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Sales funnels: definition, process, stages, template and examples

sales funnel stages
Topics
What is a sales funnel?
Stages of a sales funnel
Real-life examples of sales funnels
The value of a sales funnel
How to define your sales funnel
How to fix a sales funnel that’s losing your leads
How to manage your sales funnel day-to-day
Free sales funnel template
How to fix a sales funnel that’s losing leads
How to manage your sales funnel day-to-day
Final thoughts

Improving sales funnel efficiency should be among a company’s top priorities to turn cold prospects into hot leads and boost sales performance.

A great funnel gives salespeople key insights into their potential customers’ needs, challenges and decision-making process.

Solid sales funnel management can also make it easier to efficiently convert leads into sales and grow revenue over time.

In this article, you’ll find out what a successful sales funnel looks like, including three examples of companies doing it right. You’ll also learn why they’re so valuable and how to build a funnel and manage your own.


What is a sales funnel?

Sales funnel software visually represents the journey from your prospect’s first contact with you until a completed purchase.

It helps your sales team understand where they need to follow up or alter the sales process because too many leads drop out at a certain stage.

It’s called a sales “funnel” because the steps narrow as potential customers near the end of the process.

Each stage of the funnel pushes your qualified prospects into the next stage and drops those who don’t fit your offer.

A sales funnel is connected to the customer journey phases, which cover all the steps your customers take to purchase your product (a detailed process from your customer’s point of view).

The sales funnel structure feeds the process that prospects go through in your customer relationship management (CRM) software:

Lead In > Contact Made > Needs Defined > Proposal Made > Negotiations Started > Won

Here’s one example of what that can look like on your customizable Pipedrive dashboard.

Pipedrive Sales Funnels


Your unique sales funnel may have fewer or more steps and you can update your CRM’s layout to reflect this.

Studying your sales funnel can help you understand where you’re going wrong with prospecting, exactly when leads drop off and what prompted existing customers to convert.

A well-defined funnel improves the customer’s journey as well as the company’s performance, so optimizing yours can have an immediate, lasting impact on your sales goals.


Stages of a sales funnel

Top-performing reps know the steps of their sales funnel inside out, from cold calling to finalizing the sale.

Understanding this helps them in two key ways:

  • They can address customers’ key needs and deliver the right message at the right time

  • They can scale their process and forecast sales and revenue to hit their goals

To fully understand the sales funnel meaning as a beginner, you need to pinpoint the different steps.

While different organizations have their own ways of managing and naming the sales process and customer touchpoints, companies usually structure them into three distinct stages.

1. Top of the sales funnel: Awareness and discovery

Sales Funnel Awareness and Discovery


Early in their journey, your potential customers have a question or concern. They research to learn about possible solutions, which is when they discover your business.

Perhaps they received a cold call from a member of your team who was focused on prospecting or maybe they found your site and contact information on their own.

At this stage, they’re still identifying their challenge.

They have many questions as they’re trying to verbalize their problem and are looking for a trusted source of information.

Here are three examples of searches and questions prospects might have for specific industries:

  • A customer support software. “Customer support industry benchmarks”

  • A mattress online store. “Why does my back hurt after sleeping?”

  • An electricity provider. “Average electricity bill”

From a digital marketing perspective, prospective customers want easily accessible content that will guide them through the topics that matter to them.

Blog posts, videos, webinars and even quizzes facilitate this part of the process, which is called lead generation.

If you’re using sales funnel management to track this stage, your Uncontacted prospects may turn into Contact Made prospects. More precisely, they are now your Leads.

Now, your sales reps can ask relevant questions and qualify the lead to make sure they’re the right customers for your company.

2. Middle of the sales funnel: researching solutions

Sales Funnel Researching Solutions


Now, you’ve filtered your prospects and those still in the funnel should be “ideal customers”.

Questions in the middle of the funnel are no longer generic, as your prospects have now named and defined their problem(s).

