Sales funnel: what is it, features, stages and examples

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

What is a sales funnel? This term is understood as a specific marketing model that allows you to organize the implementation of the product in such a way that effective control of its results can be organized at each stage of this process.

This direction is used by many entrepreneurs. But this topic will be especially interesting for those who are at the initial stage of creating and expanding their own business. Why is a sales funnel useful for entrepreneurs? Let's try to understand this issue.

A bit of history

Hierarchical communication models contributed to the emergence of the sales funnel. The goal of any of these marketing strategies has always been to ensure that the product is sold, as well as interacting with customers to make regular purchases in the future.

One such hierarchical model was proposed in 1898 by US lawyer Elias Lewis. In his concept, the author described the psychology of the client. Three decades later, this model was successfully combined with the AIDA trading model. Abbreviation for thisconcepts are deciphered in this way:

• attention - attention;
• interest - interest;
• desire - desire;
• action - action.

Since the thirties of the last century, the sales funnel has already taken its strong place in marketing strategies, becoming one of the main concepts in this direction. The idea itself was very simple. Anyone who wants to sell something will need to work with the client, going through certain stages of communication with him. They include many processes - from drawing attention to the proposed product to convincing people of the correctness of their choice, which ultimately leads to a purchase. With the passage of each of the stages, the number of customers is reduced.

More than a hundred years have passed since the creation of such a model. However, the principles of selling have not changed so far. They, as before, include four stages of buyer readiness:

1. First of all, the customer's attention is captured. For this, such a sales funnel tool as advertising is used.
2. Next, there is increased interest. This is especially influenced by the content of the advertisement.
3. A potential buyer has a desire to purchase a product. That is, he seeks to take advantage of the available offer.
4. The client starts to act. To do this, he visits the site, the store or calls the company.

A client who has passed all the above steps is considered to be already "warmed up". The manager can only not miss it and close the deal.

Definition of concept

In English, this term comes in three versions. This is a sales pipeline, sales funnel or purchase funnel. Such a concept means the path that the average consumer of a service or product goes from the moment when his attention is drawn to the product to the stage of purchase.

English-language "Wikipedia" considers the sales funnel as a marketing model that illustrates the passage of all available stages of the purchase. On the first of them, an acquaintance with the offer, which can be called the first touch, takes place, and on the last one, the deal is drawn up.

On the other hand, a sales funnel is understood as the number of customers who remain at certain stages of communication with the manager. This concept perfectly captures the entire implementation cycle, which starts with a cold call and ends with a deal.

With the passage of each of the stages of this marketing strategy, the number of potential customers will certainly decrease. This explains the fact that at the output the number of deals made is much different from the number of calls made by the manager.

Need to use

The sales funnel is an ideal marketing tool that allows you to effectively analyze the work of not only the entire sales department, but also each of its employees. When applying such a model, it becomes clear to the entrepreneur at what stages of his company's activity the maximum elimination of potential buyers occurs. This allows you to identify shortcomings in the work. Fortroubleshooting, you will need to pay attention to this stage, which will help correct the situation.

Let's consider a simple example of a sales funnel. Sometimes it happens that the manager made 100 cold calls, put up 10 commercial offers, and in the end did not conclude a single contract. This situation can already be thoroughly analyzed. First of all, out of 100 calls, only 10 proposals for cooperation were made. Why so few? It is possible that here it is worth working on the motivation of a potential buyer. Or maybe it's all about the dishonesty of the manager, who simply forgot to put out a commercial offer to the client? The field for analysis in this case is very extensive.

Looking further. None of the 10 commercial proposals submitted to the client received a response. Probably, the documents were drawn up extremely poorly. Or maybe the manager just didn't work with the client to the end?

The given example of a sales funnel considered only three stages of the model. In real life, of course, there are more of them. However, already on the basis of the foregoing, the very essence of such a tool becomes clear, which is necessary for analyzing the effectiveness of sales. The results obtained will make it possible to take the necessary measures in a timely manner to prevent stagnation in the organization's activities.

