Sales Funnel Stages: The 5 Steps of a Sales Funnel
No matter what it is you’re trying to sell on the web, a sales funnel is the number one way to do it.
A sales funnel is the most systematic way:
- to build trust
- to build a relationship
- and to encourage people to want your brand before making a sale
- and it is incredibly powerful when done well
Take a look around the web and chances are that you’ll have come across a large number of sales funnels without even realizing it.
So what exactly is a sales funnel?
- how does a sales funnel work?
- and how can you tap into its power for yourself?
Those are the questions we’re going to be asking and answering.
By the end, you’ll know exactly what an sales funnel is and why it’s so important. Moreover, you’ll be able to build your own sales funnel from scratch and use it to capture leads and convert them into paying customers.
Once you understand the science behind sales funnels, you’ll see why it’s the most effective way to build profits and you’ll be able to turn any product or service into a massive success.
What is a Sales Funnel?
You start out with a broad opening to capture as many leads as possible and then you gradually narrow those leads down to only the most engaged and interested prospects so that you can sell to them.
All the while:
- you’ll be building trust
- building engagement
- and priming them ready to make a sale
You can also think about this as a ladder, which each rung taking your customers closer to the top where you’ll eventually try to sell to them.
In practice, what this means is a series of different marketing strategies, each arranged in such a way as to build more and more targeted leads for your business. So you might start with a simple advert, or a blog post and then move on to an email list, then a ‘free report’, then a seminar, then a small product sale and then a big sale.
Each of these marketing stages is a rung on a ladder, it’s a little further down the funnel.
And each time a customer clicks on the next link, or follows you to the next step, they are becoming more and more likely to buy from you.
As mentioned, there’s a good chance you’ll have encountered different sales funnels in your travel around the web: and you may even have bought products from others through this method. You might have come across a blog and signed up to the mailing list for instance, and then been told to click on the link therein in order to see a free seminar. And then maybe the free seminar asked you to sign up for the next seminar which would cost a little money.
And you may have come across it on YouTube too.
For example: Tai Lopez is something of an inscrutable businessman who is willing to use everything at his disposal to capture new leads and sales – even when that involves a bit of bare-face lying (that’s not his car and not his garage!).
But he still employs a sales funnel very well. If you go on YouTube to watch a video, his ad will very often show up.
The guy then goes on to talk about his cars or his massive house and this makes you want to watch – even if only because it annoys you.
At the end of the video, he offers to show you how to get his three most important tips for making money. And because it’s free, why wouldn’t you click it? Only at this point, you’re becoming more and more involved with his brand and more and more likely to become a paying customer.
When you watch this ‘free’ video, which is on his site or channel, you’ll then be told you can get even more information by signing up for a free report. In fact, this report is key to understanding the video. If you do this, then Tai now has your details and the confirmation that you’re interested in what he has to sell!
You’ve gone from a ‘cold lead’ (someone on YouTube, targeted based on your video watching choices), to a ‘warm lead’ (someone who has demonstrated an interest) to eventually a ‘qualified lead’.
The way Tai does this is a little transparent and a little cynical – but it’s how many of the big names operate including the likes of Tony Robbins, Tim Ferriss and Pat Flynn. And it’s exactly what you should be doing if you want to make sales.
Note: that doesn’t mean you have to con people like Tai!
Just that you need to think about your marketing strategy in steps and stages and understand the psychology of the way you’re dealing with people.
Why Sales Funnels? Understanding the 5 Touches
Imagine if someone came up to you in the street and asked you if you’d like to buy a $5,000 Tag Heuer Carrera watch.
99.9999% of the time, you would say no to that offer.
Why? Well, apart from the fact that you might not want a watch (you are a ‘cold lead’ in that respect), there’s also the small issue of trust, recognition and authority.
- you don’t know who this person is
- you’ve been given no reason to trust them
- and you’re probably not going to want to hand over any cash
That’s why companies don’t do this.
Instead, they give you fliers. Fliers are things you can choose to accept or throw away – but either way, they don’t cost you anything and you won’t feel that you’re being pressured into anything.
Other stores do something different: they give away freebies.
Walk past Starbucks and you’ll often find them giving away free samples of their new drinks and cakes for you to try. Again, you can easily walk away if you’re not interested and you won’t feel you’re being strong-armed. If you like the free sample though, then you can come in and try whatever else they’re offering.
If you try and sell to people right away on your website though, then you’re the equivalent of someone trying to sell thousand dollar watches in the street.
And if that’s the only thing you’re offering and the only way that your visitors can engage with you, then they’re just going to say ‘no thanks’ and leave, giving you no way to contact them again and no way to get them back. As you might have guessed, this is a poor strategy and many online marketers are notorious for employing this strategy.
Try to imagine it from their perspective:
- they have typed ‘fitness tips’ into Google, found your page essentially by accident
- and now you’re trying to sell them your training program for $500.
People do not make decisions on that basis unless they’re loaded with cash.
- they’ll see you’re trying to sell them
- write you off as spam
- and then leave
Now imagine the alternative: the sales funnel technique.
