What is a Sales Funnel? Everything You Need to Know

A sales funnel, also called a purchase funnel, is the visual representation of the customer journey, depicting the sales process from awareness to action. Home Marketingandsales ERP salesfunnel Sharethisitemwithyournetwork: By BenLutkevich, TechnicalWriter JacquelineBiscobing, SeniorManagingEditor,News Whatisasalesfunnel? Asalesfunnel,alsocalledapurchasefunnel,isthevisualrepresentationofthecustomerjourney,depictingthesalesprocessfromawarenesstoaction. Thefunnel,whichisalsosometimesreferredtoasamarketingfunnelorrevenuefunnel,illustratestheideathateverysalebeginswithalargenumberofpotentialcustomersandendswithamuchsmallernumberofpeoplewhoactuallymakeapurchase. Whyisimplementingasalesfunnelimportant? Thereareseveralreasonswhyimplementingasalesfunnelisimportant,includingthefollowing: Createscustomers.Thepointofthesalesfunnelistotakeabusiness'stargetaudienceandmovethemembersthroughaseriesofstepsthatmayeventuallyresultinthembecomingcustomers. Generatesreferrals.Inadditiontoacquiringabasetargetaudienceandgroupofcustomers,asalesfunnelalsospurssatisfiedcustomerstoreferotherprospectsthatpreviouslymaynothavefallenintotheoriginaltargetaudience. Monitorsandtracks.Asalesfunnelenablesorganizationstoseehowwelleachstepofthesalesprocessisworkingandtomakeadjustmentsasneeded.Thishelpsensureefficientuseoftimeandsalesresources.Pushingcustomersthroughthesalesfunnelcreatesusefulfeedback. Focusesefforts.Asalesfunnelnarrowsthebusiness'sfocustoaspecificgroupofprospects.Thismakesiteasiertoreachtargetaudiencemembersandconvertthemintocustomerswhentheyreachthebottomofthefunnel.Asalesfunnelcanalsohelpbusinessesweedoutunqualifiedprospectsbyrequiringpotentialcustomerstogothroughaseriesofstepseventuallyleadingtoapurchase. Today,asuccessfulcompanyreliesonbothsalesandmarketingtoguidethecustomerthroughthesalesfunnelandtobuildcustomerloyalty,takingadvantageofcontentmarketing,customerdataanalyticsandthetwo-waycommunicationthatsocialmediamarketingprovides. Howthesalesfunnelworks Salesfunnelstageswillvarybycompany,buttheyaregenerallydividedintothefollowingfoursections: Awareness.Thisstageincludesthelargestnumberofcustomerprospects.Theyhavedeterminedaproblem,begunsearchingforasolutionandbecomeawareofanorganizationviaContentmarketing,anemailcampaign,socialmediamarketingorotheravenue. Interaction.Atthisstage,thenumberofcustomerprospectsbeginstodecrease,butthepossibilityofasalesconversionincreases.Thisisgenerallywhenthecustomerwillengagewiththeorganizationandrequestmoreinformation.Theprospectwillalsoconductcompetitiveresearchtodetermineiftheorganization'sproductcanbestmeettheirneeds. Interest.Theprospectdemonstratesincreasedinterestintheorganizationbyreachingoutforanswerstotheirquestions.Thisstageoftheprocessmayincludesalesoffersandfurtherresearchintothedifferentoptionstheorganizationpresentsaswellaspricing.Ifthecustomerdeclinestobuysomething,theyceasetoprogressthroughthefunnel. Action.Allofthepreviousstagesofthesalesfunnelculminateinthefinalstep--action.Atthispoint,thecustomerhasdecidedwhetherornottopurchasetheproduct.Iftheprospectdeclinestomakeapurchase,theorganizationcanuseothermarketingtacticstoensuretheirproductstaystopofmind. Thesalesfunnelbeginswiththepotentialcustomer'sawarenessandendswiththemtakingactiononaparticularproductorservice. Howtobuildasalesfunnelforyourbusiness Thereareseveralbestpracticesabusinessshouldfollowtobuildasuccessfulsalesfunnel.Theseincludethefollowing: Analyzeaudiencebehavior.Thisinvolvesdefiningatargetaudience--thepeoplewhowillbedrawnintothetopofthefunnel.Foraweb-basedbusinessthismightmeananalyzingmetricsonhowprospectsusethesite,includingwhattheyfindmostpopularandthebounceratethatshowstheamountoftimetheyareonthebusiness'swebpages. Captureaudienceattention.Thereneedstobesomethingthatinitiallydrawsanaudienceintothefunnel.Thismayincluderichmedialikeinfographicsandvideosoradvertisements. Directtheaudiencesomewhere.Oncetheirattentioniscaptured,theprospectsneedaplacetogo.Foraweb-basedbusiness,thismeansusinganattractivelandingpagethatgathersdatafromtheuserexperienceandfeaturesacalltoactionthatgetstheprospecttoengage. Generateleads.Oncethepreviousthreestepsarecompleted,itisimportanttocontinuouslygeneratenewleadstoaddtothefunnel.Thereareseveralleadgenerationtoolsthatbusinessescanusetohelpautomatethisprocess,includingSalesforce,HubSpotandLeadformly. Maintainrelationships.Onceleadsaregeneratedandcaptured,themostimportantstepistonurturetheseprospectsintocustomers.Thepointofthesalesfunnelistogeneratecustomers. Salesfunnelmetrics