Knowledge of this marketing tool allows businessmen and entrepreneurs to achieve multiple increases in their profits. And at the same time, it doesn’t matter where the sales funnel is built. WhetherInternet trading or selling a product in a store. This model always works great.

The use of a sales funnel in the modern world is becoming especially relevant. After all, today often the supply of goods, as a rule, exceeds their demand. This makes it increasingly difficult for companies to attract buyers directly. Conducting a competent analysis of the sales funnel allows you to influence potential customers more subtly and unobtrusively, quickly and imperceptibly adjusting to their needs.

Building a general scheme

As you know, the main goal of marketing is to turn the initial attention of the client into a real interest. How to build a sales funnel that allows a potential buyer to reach its bottom with a guarantee, that is, to make a purchase? This is the art of marketing.

In order to understand how to build a sales funnel, you need to familiarize yourself with those factors that have a direct impact on the number of consumers of goods or services. Among them:

• visual demonstration, advertising and other ways to promote the product;
• the ability to find the right audience;
• marketing and pricing policy, including promotions, discounts and other additional benefits.

In other words, the funnel of sales of services or goods should be built in such a way that the consumer understands why buying a product in this store is more profitable for him than in any other.

Funnel conversion

Consider this very important marketingelement. The sales funnel conversion is understood as an indicator of the effectiveness of its certain stage or level, which is expressed as a percentage. This is nothing more than the ratio of those actions that were potentially possible to those that were committed in reality.

Let's consider a specific example. So, the company placed a banner on the street. This advertising tool was seen by 1 thousand people. This step is the first stage of the funnel. After that, potential buyers began to call the company. Of the 1000 who saw the banner, 100 people became interested in the products. This is the second stage of the funnel. As you can see, the number of potential buyers has decreased significantly. Of those who called, only 10 people came to the store. This is the third stage of the funnel. Only one person purchased the item. Thus, the funnel has come to its last stage.

Let's look at the conversion rate. At the first stage, this is the ratio of the number of all people who actually called to those who saw the ad (100 people / 1000 people100%=10%).

Conversion is calculated in the same way at all sales stages. So, her total is 0.1% (1 customer/1000 ad viewers100%).

Internet Marketing Tool

Considering the conversion in the conditions of the sale of goods using the global network, it is necessary to have an understanding of such an indicator as CRM. It indicates the effectiveness of ads, measured in revenue per 1,000 impressions.

If you include a sales funnel in a CRM system, it will become obviousthe following key points:

1. Implementation stages where possible customers are eliminated as much as possible.
2. Customer audiences to focus on and focus on.
3. The conversion rate as a result of combining various parameters.
4. Extra processes or links in the sales chain.
5. Efficiency of the whole business.

It should be noted that the sales funnel is a very effective marketing tool. It works in any case, regardless of the names of the goods offered, whether it be watches, cars or trips to Turkey. This tool is also used in the sale of real estate, as well as exclusive and expensive goods. The peculiarities of sales in this case will consist only in a proportional decrease in the size of the audience at all its stages.

Each entrepreneur must understand that he needs to make the funnel as similar as possible to the pipe. In this case, almost all potential buyers will turn into real customers. Getting as close as possible to these ideal conditions will ensure the high efficiency of the company.

Let's consider the immediate stages of the sales funnel, the sequential passage of which will allow the business to be more streamlined and profitable.

Working with offers

The first stage is preparatory for the entrepreneur. He must work out his product or service as much as possible, while formulating a unique selling proposition (USP). For example, you need to describe as broadly as possible the benefits that the buyer will receive whenpurchasing this product, and how the company differs from its competitors.

It is worth bearing in mind that USPs that only indicate that the company offers high quality, the best product and short lead times are unlikely to work today. The client needs specifics.

For example, customers can be offered a discount of up to 20% during the week. Or indicate the delivery of goods within an hour after the order is received. And in terms of quality, for example, if dirt is found on a car, a year of free car wash can be provided.

After preparing and carefully developing a product or service offer, an entrepreneur can move on to directly building and setting up a sales funnel.

