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Sales Funnels: Definition, Process, Stages and Examples

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
Final thoughts

Improving sales funnel efficiency should be among a company’s top priorities in order to turn cold prospects into hot leads and boost sales performance. It makes sense, A great sales funnel gives salespeople key insights into their potential customer’s needs, challenges and decision-making process.

Without solid sales funnel management software, it’s very difficult 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 and how to build and manage one for your team.


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.

The sales funnel definition prescribes that it literally acts like a funnel, meaning it is widest at the top and narrowest at its the bottom. Each stage of the funnel pushes your qualified prospects into the next stage and drops those that are not a fit for what you offer.

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

The sales funnel structure shows the process that prospects go through: Untouched > Contact made (Leads) > Qualified > Proposal presented > Negotiation > Won.

Studying 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 impact on your sales goals.

Top-performing sales reps know the steps of their sales funnel inside out, from cold calling to finalizing the sale. This helps them in two key ways:

  • They can address customer’s key needs and deliver the right message at the right time;

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

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


Stages of a sales funnel

In order to fully answer the question “What is a sales funnel?”, we need to tackle the different steps of the funnel. While different organizations have their own ways of managing and naming the sales process and customer touchpoints, these are usually structured into three distinct stages.


1. Top of the sales funnel: Awareness and discovery


Early in their journey, your potential customers have a question or concern 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.

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 some examples of questions they might be having have 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 confident that your solution is the best answer to their problem.

From a digital marketing perspective, prospective customers want easily accessible content that will guide them through the topics that matters to them, including blog posts, videos and even quizzes. This is the part of the process called lead generation.

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 to make sure they’re the right customers, which is what brings us to the next stage.

2. Middle of the sales funnel: researching solutions


At this point, 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 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?”

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 solution providers such as specific companies and their products or services. Instead, they’re looking for the types of solutions available to them.

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

As you get to talk to them and ask them questions to determine whether your offer is the right fit for their problem, your Leads become Qualified. The content that serves your leads best in this stage includes in-depth guides, comparison-style checklists and pros versus cons lists. These would make it easy for the decision-maker to move on to the decision stage.

3. Bottom of the 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 and more specific, following the narrowing shape of a funnel’s bottom. 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]?”

At this stage, long-tail SEO keywords can help lead users to information that enables them to make a decision that suits their exact needs, specific problems and budget.

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 analyses. These will 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

Let’s look at some sales funnel examples to further answer the question posed earlier: What is a sales funnel? They’ll show how 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.

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.


Twilio: Top of the funnel

Potential customers can easily find Twilio as their potential vendor when they search for a key term, “communication APIs,” for which Twilio ranks highly.

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

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 where they want to go next.


The “Not ready yet? Talk to Sales” button tells prospects that they understand they may not be ready to buy yet, and are there to help simplify the process.

When new users sign up, they either get 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 has become a lead, the sales rep can leverage the information collected in the opt-in form, such as the company name, job title and the product that the lead is interested in, to drive a valuable sales conversation and ask the right questions.


Based on the specific technologies, categories and past experiences that the lead shared, the sales rep is able to inject relevant, personalized content into the initial conversations that ​​speaks directly to their problems:


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.

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.


If 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, it’s highly likely 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’re one of the most innovative tools for continuous software testing.


Tricentis: Top of the funnel

Tricentis can easily be found when you search for a software testing tool. SEO-wise, they actually rank highly for related keyword terms. Because of this, they can easily build awareness with their target audience.


Potential customers who land on their website can get in touch with the company in several ways, either by requesting a demo or starting a free trial (top right) or having someone contact them (menu bar).

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.


Furthermore, Tricentis has a huge resource library, which means that they can nurture their sales leads by sending incredibly specific content for the challenges their lead is facing.


Whether prospects require more information in the form of info packs, video demos or in-depth guides, a Tricentis salesperson can easily provide them what they need and move them further down the funnel.

Tricentis: Bottom of the funnel

When it’s time to make a purchase decision, Tricentis leads 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. By matching their prospect’s needs and requirements, and by ensuring good customer service, they can easily win over highly qualified prospects.

Example 3: Anchor Fabrication

Our final example isn’t a software, app, or SaaS product, but a contract metal fabrications partner called Anchor Fabrication. You’ll find them at the top of the search results for “anchor fabrication” as they’ve optimized their website for those looking for metal fabrication contractors.


Anchor Fabrication: Top of the funnel

Once they attract their target visitors, Anchor Fabrication makes the most out of each page to draw them 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 of client-centered manufacturing with their certifications and the “Why fabricate with us” explanation, they also offer invaluable resources for a range of issues their potential first-time customers may be facing. These user-centric features play the role of a lead magnet.

For example, right on the homepage, you can watch a video on benefits of manufacturing outsourcing, get two free guides, as well as contact sales. These might be considered a lot for a homepage, but they’re able to showcase 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. They do this by positioning themselves as experts and offering guidance the lead needs to build rapport.

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


As sales reps answer their lead’s questions and build up 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 to go for.

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

Whether it’s about breaking down costs, the time that will be saved or successful past projects, their salespeople can gauge which information will help push the prospect to sign up for their services. Thanks to the detailed descriptions of services they offer and the industries they serve, they can do exactly that.

These examples show how sales and marketing work in perfect harmony to attract, nurture and impact the decision-making process of a potential customer. Applying these insights would need taking a deeper look into your marketing funnel, meaning this is where you can see how well it aligns with your sales process.


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 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.


How to define your sales funnel

We hope that by giving you examples of the function and definition of funnels, you have a general idea on how you can apply them in your specific sales scenarios.

Here’s 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 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, 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.


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 that will make you a more efficient salesperson.

Here are the main points for you to take away from this article:

  • 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 affects the way your prospects see you, as well as the operations of your organization

  • A structured approach is key in defining your sales funnel and in fixing any sales funnel leaks

  • A good sales funnel software, like a CRM, will amplify the value of your sales funnel

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

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