Using the same industries as in the previous section, these might be their searches:

  • “Types of support for software teams”

  • “How to choose the best mattress for [back condition]”

  • “How to save money on an electricity bill”

In the middle of the sales funnel, your lead is diving deeper into the specifics of the problem.

At this point, they might not necessarily be evaluating specific providers and their products or services. Instead, they’re looking for the types of solutions available to them.

In the first customer support example, the lead has not decided whether to buy a software solution for in-house support teams or outsource support altogether.

In the next sleep query example, the lead isn’t sure if they need a mattress topper or a new mattress altogether.

As you talk to them and ask questions to determine whether your offer fits their problem, your Leads become Qualified.

The content that serves your leads best in this stage includes in-depth guides, comparison-style checklists and lists of pros versus cons.

Rich, answer-driven content makes it easier for the decision-maker to reach the purchase stage.

3. Bottom of the sales funnel: Making an educated purchase decision

Bottom of Funnel Making an Educated purchase decision


At the bottom of the funnel, leads understand their problem, have learned the best type of solution and are ready to select a provider.

The questions and concerns in this stage become vendor-driven and more specific, following the narrowing shape of a funnel’s bottom.

Their online searches, as well as their questions, might look something like this:

  • “Does [Provider 1] offer better support software features than [Provider 2]?”

  • “Who offers the longest and most complete warranty policy for mattresses?”

  • “What are the electricity contract terms with [Provider 1] versus [Provider 2]?”

At this stage, long-tail keywords (e.g., “best soft mattress topper for back sleepers”) can help lead users to information that enables them to make a decision that suits their exact needs, specific problems and budget.

The most effective content for the bottom of the funnel includes frequently-asked-question pages, videos about product features, live sales demos and side-to-side competitive feature analyses.

Each of these will reinforce the qualified lead’s confidence in your offer as they keep seeing it fits their specific problem.

When your qualified leads choose your solution, they typically go through the sales proposal and negotiation phases, after which you ideally win their business.


Real-life examples of sales funnels

Sales funnel examples can demonstrate how a salesperson guides the prospect from the moment they become a lead through to purchasing.

They do this by understanding a prospect’s key pain points and providing the right answers at the right time.

Sales funnels apply to most businesses, whether you are a product marketplace, sell online courses or run a membership site.

Here are three examples of companies implementing this process.

Example 1: Twilio

Twilio offers communication APIs – a service developers can implement to embed voice calling and text messaging into a software application or a product.

Twilio knows how important it is to communicate the specificities of its product with headings like “100% guaranteed protection from SMS pumping fraud”.

sales funnels Pipedrive Twilio example


While regular consumers may not understand what “SMS pumping fraud” is, it’s likely a familiar Twilio customer pain point.

Twilio: Top of the funnel

Potential customers can easily find Twilio as their potential vendor when they search for a key term, “communication API software” because the company ranks highly on Google.

Prospects can also find them on social media, through their blog or a self-paced game made for learning how the product works.

Once prospects see the fit for their needs, they can either create a free Twilio account or request to talk to a sales rep.

Twilio even uses different call-to-action buttons to help guide prospects to where they want to go next.

Twilio top of funnel


Prospects can choose between “Start for free” or “Contact sales”, conveying the company understands they may not be ready to buy and is there to help simplify the process.

Twilio: Middle of the funnel

When a Twilio website visitor becomes a lead, a sales rep can leverage the information collected so far.

For example, the opt-in form asks for the company name, contact details and the product the lead is interested in. All of these details can help drive a valuable sales conversation and allow the rep to ask the right questions.

Based on the specific technologies, categories and past experiences the lead shares, the sales rep can inject relevant, personalized content into the initial conversations that ​​speak directly to their problems.

Twilio has also set up its resource center for filtering by role, solution and industry, so potential customers can self-serve according to their needs.

Twilio middle of funnel


As they do this and gauge the response from their lead, they qualify them further and help them progress down the funnel.

Twilio: Bottom of the funnel

Finally, the lead considers Twilio as their solution. However, they have questions about pricing, implementation and the return on their investment.

Hyper-specific sales pages, such as customer stories, in-depth documentation and use cases, now come in handy. The more relatable they are to the lead’s industry and scenario, the better.

Twilio bottom of funnel


Suppose the sales rep can satisfactorily address questions and concerns at the bottom of the funnel and convey the match between the lead’s problem and the solution. In that case, they will likely convert into a customer.

Example 2: Tricentis

Tricentis is an innovative software testing tool with a product suite that spans automation, integration and optimization.

Sales Funnels Pipedrive Tricentis examples


Like Twilio, the landing page speaks to the exact solution its target customer is searching for. In this case, it’s AI-augmented engineering.

Tricentis: Top of the funnel

You can easily find Tricentis when you search for a software testing tool because the company ranks highly for related keyword terms, like “beginner guide to volume testing”.

Tricentis uses this visibility to build awareness with its target audience.

Tricentis top of funnel


Potential customers who land on the website can then contact the company in several ways. For example, you can request a demo, start a free trial or have a team member contact you.

Tricentis: Middle of the funnel

In the middle of the funnel, a sales rep has more information about the lead, such as their job title and company name. A foundation like this is ideal for starting a qualifying sales conversation.

Customers at this stage might be looking to see if a solution has helped people or companies similar to them before. This is where Tricentis’s reviews and case studies can speak to customers who are considering their options.

Tricentis middle of funnel


Tricentis also has a vast resource library, which means that it can nurture sales leads by sending specific content for the challenges each is facing.

Tricentis’s e-books, reports and white papers are helpful here, as they provide in-depth details on a given topic and build authority for the company.

If a prospect wants more information, a well-placed call to action (CTA) can put them in touch with a Tricentis salesperson.

Tricentis: Bottom of the funnel

When making a purchase decision, Tricentis leads may need a little more information and reassurance that the product is the right way to go.

In this situation, sales reps can direct the lead toward helpful content like their ROI calculator, customer success stories and live expert learning events.

Tricentis bottom of the funnel


By matching their prospect’s needs and requirements and ensuring a good customer experience, they can win over highly qualified prospects.

Example 3: Anchor Fabrication

Anchor Fabrication is one of the largest contract metal fabrication partners in the US.

You’ll find the company ranks highly for terms like “burden labor in metal fabrication” as its team has optimized the website for those looking for metal fabrication contractors.

Anchor Fabrication Top of Funnel


Anchor Fabrication: Top of the funnel

Anchor Fabrication uses its website to get target visitors to take an action that will turn them into a lead.

Anchor reinforces the message of client-centered manufacturing with its certifications and the “Why Anchor?” explanation. It also offers invaluable resources for a range of issues potential first-time customers may be facing.

User-centric features like these act as lead magnets to draw in potential customers.

For example, you can watch a video on the benefits of manufacturing outsourcing, get several free guides and contact sales.

A large amount of content like this might be considered a lot for a homepage but it showcases Anchor’s offer and hits right where key customer problems are.

sales funnel offer CTA


Anchor Fabrication: Middle of the funnel

A sales manager or sales rep’s priority in the middle of the funnel is to qualify the lead as in-depth as possible. They do this by positioning themselves as experts and offering guidance to build rapport.

Anchor Fabrication has built a comprehensive resource library for this purpose.

Anchor Fabrication Middle of Funnel


As sales reps answer questions and position Anchor Fabrication as a possible solution, these resources can also spark new questions and get the lead to naturally progress deeper into the customer journey.

Anchor Fabrication: Bottom of the funnel

Finally, the lead will want to know if Anchor Fabrication is the best and most reliable option.

Sales reps can now go through industry-specific case studies, their sales strategy in handling specific use cases, expected results and associated timelines.

Whether it’s about breaking down costs, time saved or successful past projects, salespeople can gauge which information will help push each prospect to sign up for their services.

The detailed descriptions on Anchor’s site of its services and the industries it serves help to do exactly that.

Note: Each of these effective sales funnel examples shows how sales and marketing work in perfect harmony to attract, nurture and impact the decision-making process of a potential customer.


The value of a sales funnel

Listed below are the benefits a defined sales funnel brings to your organization’'s health and revenue and to the customer journey.

1. How a solid sales funnel impacts your prospects

By now you’ve noticed the amount of questions your potential customer might have before even thinking of purchasing from you.

Even though these concerns may arise at a different time for each of your prospects, and likely even in a different order, your sales funnel helps you understand what they need to move to the next step.

Here are three ways this happens.

A sales funnel helps you deliver the right message at the right moment. Imagine this scenario: You’re shopping for a new fridge. You have a very basic picture of what you want, so you’re not ready to buy just yet. At this point, you want to learn more about the benefits and disadvantages of certain models, features and sizes.

However, as you get on the phone with a salesperson, they immediately jump onto pricing for their best-selling model. While you appreciate the effort, you can’t help but wonder if they even care what you need or if they’re just looking to boost sales activities and meet a quota.

With a detailed sales funnel in place, including a map of prospect’s questions and details they need, you can deliver the right information and an aligned message to your prospects every single time, and save your future customer from the frustration of the scenario above.

A sales funnel enables alignment between marketing and sales. Remember, your prospects can get in touch with you at any stage of the sales funnel, whether it’s the early research or late decision phase. This is why it’s crucial to align your marketing and sales efforts so that potential customers receive the information they need when they need it.

To accomplish this, your marketing team can leverage the prospect’s online behavior, such as visiting specific landing pages on their website or activity linked to your email marketing campaign. You can then retarget them with paid ads geared toward where they are in their customer journey, as well as plan future content and educational resources such as online courses based on this.

As a result, you’ll convey the right message outside of your sales conversations, too.

A sales funnel creates commitment and loyalty. As your prospect begins their research (via Google search or other search engines) and learns about solutions, they will realize how many options they have. Especially in the first stage of their journey, prospective customers can easily switch to another solution provider to see their offers.

This is why it’s important for you to be present in the sales funnel early on and establish trust with your prospect by addressing all of the concerns that would influence their buying decision.

2. How a solid sales funnel impacts your organization

“A smokestack, a flue, a metal chimney on a steamship or a steam engine” are other “funnel” definitions found in the American English dictionary, which figuratively illustrate similar functions of the sales funnel. The sales funnel is a great indicator of your company’s operations and how the sales process keeps the organization steaming along.

In other words, a sales funnel gives you an overview of where in the sales cycle your money is, where your opportunities for potential revenue are and how to boost your conversion rates. A well-managed sales funnel makes all of your sales efforts well organized and gives you more control over your sales results.

Here are ways a high-quality sales funnel works for your business.

You can save time by dismissing unqualified prospects and focusing on hot or qualified leads. A bloated sales pipeline can be deceiving for a sales rep. You might believe that you have a lot going on because there are a lot of new leads.

Yet if, in reality, you’re not adding new deals because of this false sense of safety, you’re doing yourself a disservice. An effective sales process and funnel will filter out the wrong leads so you can increase your sales and marketing efforts on the highly qualified ones.

You can move deals into next stages quicker. The longer your sales funnel has been defined, the more you’ll be able to nail down exactly what it takes to move your prospects down the funnel, from the awareness stage or consideration stage to the conversion stage.

This means you’ll be able to deliver relevant information quicker and address your lead’s concerns upfront (often even before they know they have that concern.) This will shorten your time from initially contacting a new lead to closing the deal.

You can track sales metrics that matter. To make the most of your sales funnel, it’s important to monitor and keep track of some key metrics in your funnel. This is another method that will ensure your funnel is healthy, your sales are on track, and your time is spent wisely.