They do the same thing:
- they type in ‘fitness tips’ and they land on your site where they get some great information right away
- that information is unique, interesting and useful
- but at the bottom, it tells the audience that if they want more great tips – your ‘5 Most Powerful Tips’
- then all they have to do is to enter their details to receive your free report
There’s very little reason for them not to do this: you have demonstrated that you’re able to provide value and you’re offering something for free. The only price they pay, is to allow you to contact them in future – but as you will point out, they can always just unsubscribe if they don’t want to hear anything more from you.
They get their free report and once again, they find it is really good.
At the same time though, they’re now getting emails from you – emails with highly engaging and interesting subject lines. The people who click those emails are now showing very good engagement and you can see that they’re the kinds of people that might be willing to buy from you.
Those people will receive an email on an automated basis that invites them to an exciting free conference where they can here you talk online about fitness. This is a great, rare opportunity and if they like what you’ve done so far, they should definitely get involved.
They do that and because they’ve gone so far out of their way to hear you and they’ve listened to the whole thing, they’ve now made the full transition to fan. They are now engaging with you in a big way and going out of their way to hear more from you. This makes a massive difference because in their own mind it will inform them that you are someone they’re interested in hearing more from.
Quick Psychology Lesson!
This relates to an interesting aspect of psychology called ‘cognitive dissonance’. Did you know that the best way to make someone like you is to get them to do things for you. Why? Because this creates a state of cognitive dissonance in their mind otherwise. The brain like congruence – it likes to see that your actions are consistent with your beliefs.
If you do something for someone that takes a lot of effort then, the brain assumes that you must really like them to have been willing to go to such lengths.
The same thing works here. If someone engages with your brand – if they rush to your seminar and wait for you to come online – they tell themselves that they must be big fans of your work!
At the same time, when someone has put a lot of effort into something, that then creates a strong motivation to ‘get something from it’. Your audience will want closure and the best way to do that is by buying from you!
After your free seminar, the next stage is to sell to them. This is them taking the next step and transitioning from a visitor or a fan into a paying customer. This is the point where they become willing to buy from you and where you can start making money.
BUT it’s not going to be the ‘big ticket’ item yet.
Instead, you’re just going to sell them something very small. This very small thing is going to be something along the lines of an eBook, or a short course. It should cost anywhere from $5 to $50 but what it’s doing is demonstrating that they can buy from you and trust you.
Why Your Small Sale is So Important
This ‘small sale’ is a super important point to include in a sales funnel (and one that not everyone will know to include). The basic idea behind this, is that you’re giving your audience the chance to buy from you without too much risk.
Because, as we saw with our watch salesman, one of the biggest ‘barriers to sale’ is risk.
People are naturally risk averse and they hate the idea that they might hand over their cash, only for you to go running off into the sunset laughing at their stupidity.
They need to see that they can buy from you and trust you.
And if they don’t know that, then getting them to spend $5,000 is going to be very hard. But now sell them something for $5 and you can get them to say ‘why not’?
They’ve seen you can offer value from the other steps in your sales funnel and the risk of losing $5 is not too serious.
- so they take their chance
- only now, they know they can trust you
- they know that you’re able to deliver value
- and their details will already be saved in your payment system
That means that to make the big purchase, you only have to persuade them that your product is worth it and get them to take the plunge with one click. This is MUCH easier than trying to get them to take the plunge when they’ve never dealt with you before.
And finally, it’s off the back of that sale that you’re going to then sell your big ticket item.
They’ve heard all your free content, they’ve read your eBook… but if they want to get the very most from you and if they want to see the very best, most powerful tips for their training, then they need to upgrade to your most expensive offer.
Alternatively, you might make multiple sales of products that increase in value gradually over time and that way each increase in cost will seem very small. This way, you are making ‘incremental’ increases in price and thus people will gradually increase the value that they’re spending with you and become increasingly likely to make the transition to the truly ‘big ticket’ items.
But in short, that is how you sell a $5,000 product.
One More Important Point
One more important point is to understand and utilize the power of social influence and membership. This is one more tool you’re going to use to get people to really want to take the next step down your sales funnel – the idea of belonging to something and being a part of something and the idea of being ‘left out’ unless they take that step.
So you’re going to point out to your audience that buying your big ticket item means being a part of your movement, means getting the full experience and means seeing the VIP content that your ‘regular’ customers don’t get to see. They’ll be part of an elite community and they’ll get access to top secret information!
The Five Touches (sales funnel stages)
Hopefully you now understand how a sales funnel works and why it’s such an important tool for maximizing your sales. At the same time though, it’s worth noting that the steps themselves don’t need to look like this. You might not have a mailing list, you might not have a seminar – but you can still create a funnel.
- is simply that you have a series of escalating steps
- with each one increasing engagement and building your fan base further
So the question now becomes: how many steps constitutes a ‘funnel’?
While this varies from case to case, the best answer is five. That’s because research tells us that it takes five touches to sell to someone. This means they should interact with your business at least five times before you try and shift your big ticket item. This is enough to take someone from being completely unaware of your brand, to being familiar enough with you that they are willing to put their money and their trust in your products.
What Constitutes a Sales Funnel?
Above, we looked at an example of a typical sales funnel and how it might work. We saw that you should utilize five unique steps but that these steps could vary depending on your business and your preference.
So now the question is:
- What options do you have for your steps?
- What kinds of touches can you employ to get the maximum amount of custom?
Here are some potential ