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Sales Funnels: Definition, Process, Stages and Examples

The one tool that helps sales reps turn cold prospects into hot leads is the sales funnel.

In fact, improving sales funnel efficiency is among the top priorities in order to boost sales performance. It makes sense: a great sales funnel gives salespeople an insight into their potential customer’s thought process, challenges, and decisions.

However, as much as 68% of companies have not identified or attempted to measure a sales funnel. The same survey showed that 79% of marketing leads are never converted into paying customers.

It’s certain: without solid sales funnel management software, it’s almost impossible to convert leads into sales efficiently and grow sales and revenue over time. So what is a sales funnel that has been successfully set up?

What is a sales funnel?

A sales funnel is a visual representation of 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 due to drop off in the funnel.

Just like its name indicates, a sales funnel is the widest at the top and the narrowest at its bottom. Each stage of the funnel pushes your most qualified prospects into the next stage and drops those that are not a fit for your offer.

A sales funnel is directly connected to the customer journey phases, which can be sorted into three parts: top, middle, and bottom.

This can translate into the sales funnel structure on your part as prospects going through Untouched > Contact made (Leads) > Qualified > Proposal presented > Negotiation > Won.

Understanding your sales funnel can help you understand where you’re going wrong with prospecting, exactly where leads drop off, and what led existing customers to follow the sales funnel all the way through. Optimizing your sales funnel can have an immediate, lasting impacts on your sales goals.

Top-performing sales reps know the steps of their sales funnel inside out, from cold calling to finalizing the sale. There are two key reasons for this:

  • They can address customer’s key needs and deliver the right message at the right time, and
  • They can scale their sales process, forecast their sales and revenue, and hit their goals.

In other words, a well-defined sales funnel improves customer’s journey as well as company’s health.

Stages of a sales funnel

In order to fully answer “what is a sales funnel?” it's essential to review the different steps of the funnel. While each organization has its own way of managing the sales process and customer touchpoints towards a purchase, these are structured into three distinct stages.

1. Top of the sales funnel: awareness and discovery

Sales Funnel Stages: Top of Funnel: Awareness and Discovery

Early in their journey, your potential customers are going through a specific problem and are researching and learning about it, 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 or contact information on their own.

This early in the journey, they are still identifying their challenge. They have many questions about it as they likely haven’t named the problem itself—they just know the symptoms.

They are trying to verbalize their problem and are looking for a trusted source of information and education. Here are some examples of questions they might be having for specific industries:

  • A customer support software: “Customer support industry benchmarks”
  • A mattress store: “Why does my back hurt after sleeping?”
  • An electricity provider: “Average electricity bill”

At the top of the sales funnel, your prospect wants to feel educated and confident to be able to talk about their questions and problems when the time comes.

From a marketing perspective, they want content that will guide them through the topic that matters to them, including blog posts, videos, and even quizzes. This is the part of the process called lead generation: –you’re finding the right customers even in the early stages of your funnel.

In this stage, your Untouched prospects turn into Contact made prospects. More precisely, they are now your Leads. It’s time for you, the sales rep, to ask relevant questions and qualify your lead, which is what brings us to the next stage.

2. Middle of the sales funnel: researching solutions

Sales Funnel Stages: Middle of Sales Funnel: Researching Solutions

In this stage, you’re no longer dealing with nameless and faceless contacts, prospects still in the funnel should be “ideal customers”. They have now named and defined their problem, and they are looking into all available solutions such as products and services.

Questions in the middle of the funnel are no longer generic. Instead of asking ‘why’ questions, your leads are diving into a range of opportunities to remedy their struggle.

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

  • “How to provide good customer support over the phone?”
  • “How to choose the best mattress for [condition]?”
  • “How to break down an electricity bill?” or “How to choose an electricity provider?”

At the middle of the sales funnel, your lead is diving deeper into the specifics of the problem. They understand what’s bothering them in great detail and want to know the possible solutions.

At this point, they might not necessarily be evaluating solution providers such as specific companies and their products. Instead, they are looking for types of solutions available to them.

For example, they have yet to decide if they will buy a software solution for in-house support teams or outsource support altogether. Another example: they aren’t sure if they just need a mattress topper or if they should buy a new mattress.

The content that serves your leads best in this stage includes in-depth guides, comparison-style checklists, pros versus cons lists, and other insightful pieces. Your company should focus on making this stage easy for the decision-maker on the client’s side.

In this stage, your Leads become Qualified as you get to talk to them and ask them questions that help you decide whether your offer is the right fit for their problem.

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

Sales Funnel Stages: Bottom of Sales Funnel: Making an Educated Purchase Decision

Finally, the bottom of your funnel is when your leads now know everything about their problem, the best type of solution for them, and are ready to select the provider to purchase this solution from.

This is why their questions and concerns in this stage become vendor-driven. So their online searches, as well as their questions to you, might look something like this:

  • “Does [provider 1] provide 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]?”

That’s what helps your lead make a decision that suits their exact needs, specific problems, budget, and other relevant resources.

The best content for the bottom of the funnel are frequently-asked-questions pages, videos about product features, live demos, and side-to-side competitive feature analysis. These reinforce their confidence in your offer as they keep seeing its fit for their specific problem.

This is when your qualified leads go through sales proposal and negotiation phases, after which you ideally win their business.

Real-life examples of sales funnels

With this breakdown of sales funnel stages in mind, we can now look at some sales funnel examples. In order to answer “what is a sales funnel?” we’ve chosen some great examples from different types of companies. They will show a salesperson can guide the prospect from the moment they become a lead through to purchasing by understanding their key pain points and providing the right answers at the right time.

This is where sales and marketing work in perfect harmony to attract, nurture, and impact the decision-making process of a potential customer. This is also where you can see how well your marketing funnel aligns with your sales process.

Example 1: Twilio

Twilio offers communication APIs—a service that developers can implement to embed voice calling and text messaging into a software application or a product. They know how important it is to communicate these specifics to their audience, and they’re really good at it.

Sales funnel examples: Twilio

Twilio: Top of the funnel

Potential customers can easily find Twilio as their potential vendor by simply searching for a key term—communication APIs, for which Twilio ranks highly.

They can also find them on social media, through their blog, or a self-paced game made for learning Twilio.

Once they’re seeing the fit for their needs, they can either create a free Twilio account, or request to talk to sales. Twilio even makes an effort to tell you they understand if you’re not ready to buy yet in multiple places:

Sales funnel stages: Top of sales funnel Twilio

When they’re signed up, they either end up with a free account to start with (and eventually upgrade to a paid one), or they land in a sales rep’s inbox and wait to be contacted.

Twilio: Middle of the funnel

Now that a website visitor became a lead, the sales rep can leverage the information collected in the opt-in form, such as the company name, job title, and even the product that the lead is interested in, to drive a valuable sales conversation and ask the right questions.

Sales Funnel Stages: Twilio: Middle of Sales Funnel

As they ask questions aimed at finding a product fit for a prospect’s problem, the sales rep can then make the most out of the answers and concerns that the lead presents.

Based on the specific technologies, categories, and past experiences that the lead is mentioning, the sales rep can send them content that solves their problems:

Twilio Sidebar

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 is now qualified and considers Twilio as their solution. However, they have questions about pricing, implementation, and the return on their investment.

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

Sales funnel stages: Twilio Bottom of funnel

If the sales rep can confidently answer questions at the bottom of the funnel in full and conveys the match between the lead’s problem and the solution, they will convert the lead into a customer.

Example 2: Tricentis

Tricentis is a software testing tool with a suite of products that spans across automation, integration, and optimization. They are one of the most innovative tools for continuous software testing.

Sales funnel examples: Tricentis

It’s easy to assume Tricentis wants to be found as someone searches for a software testing tool—and they are. They actually rank highly with a guide called The Top Software Testing Tools: The Ultimate List of Lists for the software testing tools search.

Sales funnel stages: Top of sales funnel Tricentis

Because of this, they can easily build awareness with their target audience.

As their potential customers land on their website, they can get in touch with the company in several ways: by starting a free trial, selecting the ‘Ask an expert’ option (top right) or ‘Talk with sales’ option (bottom right).