Here are the metrics you should track at all times:

  • Number of deals in your funnel

  • Average size of a deal in your funnel

  • Close ratio or average percentage of deals that get won

  • Sales velocity or average deal lifetime before it’s won

These metrics are closely related to each other. For example, the number of deals in your funnel matters only if you know what percentage of your deals you win on average. The average size of a deal impacts the amount of deals you should be closing in order to hit your revenue goal. And sales velocity helps you understand how much of your time can and should go toward each quality deal, so you can manage your days effectively.

Pipedrive campaigns follow up emails


How to define your sales funnel

Now that we've given you examples of the function and definition of funnels, you have a better understanding of how you can apply them in your specific sales scenarios.

Here’s a simple yet powerful process of creating your own sales funnel and putting it into practice:

  1. Think through your customer’s buying process and the main decision points from your customers’ point of view. Then write down the matching sales stages for your company. It should take no longer than 10 minutes per customer segment (if you have more than one).

  2. Discuss the stages with other salespeople and colleagues. If you’re a one-person operation, ask an industry peer. A second opinion often helps you spot flaws in your plan before implementation.

  3. Spend some time reviewing whether your sales pipeline stages match your typical sales scenarios.

  4. Review the final stages with others (if you have a team). Make sure everyone understands the aim of defining sales stages and agrees on measuring activities at each stage.

  5. Revise the sales stages in a month or two. If a stage seems to be confusing, then rename, delete or add new ones to reflect what’s really happening with your sales pipeline. This is also a good time to see where you can get referrals, what you can upsell or how you can improve customer retention.

The key here is to understand the thought process of your leads when they’re moving into the next stage of their purchase journey. This will help you determine which call-to-actions to use. For example, what does it take for them to register for a free trial? Download an eBook? Sign up for a live demo? And ultimately, make that purchase?

And on the other side of the story, find your own key activities that help them achieve all the milestones you listed above. Is it an email that includes relevant resources or testimonials for social proof? A call for you to answer their questions? A specific type of deal you can offer?

Answer these questions and you’re good to go.


How to fix a sales funnel that’s losing your leads

While your sales funnel can be a great source of success in your sales team, it can also become a frustration if you notice that:

  • The rate of leads you’ve won is low compared to the total number of leads

  • The sales process is taking significantly longer than expected or necessary

  • Many leads become uninterested or unresponsive

While a leaky sales funnel is frustrating, the good news is that there are simple ways to deal with it.

Revisit your sales funnel from lead to close. Earlier in this guide, you’ve already mapped this out. Now, it’s time to think about potential flaws in your system such as internal processes that may affect customer experience and make it harder for a prospect to do business with you. This will help you break down barriers and make it easier for prospects to engage with you at every stage.

Review your initial lead response time. According to InsideSales.com, 35-50 percent of sales go to the vendor that responds first. Speed literally wins deals! The time it takes for your company to respond to leads once they hit your inbox may be the first source of a leak. Make sure to review your process to prioritize lead response time.

Identify why prospects are disqualified. One of the overarching benefits of having a sales funnel is delivering the perfect message right when your prospect needs it. So if your funnel seems leaky, it’s time to analyze the leads that aren’t working for you.

Did they fit your ideal buyer persona, and if so, why did they not show interest in your company? There could be any number of reasons such as pricing, market immaturity or a lengthy product implementation schedule – knowing these issues is the first step to finding ways to address them.


How to manage your sales funnel day-to-day

The more deals you work on at the same time, the easier it is for them to slip through and go cold. Keeping an eye on all of them at once can be challenging.

This is why it’s crucial to implement an automated system that will give you a visual overview of what’s happening in each of your sales funnel stages, as well as send you reminders for key actions to move the deal forward for each individual lead.

The solution? A CRM software. It will help you:

  • Forecast your sales for the upcoming month or quarter

  • Keep track of lead’s activities

  • Leverage reminders and stay on top of hot deals

  • Organize your day to make the most of the hours you spend with your leads

  • Close deals faster

  • Automate certain sales activities


After you’ve defined your sales funnel in an earlier step, take the time to transfer the different stages into your CRM. If you’re not using one already, make sure to choose one that makes you more efficient and productive.

