What is a sales funnel?
Visually, the term "sales funnel" makes sense, because the sales funnel is, in short, every step a potential customer has to take to become your customer. By knowing each step, you can use tactics to improve the number of people moving from one step in the sales funnel to the next. In fact, it can have a big impact on your business.
Here is an example:
People at the top of the sales funnel walk past your store. A certain percentage of them decide to go inside, which is the next step in the sales funnel.
A customer now sees a rack with shorts - the customer now walks to the rack, now they are at the next step in the sales funnel.
The customer then chooses two pairs of shorts and goes to the checkout. They are now at the last step. If all goes well, they complete the purchase and reach the bottom of the funnel - i.e. a sale.
The very same process applies to all businesses in one way or another. Your sales funnel can therefore also exist in the following situations and businesses:
- Retail shops
- Sales teams
- Web shops
- E-mail campaigns
- Personal consultations
Any marketing channel can be part of your sales funnel, and your funnel can be spread across multiple channels.
Why is a sales funnel important?
Your sales funnel gives you insight into the stages your customers go through before they buy something in your store. For example, if you know that 10TP3T of all potential customers end up making a sale, this information will help you understand the gaps in your sales funnel - the places where potential customers drop out and never convert to a sale. If you don't understand your sales funnel, you can't optimise it.
How the sales funnel works
While there are many words used to describe different sales funnel stages, we will go with the most common terms to explain how each stage works, as a consumer goes from a visitors → to a lead → to a buy.
A visitor lands on your site via a Google search or a social link. The visitor may choose to read a few of your blog posts or explore your products. At some point, you offer him or her a chance to sign up for your email list.
If the visitor fills in your form, he or she becomes a lead. You can now market products and services to the customer outside your website, for example via email marketing, phone or other content - it can also be a combination of all three.
Leads tend to return to your site when you contact them with special offers, information about new blog posts or other exciting messages. Maybe you offer a coupon code.
The sales funnel narrows as visitors move through it. This is partly because at the top of the funnel you can't and don't need to be as precise as with buyers at the bottom, where your message to the customer becomes increasingly targeted.