What’s a Sales Funnel and Why Your Business Needs One


Marketing Strategy

“Sales Funnel” is a term that small businesses like yours may have heard of but you may have been wondering what one is and how to implement it.

A well-established sales funnel is essential to help your business grow. But first, what is a sales funnel?

What Is a Sales Funnel? 

A sales funnel is the series of steps that carry your potential customers into paying customers. Just like a funnel used in cooking guides a liquid or a powdered substance into a smaller designated area, a sales funnel will help channel a stream of customers from your target market into your customer base.

The 5 Steps of a Sales Funnel

Step 1: Awareness

Establishing awareness of your brand, product and services is key when it comes to capturing the attention of your target customers.

This can be done through social media posts, paid ads, sponsored content, blog posts, a lead-generation e-mail, or any other means in which you can get your business in front of the eyes of potential customers.

Step 2: Interest

Now, picture a funnel. The same way an actual funnel narrows as it goes down, so will the number of potential customers as they engage with your business.

Lots of people will be aware of your business if you’ve efficiently performed Step 1. However, not all of those who are aware of your business, will be interested in its products or services.

Those who are, will subscribe to your newsletter, follow you on social media, sign up for your webinar, or another offer. Basically, they’ll engage with whatever content or offer you are creating to build their interest in your business.

Step 3: Decision

Out of those who reach the “interest” stage, some will progress and consider purchasing your product or contacting your services.

Yet, consideration does not equate to an actual purchase, contract, subscription, or another means of conversion.

You need to optimize your service or product pages and make them appealing and convincing enough for your target customers to be willing to take action. That’s because there is one last step in the sales funnel, which is …

Step 4: Action

Not everyone who considers buying your product or contracting your service will end up going through with it. Online carts and contact forms get abandoned, e-mails remain in the drafts folder, and budgets and priorities change.

So, you may need to reengage with your customers to remind them of your business through means such as abandoned cart e-mail sequences, special offers, retargeting ads, and similar.

Through a well-established sales funnel, you’ll be converting potential customers into actual paying customers.

The Top 5 Reasons Why Your Business Needs a Sales Funnel

1. Increase Sales and Revenue

This reason is kind of given away in the name. A sales funnel will help increase your sales by guiding your customers through the sales process. Imagine putting two bottles of the same size out in the rain. One has a funnel, and one doesn’t. The one with a funnel will fill up faster because it’s catching more rainwater and funneling it directly into the bottle.

Now, imagine your business is one bottle, your competitor is the other, and that the rainwater is your customer base. You want to have a sales funnel to make sure you’re attracting as many customers as possible and making more sales.

2. Understand Your Target Audience Better

By building a sales funnel, you are actively paying attention to the way your customers engage with your business. You’ll be focusing on what ads build the most awareness and what content creates the most interest.

Doing this helps you learn more about your target audience and potential customer base. The more you know about them and the more you can tailor your sales efforts to suit their needs, the bigger your sales funnel will get and the more sales you’ll make.

3. Improve Your Conversion Rate

Creating a sales funnel will also help you realize where the holes in your sales tactics are. If lots of people see your ads but you don’t get many visits to your website, you can deduce that some aspects of your sales funnel aren’t convincing enough.

You have some holes in the interest section of your funnel, and you’re losing customers because of that. So, it would benefit you to take the action needed to remedy that.

4. Improve Your Marketing Efforts (or Get Help)

Once you know what steps of the sales funnel need to be improved, you know where you’re losing out on turning potential customers into actual customers. So, you can try to plug the holes with effective marketing.

Of course, not everyone who sees your ad is going to become an actual customer. However, if you have 5000 people subscribed to your newsletter (the interest stage) but you’re only making 5 sales a week, that means that you’re struggling to get people from the interest stage to the action stage and it would behoove you to address the problem or get professional consulting or assistance.

5. Gain More Accurate Financial Forecasting

By introducing a sales funnel, you are making it easy to track the way potential customers turn into actual customers. This helps you estimate your small business sales goals, targets and minimums.

Having a better idea of how much money you’ll be bringing in helps you plan and budget better as well as grow faster as a business.

So that rounds up the basics of what’s a sales funnel and why your small business needs one.

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