When choosing your CRM as a sales funnel tool, ask the following:

  • Does your CRM help you focus on the most important activities?

  • Are you able to see everything that’s happening in your deals?

  • How does it allow you to stay organized?

Remember, only the CRM tool that actually gives you better-quality leads and makes your deals move at a faster pace will make a positive impact on your organization, so take your time to understand what your sales funnel requires.


Free sales funnel template

Whether you’re an entrepreneur or a small business, you can download our customizable free sales funnel template for Excel or Google Sheets.

Input your contact and deal details, then fully customize it based on your industry and specific business needs.

Get organized with your free sales pipeline excel template

Looking for a more streamlined way to manage your sales? Download this free sales pipeline template and test it out now.


How to fix a sales funnel that’s losing leads

While your sales funnel can be a great source of success for your sales team, it can also become a frustration if you notice that:

  • The rate of leads you’ve won is low compared to the total number of leads

  • The sales process is taking significantly longer than expected or necessary

  • Many leads become uninterested or unresponsive

While a leaky sales funnel is frustrating, the good news is that there are simple ways to deal with it.

Revisit your sales funnel from lead to close

You’ve already mapped out how to make your sales funnel measurable.

Now, it’s time to think about potential flaws in your system, such as internal processes that may affect customer experience and make it harder for a prospect to do business with you.

Identifying these will help you break down barriers and make it easier for prospects to engage with you at every stage.

Review your initial lead response time

Speed can win deals. According to Workato, over 99% of business-to-business (B2B) companies don’t respond within 5 minutes.

The time it takes for your company to respond to leads once they hit your inbox may be the first source of a leak.

Make sure to review your process to prioritize lead response time and give yourself a competitive advantage.

Identify why you disqualify prospects

One of the overarching benefits of having a sales funnel is delivering the perfect message right when your prospect needs it.

If your funnel seems leaky, it’s time to analyze the leads that aren’t working for you.

Did they fit your ideal buyer persona? If so, why did they not show interest in your company?

There could be any number of reasons, such as pricing, market immaturity or a lengthy product implementation schedule – knowing these issues is the first step to finding ways to address them.


How to manage your sales funnel day-to-day

The more deals you work on at the same time, the easier it is for them to slip through and go cold. However, keeping an eye on all of them at once can be challenging.

Implementing an automated system can give you a visual overview of what’s happening in each of your sales funnel stages.

It can also send you reminders for critical actions you need to move the deal forward for each individual lead.

The solution? CRM software like Pipedrive can help you:

  • Forecast your sales for the upcoming month or quarter

  • Keep track of each lead’s activities

  • Leverage reminders and stay on top of hot deals

  • Organize your day to make the most of the hours you spend with your leads

  • Close deals faster

  • Automate certain sales activities

Here’s how you mark, filter and track lost deals using Pipedrive.

Filter track lost deals using Pipedrive


After you’ve defined your sales funnel, take the time to transfer the different stages into your CRM.

If you’re not using one already, choose one that makes you more efficient and productive.

When choosing your CRM, ask the following:

  • Does it help you focus on the most important sales activities?

  • Are you able to see everything that’s happening in your deals?

  • Does it allow you to stay organized?

Remember, only a CRM system that gives you better-quality leads and makes your deals move faster will positively impact your organization, so take your time to understand what your sales funnel requires.


Final thoughts

With your potential customer’s pain points and questions in mind, you can now map out and implement a start-to-finish sales funnel to create a more seamless customer journey that boosts sales.

A well-defined sales funnel affects the way your prospects see you, as well as the operations of your organization. A structured approach is key to defining yours and fixing any leaks.

To help, use sales funnel software, like Pipedrive, to track and amplify the value you offer.

Take action with your funnel now to get the most out of your sales leads, optimize your sales and digital marketing workflows and build lasting customer relationships.

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