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A customer’s journey begins with a lead and ends with a handshake, a signature on the dotted line or a click on the ‘purchase’ button. A sales funnel is the process of guiding buyers along the sales path to your door. It’s an excellent approach for tracking the customer journey and determining where to target different products and pricing points.

Breaking down the processes of your marketing and sales activities will help you determine whether your strategy is producing the desired outcomes. You can also pinpoint specific points in your customers’ journeys where it could be improved. How? By utilizing a sales funnel.

A sales funnel is a model that depicts a consumer’s journey to your optimum pricing point, after which they become a customer. Consider a funnel, similar to the one you use to put oil in your car. The funnel’s top is broad and open to catch as much oil as possible and direct it down into the engine. In a sales funnel, you want to capture the attention of as many people as possible.

These persons are referred to as leads or potential customers. You’re using the sales funnel framework to better qualify all of the potential consumers you’ve gathered to guarantee they’re a good fit to work with you or buy from you.

There are more would-be customers at the top of the funnel, but they are actually narrowed down into people who are likely to sign up with your offers. The four main sections of the sales funnel are:

  • Awareness section. The audience in this portion of the funnel understands that your business exists, but do not particularly show a focused interest.
  • Interest section. Potential customers know about your business, and they are interested to know more. However, they are not convinced to the point that they would actually avail of your offers.
  • Decision section. These would-be consumers are deciding if they would go for your offer versus other competitors. This is a critical section because this is the part where you need to build a convincing reason for people to purchase your products or services.
  • Action section. The final portion of the sales funnel, wherein the consumer has already decided based on your marketing strategy. All marketers have the goal of bringing customers into the action section of the sales funnel.

Perhaps you are an entrepreneur having challenges in finding customers for your business. By the understanding reasons why the sales funnel is important, you will gain insight into how to apply this principle in your marketing strategies.

A sales funnel has four steps, beginning with awareness and ending with action. You can easily design a sales funnel for many products and services by better knowing what’s involved at each phase and the various ways you may market the trip at that level.

Let’s go over each level one by one.

Lead generation

The best way to collect leads is through a free offer. One month free trial, or reaching out to people on LinkedIn. You collect some details from them to do so, such as an email address or phone number. Often in the case of a free trial, you grab credit card details to make the switch over to paid services much easier.

If you have a great offer to entice them to discover more or join you, you lead them down the funnel into the next stage.


Customers are now interested in you, your products and services, and who you are as a brand. They will do some research and compare you to others. You want to make sure you’re qualifying your customers as well. Are there certain demographics you specifically cater to that they might not fit?

You can send a series of EDMs, educating the leads on how they benefit from your products or services, and letting them qualify themselves. You can add in some more information through a soft sell, or a testimonial or two.

Read Also: What Are Top of Funnel Sales Activities?

During this time, the lead is deciding if what you have to offer is right for them. They check you out, your website, your socials, and so on. Remember, not everyone will travel further down the funnel, and that’s okay. It’s all about qualifying your prospects into people who are more ready to purchase from you than others.

If you have a great offer and can provide excellent value, you’ll nudge this person into the 3rd stage of the funnel.


The third step is negotiation. The customer has researched your competition and discovered that you’re pretty good. They like what you’re offering and these people want to join you, but what exactly can you offer them? Can you offer them savings if they purchase in bulk or for an extended subscription? Extended warranty or more after-sales services? What will it take to get to the next step?

What you offer the customer now will help with the next stage in the funnel. Do you have discounts for membership? Special offers for subscribers? Free shipping over a certain amount? Doing this will help take them to the bottom of this funnel, and the most valuable part of this journey.

Closing the deal

Close the deal. This is where those customers who are open to what you have to offer, like your deal, will sign on the bottom line, click buy now, and join you as a customer.

But make a note here: the bottom of this funnel doesn’t mean the end of this customer’s journey. You want to keep them around so they can go around and around your funnel, being a repeat customer. You want them to tell all their friends about the great experience they’ve had, so you get more people tumbling down your sales funnel.

The importance of a sales funnel cannot be understated. Some reasons why a sales funnel is important include:

1. Helps Streamline the Customer Journey

While much of shopping has largely moved online, it can still be a complex process from your point of view as the seller. How do you give helpful information to your customers when they range from people who are actively looking to buy your product to people who have accidentally tapped on your Instagram ad and only have the vaguest of interest in what you’re selling (if any at all)?

