this simple concept can boost your sales and marketing efforts and help you identify the processes that each customer goes through. So let's answer the big question first:

So What is a Sales Funnel?

A sales funnel is a way of visualising your sales process, mapping the route that interested parties take as they discover you, as their interest in doing business with you gains momentum and the all-important closure of the sale.

Imagine a standard kitchen funnel with the wide end at the top and the narrow end at the bottom. Those at the start of the sales process are located near the top of the funnel, these are usually people who have just heard about your company and have shown a passing interest. As we travel down the funnel, we get people who are more interested in doing business; maybe they've requested more information or have spoken at length with one of your salespeople. Then as you get near the end of the funnel, we find people who are close to buying or those who have committed to a sale; with paying customers coming out at the end.

No two businesses have the same sales practices, so some of these stages may not apply to you. It's important to formulate your own funnel based on your own processes, sales and marketing abilities and the nature of your business.

Why a Funnel Shape?

The funnel shape is appropriate, because, at any one time, you tend to have the largest group of people showing a little interest (represented by the larger end of the funnel), and the smallest group ready to make a purchase (represented by the smaller end). Marketing efforts tend to lie near the top of the funnel, and sales near the bottom.

Unfortunately, there is a flaw with any sales funnel - the sides have a tendency to leak. As prospects travel down the funnel, some do lose interest or discover that they are a poor fit for what your company is offering, and "leak out" during the process.

It helps to identify any recurring reasons for "leaks" if possible, and keep an eye on who is dropping out where; this is simply so you can focus on their reasons for leaving and attempt to plug some of the holes in your funnel. However, always remember that if the prospects who are leaking out of your funnel wouldn't make ideal clients, you will be far better off pursuing those that are - so leaky doesn't entirely mean bad!

What are the Stages of a Sales Funnel?

As long as they fit in an appropriate order for your sales process, the individual stages are totally up to you. No two businesses' sales funnels are the same.

However, on the whole, every sales funnel follows a very basic blueprint. You start with leads (people with a passing interest), move on to opportunities and prospects (those with a tangible interest in buying from you), followed by those who are close to agreeing to a sale, and eventually those who have purchased.

The scope of these stages can be whatever works for you. Your funnel can start wherever in the sales process you'd like to analyse, but you'll get the most benefit out of it the more of the process it covers. You can include really early prospects, like ideal customers who haven't heard of you yet; all the way down to post-sale stages such as payment, despatch and delivery.

Once you have identified the stages of your sales funnel, you can then identify which customers fall into which stages, giving you the potential to communicate with and market to them appropriately.

How Do I Start Putting my Sales Funnel Together?

The best way to define the stages of your sales funnel and put them in the right order is to take a good, long look at your current sales processes and define the steps that each customer has to go through; beginning with interest, moving through to making an enquiry, then to making an agreement to buy, on to payment and then delivery. Really go through the process with a fine-tooth comb from a both you're and the customer's perspective. Taking an objective stance and asking some of the following questions should help you to get started:

How do new people find out about you and what marketing are you currently finding results with? If you don't know, start asking your customers where they found out about you!

Once people are aware of you, how do they express interest? How do you follow up with them?

How do you engage with these initial leads to nurture further interest?

How do you currently try to turn these people into customers? Do you use cross-sells or up-sells?

What practical and logistical processes are involved in providing your product or service?

What are the most common reasons that you hear from people as reasons to buy or not to buy?

Do very different leads raise similar concerns when they reach a certain point within the sales process?

How do customers commit to a purchase (online, over the phone, by email), and how do they pay?

Do you follow up with customers after a purchase? If so, could you encourage a repeat purchase at this stage?

Do you get many repeat customers? Does your business type/industry allow for repeat business?

Taking a step back and looking at how the sales flow through your business is beneficial to formulating an overall picture of the health of your sales and marketing processes. You may well find things to add to your to-do list that is totally separate to the funnel!

Remember to check your funnel regularly for new stages, leak points and processes. It's a good idea to have a fresh look every 3 to 6 months to maintain its effectiveness.

As an analytical exercise, the process of creating and maintaining your sales funnel is paramount. With a bit of hard work and systematic examination, your funnel will prove to be a truly invaluable utensil.

For more information on FIVE CRM and telesales click here.

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