Tricentis: Middle of the funnel

Once again, a sales rep has plenty of information about the lead, such as their job title and company name. This is a great foundation for starting a qualifying sales conversation.

Sales funnel stages: Tricentis Middle of Funnel

Furthermore, Tricentis pride themselves with a huge resource library, which means that as they nurture their sales leads, they can send them incredibly specific content for the challenges their lead is facing.

Sales funnel stages: Bottom of funnel tricentis

Whether the prospect requires more information in the form of info packs, video demos, or in-depth guides, a Tricentis salesperson can easily provide them with everything they need and move them further into the funnel.

Tricentis: Bottom of the funnel

When it’s time for a Tricentis lead to make a purchase decision, they need more information and reassurance that the product is the right way to go.

This is where Tricentis sales reps can direct the lead toward their ROI calculator, their customer success stories, and even perks like their Tosca Community.

Being a match for their prospect’s needs and requirements, as well as by ensuring they'll be properly looked after as customers, they can easily win highly qualified prospects over.

Example 3: Anchor Fabrication

Our final example isn’t a software or SaaS product, but a contract metal fabrications partner called Anchor Fabrications.

If that’s what you’re looking for, that’s exactly what you’ll find as they clearly optimized their website for those looking for metal fabrication contractors and communicated their message and value proposition clearly.

Sales funnel examples: Anchor Fabrication

Anchor Fabrication: Top of the funnel

Once they attract their target visitors, Anchor Fabrications make the most out of each page on their website to draw these visitors further into the website and get them to take an action that will turn them into a lead.

Not only do they reinforce the message by communicating client-centered manufacturing, their certifications, and the ‘Why fabricate with us’ explanation; they also offer invaluable resources for a range of issues their potential first-time customers are facing. These play the role of a lead magnet.

For example, right from the homepage, you can watch a video on benefits of manufacturing outsourcing, two guides, as well as an option to talk to sales.

Sales funnel stages: Anchor Fabrication Top of Funnel

Even though this might be considered a lot for a homepage, they are showcasing how good they are at what they do and they hit right where key customer problems are.

Anchor Fabrication: Middle of the funnel

As you know by now, a sales manager or sales rep’s priority in the middle of the funnel is to qualify the lead as in-depth as possible and offer them the guidance and expertise they need in order to build rapport and position themselves as experts.

Anchor Fabrication has built an incredible resource library for this exact purpose, which they can use to go beyond just answering the questions from their leads.

Sales funnel stages: Anchor Fabrication Middle of Funnel

As they answer their questions and build up their confidence about Anchor Fabrication’s services as a possible solution, they 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 they can go for.

This is where the sales rep can go through their case studies and industry-specific case studies, their strategy of handling specific use cases and the results they will see and the associated timelines.

Whether it’s breaking down costs, the time that will be saved, and the successful past work, it’s up to salespeople to gauge which information will help push the prospect over the line and get them to sign up for their services.

And thanks to their detailed descriptions of services they offer and the industries they serve—they can do exactly that.

The value of a sales funnel

As we hinted earlier, a defined sales funnel brings benefits to your organization's health and revenue and to the customer and the journey they go through before they purchase.

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 prospect and likely even in a different order, your sales funnel helps you understand what it is they need to move them 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—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 sales person, 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 when it comes to your fridge, or if they’re just looking to boost sales activities and meet a quota. They just seem to be selling you what others are already buying.

With a detailed sales funnel in place, including a map of prospect’s questions and details they need, you can deliver the perfect 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 prospect can get in touch with you in any moment of their customer journey, whether it’s early research or late decision stage. This is why it’s crucial to align your marketing and sales efforts so that they receive the information they need even when you don’t have the ability to deliver it directly as a sales person.

To accomplish this, your marketing team can leverage their online behavior, such as visiting specific pages on their website or activity within the emails they receive from you. You can then retarget them with paid ads targeted at their sales funnel stage, as well as plan future content and educational resources based on this.

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

A sales funnel creates commitment and loyalty. A sales funnel isn’t just the work on your part. As your prospect begins their research and learns about solutions, they will realize how many options they have. Especially in the early stages of their journey, they can easily switch to another solution provider and look into their offers.

