Many business owners assume that "if you build it, they will come." But sadly, this isn't the case, regardless of how great a product is. By nature, most people just don't make a purchase the moment they learn about a product; instead, they go through a customer journey of various steps. In marketing, these steps are visually depicted and referred to as the sales funnel.
Knowing and understanding your sales funnel is not just a key marketing tactic but a necessity for the success of any business. Here's why.
What is a sales funnel?
A sales funnel illustrates the journey a customer takes to make a purchase.
Whether you're an online e-commerce store, service-based business, or even a classic brick-and-mortar shop, this funnel exists. Visually it's depicted as a funnel because you'll have more potential customers when they first become aware of your business. But as they move through their journey, prospects will inevitably be lost until you're left only with your buyers.
Becoming familiar with the standard steps of any sales funnel, as well as the unique progression of your own, is pivotal to understanding your customer.
The 4 Phases of a Sales Funnel
These four phases of a sales funnel are like the mindset of your customer. They represent the thought processes and the actions that people go through as they journey through the sales process. You can remember them with the acronym AIDA - awareness, interest, decision, and action. These steps are the general phases that a lead or deal goes through during the sales process.
The actual stages of the deal will be unique to your sales operation, but the concept remains the same, the top of the sales funnel has stages that fall into the awareness phase, then move down to the interest phase, then the decision phase, then finally to the action phase. Your sales funnel will almost always become smaller as you get closer to the action phase, the bottom of your funnel.
The key here is that while it is your customer who goes through the funnel, you as a business owner need to be approaching each step with intent. Messaging is huge. The message that you give to your potential customer at each stage of the funnel will be a deciding factor in whether they continue through the funnel to a final purchase. Simply put, you don't want to give a potential customer a message meant for a different stage than where they are in your sales funnel.
Let's take a look at the four stages of the sales funnel to get a better understanding.
Awareness Phase
This is the moment when your potential customer first becomes aware of your business or product. It's the pivotal moment you want to capture them into your funnel. The awareness stage could happen because of a social media post or a person walking past your clothing store and seeing something they like in the window.
While most people will not buy at this initial stage, there are always exceptions. Either the stars align, and the person feels they must have your product now, or maybe they've been looking for something similar before stumbling upon your offer. More often than not, though, the awareness stage is like the very first date; you'll need to woo the prospect into becoming a buyer.
Interest Phase
The interest stage is when your potential customer is doing their research. They're comparing their options and browsing similar businesses or products. This is the time when you need to offer them valuable content or information which helps them make their decision but without selling to them.
You want to be nurturing your lead at this point, not risking turning them off with salesy or pushy messaging.
Decision Phase
This is the stage in which your potential customer is ready to make a purchase, but they are likely deciding between a few options, including you. This is where you'll want to help them make their decision by presenting them with your best offer.
You could choose to offer something like a discount or free shipping, but make sure it's something that they likely won't get from their other options. You need to make your product the easiest choice and one that they can't refuse.
Action Phase
The action phase is the very bottom of your funnel. It's the exciting moment when your lead makes a purchase and becomes a customer. Now, they have entered your world.
But your job is not done; in many ways, it's just begun. You want one purchase to turn into many purchases and for your new customer to become a loyal one. At this stage, you begin to focus on customer retention.
Upon purchase, you'll want to show gratitude for their business, offer them support, and invite them to provide feedback.
An example of a successful sales funnel
Let's take a look together at an effective sales funnel in e-commerce. Let's say that you sell novelty t-shirts via a website. You've done your research and know that your ideal customer uses Instagram, so you've paid for an ad that targets this perfect customer with a nice attractive photo of one of your newest products. Your ideal customer sees the ad, clicks on it, and is taken to your website. This is the awareness phase.
Once they reach your website, they start to browse because this is the first time they've seen your business and your products. Now they've reached the interest phase, and it's time for you to capture their email address so that you make sure they stay in your funnel where you'll be able to nurture them.
After a few seconds, a lead capture pop-up hits the screen and offers them 15% off in exchange for their email address. Most people like discounts, especially if they think they may be buying the t-shirt that brought them to your site in the first place, and so they give you their email address.
Now you've captured them as a lead and can begin nurturing them with marketing emails that will solidify their interest and eventually help them during the decision-making phase. This can be a coupon or an irresistible offer.
If your message is right, your lead will progress to the action phase, where they'll finally make their purchase and hopefully come back for more.
Why understanding your sales funnel is important
According to a new study by Episerver, 98% of customers don't make a purchase on their initial visit to a business.
This means that business owners need to do the work to make sure potential customers move through their sales funnel. But, it's not enough just to be familiar with the four stages. You need to analyze and be clear on the unique journey that your customers are taking. This way, you can know exactly where along the funnel they're dropping off.
For example, if you're seeing large amounts of leads drop off early, near the end, or just not making purchases at all, you may need to consider your messaging. Or you may need to look at the possibility that your customer is being turned off by something you're offering. Another consideration is that your competition could be offering something even more valuable than you are.
This is why really getting to know your own funnel is the key to conversions. If you don't know your funnel inside out, then you can't optimize it.
How to build a sales funnel
Now we're going to review how to build an online sales funnel so that you can get started on optimizing your customers' journeys and bringing in more sales.
Build a landing page
When customers first become aware of your business via whichever advertising outlet you choose (paid ad, podcast, blogging, etc.), you need to have someplace to send them.
A landing page is your sales page. It's where you'll feature your product and where your prospects will learn more about what you offer.
This can be your website itself, where you feature all of your products, or it can be a single sales page with a specific product or offer. You can build this in any website builder like Squarespace or WordPress, or you can opt to make a single sales page with plug-and-play template tools like Leadpages. Check out our guide to building a professional website.
Capture your lead with a valuable offer
A key aspect of your landing page needs to be an opportunity for your prospects to give you their email address. This is crucial because once a potential lead leaves your site - this could be very quickly - the odds are that you've lost them.
If you have an irresistible lead capture opportunity in the form of a pop-up, then you can grab their email address and move them into the next stage of your funnel via email marketing.
How do you get a prospect to hand over their email address? With a freebie of some kind. This can be a discount, an ebook, or a free webinar. If you're using a CRM, this can be a great tool for creating your lead capture forms.
Nurture your leads
Now that you've captured your leads, you'll need to nurture them with valuable content in the form of an email nurture series - a series of emails that move them through your sales funnel. Here are 3 email marketing providers that we recommend to help you get started.
At this point, your leads have moved from the awareness phase to the interest phase, where help and educational guidance is key. Remember, you don't want to sell to them yet. Sales can be a turn-off at this point in their journey, and they may quickly unsubscribe from your list or flag you as spam.
Start selling
Here is where you can hit your leads with an offer that will nudge them into the decision stage. This can be a free trial, free shipping, or a demo of your product.
Customer retention and more nurturing
At this point, you will know who made a purchase and who didn't. For those that did, you can work on maintaining them as loyal customers with regular check-ins and offers.
And for those that didn't purchase, you can find out why and feel free to enter them into a new nurture email sequence where you continue to earn their trust and nudge them to the action phase over time.
In Conclusion
As you can see, having a sales funnel in any business is pivotal to success and growth. Without one, you're just holding your breath and hoping for a sale. But remember, it's not enough to just build a funnel; you need to really understand your funnel and optimize it for success.
If you make sure to learn about your customer's needs, nail down your messaging and provide a killer offer, you'll be hitting the ground running in no time.