Cold contacts

This term refers to the audience of potential buyers. Cold contacts are most often mentioned when talking about network marketing. However, it is quite correct to link this term to trading in general.

The number of cold contacts ultimately affects the amount of profit. Indeed, with the growth of the audience of potential buyers, the likelihood of transactions increases.

Getting cold contacts is a whole science. So, those who attract customers through direct sales should pay special attention to the following points:

• salesman communication style;
• speech literacy;
• way of dating;
• facial expressions and gestures.

Those techniques that are used in real communication can betransferred to the Internet. For someone who is able to build relationships in real life, it will be much easier online. Of course, affixed emoticons will never replace a person’s smile, but the general style of making presentations, negotiating, etc. will certainly affect Internet communication. To get the desired result, it must be light and friendly.

Interest in offer

This is the third stage of the sales funnel. It is essential to increase conversions. To increase interest in the offer, entrepreneurs use various types of advertising.

Working with objections

This tool is successfully used in any of the available branches of trade. The seller needs to decide in advance on the objections that he can hear from the client, and already have ready-made answers to them. Its main task is to neutralize all the doubts and fears of a person who came to the store in order to convince him to buy a service or product. It is recommended to do this unobtrusively and gently. And only in rare cases, aggressive methods turn out to be the most productive.

In modern marketing, persuasion uses indirect techniques. As a result, the buyer who made the purchase believes that the purchase was his conscious choice. In fact, it was the result of a difficult psycho-emotional process, which was under the guidance of the seller.

Make a deal

The final stage of the conversion in the sales funnel is the moment when the buyer got into it and reached the very bottom. The result of this processbecomes a deal. Their number is the main indicator of the effectiveness of the marketing policy.

Conduct analysis of results

At the sixth stage of the sales funnel, the percentage ratio of the number of purchases to the number of offers received is determined. The higher its value, the more productive the work of the store, website or seller can be considered.

It is desirable to analyze at each stage of the funnel. Ideally, the value of the obtained indicators should not have any sharp jumps. At the exit, you need to determine the overall indicator indicating the value of the funnel conversion.

Increase work efficiency

The analysis of the conversion will provide an opportunity to increase this indicator. In other words, the entrepreneur will need to interest real buyers. For this, a variety of methods can be applied. For example, when trading online, this is:

• free shipping on purchased items;
• communication with an online consultant;
• add desired product to cart;
• customer personalization (finding out his personal data and dealing with their use);
• providing support for closing a deal via call or chat.

Using the Software

Managers can also use an automated sales funnel. For this, special programs are used in which employees indicate data related to each transaction. Thanks to this, all sales stages can be viewed inautomatic mode.

The formation of such a sales funnel occurs at any time. Its basis is the information that was entered into the software by managers. At the same time, such an automatic sales funnel allows you to immediately control each of the stages of product implementation.

But you don't have to buy custom software. To control the effectiveness of the marketing service, you can create a sales funnel in Excel. These standard tables will allow you to generate the most time-consuming and voluminous reports within a short period of time.

Exploring the topic

There is a lot of literature on how to improve sales effectiveness. So, Maria Solodar invites her readers to get acquainted with the sales funnel. This is a well-known blogger and speaker at major marketing conferences, as well as the head of an agency that creates and implements auto funnels in the activities of leading Runet companies.

Maria Solodar's book "Sales Funnel on the Internet" became the first edition in Russian, which covered the issues of creating, optimizing, and automating this marketing tool on the Global Web. Its author proposes a system on the basis of which long-term relationships with clients can be built. At the same time, there is the prospect of multiple deals.

The result of building such a sales funnel on the Internet will be an increase in the amount of the average check, an increase in the number of transactions, an increase in conversions and a decrease in advertising costs.

Maria Solodar conveys to her reader a hugeexperience in creating auto funnels, which she gained while working for thousands of companies, online stores, as well as for organizations in the real estate, medical care, etc. The book contains step-by-step instructions for creating and further automating a funnel, the implementation of which will open up great opportunities for an entrepreneur to make sales via the Internet.