This is why it’s important for you to be present in the sales funnel early on and create a bond with your prospect. As they notice you’re able to address all of their concerns, they will grow to trust you and you will increase the chance of turning them into your customer.

2. How a solid sales funnel impacts your organization

The sales funnel is a great measure of your company’s health. It gives you a clear view of the opportunities currently available to you and the entire sales team, showing you the revenue that you will make in the months ahead.

In other words, a sales funnel gives you a complete overview of where in the sales cycle your money is and how to boost your conversion rates. A well-managed sales funnel makes all of your sales efforts well organized and gives you control of your sales results.

Here are some direct benefits of a high-quality sales funnel for your business.

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 and that you’ll hit your target.

If, in reality, you’re not adding new deals because of this false safety, you’re doing yourself and your sales targets a disservice. Having a solid funnel in place will enable you to dismiss bad leads early and increase your efforts with highly qualified ones—ultimately resulting in more sales and better customers. An effective sales process and funnel automates this work by naturally filtering out the wrong customers early on in the funnel.

Move deals into next stages quicker. The longer your sales funnel has been defined, the more you will be able to nail down exactly what it takes to move your prospects down the funnel.

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

Track sales metrics that matter. To make the most of your sales funnel, it’s essential that you monitor and keep track of some key metrics in your funnel. This is another method that will ensure your funnel is healthy, your sales 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: average percentage of deals that get won
  • Sales velocity: average deal lifetime before it’s won

These metrics closely relate 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 towards each quality deal, so you can manage your days effectively.

How you can define your sales funnel

We hope that with all the details and examples we talked about by now, you have a general idea of what a sales funnel means in your specific sales scenarios and for your prospect’s needs.

Here is a simple yet powerful process of defining 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 agree 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.

The key here is to understand the thought process of your leads in moments when they are moving into the next stage of their purchase journey. 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, give you their money in exchange for a solution?

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 packed with resources? 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 source of great 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

A leaky sales funnel is frustrating, but 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 that make it hard for a prospect to do business with you. It’s too easy for companies to sacrifice customer experience for internal processes. Make sure that you break down barriers and make it easy 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 their inbox may be the first source of a leak, so make sure to review this and make time in your day for prioritizing responding to leads.

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 learn about the leads that aren’t working for you.

Make sure they fit your ideal buyer persona, and if so, why did they not show interest in your company? There might be reasons such as pricing, market immaturity, or a too-long product implementation schedule—make sure to dive into everything that might be the reason.

How to manage your sales funnel day-to-day

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

This is why it’s crucial to implement a system that relieves you from having to remember to look at each individual lead. A great system 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 take and move the deal forward.

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

  • Forecast your sales for the upcoming month or quarter
  • Close deals faster
  • Keep track of lead’s activities
  • Leverage reminders and always keep on top of hot deals
  • Organize your day and make the most of the hours you spend with your leads
  • Automate certain sales activities
Sales Funnel Chart Expected v. Reality

After you’ve defined your sales funnel in an earlier step, take the time to transfer your sales funnel stages into your CRM—and if you’re not using one already, make sure to choose one that makes you more productive instead of adding unimportant tasks to your schedule.

When choosing your CRM, make sure to ask yourself 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 a CRM tool that actually makes your deals move at a higher pace and with better quality leads is the one that will make a positive impact on your organization, so take your time to understand what your sales funnel requires.

Take action with your sales funnel now

With your potential customer’s pain points and questions in mind, you can now map out and implement a start-to-finish sales funnel that will make you a more efficient sales person.

The main points for you to take away from this guide:

  • The top, middle, and bottom of the sales funnel define the range and depth of the information your leads need at each stage of their purchase journey
  • A well-defined sales funnel impacts the way your prospects see you, as well as the health of your organization
  • A structured approach is key in defining your sales funnel, as well as in fixing any sales funnel leaks
  • A good sales funnel software, like a CRM, will amplify the value of your sales funnel

With this in mind, you’re ready to make the most of your sales process and build lasting relationships with your future customers.

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