Having a clear sense of your funnel helps to streamline the customer journey. Knowing exactly where your customers are in their decision-making process can help you determine what you’re serving them and how you can help them make up their minds. For example, you can use your sales funnel methodology to determine whether a visitor needs precise product information when deciding between options (as a mid-funnel strategy) or just a gentle nudge, like an offer of a 10% discount or a reminder that “you left something in your cart” (at the end of the funnel).

2. Sorting and Ranking Your Leads

The sales funnel approach can help you determine who your most realistic leads are as they move from the marketing funnel to the sales funnel. Sales Qualified Leads (SQLs) are prospective customers ready for your sales team to target. Every stage of the sales funnel can be broken down further in granular detail. Having benchmarks based on digital data left by your customers helps you sort the sheep from the goats, as it were.

As a business owner, even with generous marketing resources, you can’t focus on everyone. If your business is more niche, your funnel should focus more on customer retention. If it’s broader, you’ll want to make as big a splash as possible. Either way, a funnel can help you look at who’s moving from general to specific interest in your brand, and prioritize from there. 

Sometimes, a lead is looking to buy something now but needs specific guidance; other times, a lead is less sure of their needs (or their organization’s) and requires more long-term cultivation. It benefits you to know how to distinguish, and ultimately treat, your leads.

3. Better Allocation of Resources

Having a clearly defined funnel will allow you to focus your resources where they can most effectively move the needle. That could mean focusing on the last stages of the funnel, or it could mean allocating greater portions of your time and budget toward initiatives such as making video content that speaks precisely and clearly to different stages.

4. Precise Forecasting of Sales Volume

Funnels are an excellent way of forecasting how many actual sales you will have. Most marketers believe that a 3.1% to 5% conversion rate from visits to sales is the right range to aim for. Of course, you can then use all of your strategies and data to increase those odds. Your marketing efforts can either be aimed at increasing your pool of possible customers at the top of the funnel or focusing your efforts on the bottom of your funnel. Either way, your metrics and KPIs will be accurate and allow you to then measure and optimize your marketing efforts.

5. Better Measurement and Optimization

Funnels allow you to work smarter, not harder—allowing you to start with a general picture of your target audience. By knowing your target audience’s social media habits, for example, you can build awareness on their favorite sites, leading some potential customers to your landing page. This then gives you an email list of engaged subscribers to whom you can send interesting and appealing content and provide a discount to people who actually buy your goods.

For your next cycle, you can examine each step, see where you lost potential targets, and then plug the “leaky” parts of your funnel.

6. Improved Customer Targeting

Customers at different points in your funnel will require different kinds of content and engagement. By breaking your funnel into stages, you can target customers in specific and concrete ways. These four stages are:

  1. Awareness
  2. Consideration
  3. Conversion
  4. Retention

There are even ways to further subdivide these stages, but the general pattern—from “just looking” to “buying a case”—is the same. 

Your content will look different across these stages. For example, during the awareness stage, you’re raising recognition of your brand, so you may wish to make videos highlighting your company culture or behind-the-scenes experiences you’re proud of. By the conversion phase, you’re looking to demonstrate that using your product is as frictionless as possible. Here, you might want to consider product spotlight videos, how-tos, and testimonials to convince any skeptics. 

By getting an accurate picture of your customers at different key decision-making points, you can address the real concerns they may have.

7. Increased Conversion Rates

One of the most important benefits of a sales funnel is that by focusing more intently on techniques to target your clients and push them to the point of action and retention, you will increase your conversion rates. Having a conversion funnel plan and being methodical gets results, as opposed to a haphazard approach to marketing and sales content.

At the start of your funnel—if you’re selling mattresses, for example—your content will focus more on articles like “Why getting a good night’s sleep is important.” By the end of the funnel, you’ll be telling consumers more about the specific advantages of your mattress, and offering discounts to entice them. But all of this content will have a single focus: to convert potential customers to actual ones.

8. Increased Customer Loyalty

Your sales funnel doesn’t end when a customer makes a purchase. You also want to consider retention. Once you know a customer has bought and enjoyed your product, you can sell them accessories that complement it, follow up to make sure they are satisfied, and find ways to keep them as a part of your brand’s family. 

It can be easier to retain clients than find new ones, so while your task as a marketer is not done, at least you know you’re engaging with a receptive audience.

Indeed, the sales funnel is an indispensable concept in business growth. As you learn to identify each customer’s level in the funnel, you will begin to become a master in lead generation and generating more sales for your exciting entrepreneurial venture.

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