Companiesusevariousmetricstoanalyzeandscoreleadsandprospectsduringthesalescycletoevaluatethesuccessoftheirsalesteams. Examplesoflead-to-revenuemanagementmetricsincludethefollowing: Averageordervalue.Thisshowshowmuchrevenueonaverageisgeneratedwitheachorderorpurchase.Thisisimportantbecauseitshowshowvaluabletheaverageindividualcustomeris. Customerlifetimevalue.Thisquantifiesthevalueofeverysalesopportunityinthefunnel. Conversionrate.Thisisthenumberofcustomerconversionsdividedbythetotalnumberofsitevisitorsorthosewhohaveotherwiseengagedwiththebusiness'sproductorservicewithoutyetbecomingacustomer.Thisisthepercentageofleadsthatturnintocustomers. Entrances.Thesearethenumberofleadsthatenterthefunnelduringaspecificperiodoftime. Follow-ups.Thisisthenumberofprospectsthatfollowupwithandrespondtotheinitialmarketingeffortsofthebusiness. Flowrate.Optimalflowrateistheaverageamountoftimeleadsareineachstageofthefunnel. Totalrevenue.Thisisthetotalamountofrevenuegeneratedbyallsalesinagivenperiod.Thisisagoodmeasureofoverallsalesefficiency. Winrate.Thisisthepercentageofdealclosingsdividedbythetotalnumberofdealsinthepipeline. Optimizingandmanagingyoursalesfunnel Inadditiontothebestpracticesmentionedabove,thereareseveralmarketingautomationsoftwareoptionsthatcanhelpbusinessesgetthemostoutoftheirsalesfunnel,includingthefollowing: AdobeMarketingCloud.ThistoolcomesaspartofAdobeExperienceCloud'ssuiteofproductsandservicesandfeaturesMarketoEngagementPlatform. HubSpotMarketingHub.Thiscustomerrelationshipmanagementsoftwareoffersmarketing,salesandcustomerservice. SalesforcePardot.Thismarketingautomationtooloffersanalyticsfeatures. Somefeaturesthatareusefulinmarketingautomationandsalesfunnelsoftwareincludethefollowing: Triggeredemails.Thesecanbeautomatedandtriggeredbyauser'sbrowsingbehavior. SMSandpushnotifications.SMSmessagesandpushnotificationareautomatedformobilemarketingcampaigns. ROIreporting.Returnoninvestmentcanbemonitoredasanindicatorofoverallfunnelhealth. Leadmanagement.Aleadactivitysummaryenablesrefinedcampaigntargeting. Offermanagement.Arules-basedoffercatalogenablesmarketerstoassignweighttoandtrackpresentationofofferstocustomers. Knowledgebases.Aknowledgebaseprovidesemployeeandcustomersupportthroughanonlinelibraryofreferencedocuments. Leadgeneration.Automatedfeaturesmonitorcustomerinteractionswithlandingpagesaswellbuilt-inautomatedlandingpagedesigns. Salesdashboard.Reportinganddashboardsprovideeasydisplayofsalesperformanceandmeasurement. Salesalignment.Softwareenablesgranularanalysisofanindividualsalesperson'sactivity. SEOrecommendations.Recommendationsformakinglandingpagesmoreattractivetocustomersandmakingblogpostsperformbetterinsearchengines. Customerdatacurationfeatures.Customeranalyticsanddataareoptimizedandorganizedforeaseofuse. Customerfeedbackfeatures.Feedbackcanbesolicitedthroughtriggeredemailsandothersoftwarefeatures. Socialmediamanagement.Thisallowscustomerstomonitoruserfeedbackonsocialmedia. Multipleversions.Salesandmarketingsoftwaremayofferdifferenttiers,fromafreetrialtoproplan. Intoday'sageofthecustomer,thejourneyacustomertakes--sometimesreferredtoasthecustomerlifecycle--islesslikelytobelinear.Forthatreason,someexpertspreferaflywheelmodel,whichputsthecustomeratthecenterofanorganization'smarketingefforts.However,unlikeaflywheelmodel,asalesfunnelenablesabusinesstobeasgranularasneededinitseffortstoconvertaprospectintoasale. Insomecases,theflywheelmodelispreferredtothesalesfunnelbecauseitiscontinuous. Thegoalofasalesfunnelistotakeprospectivecustomersinandnurturethemintotruecustomers.Learnsixwaystocreateacustomerexperiencethathelpsensuresalessuccess. 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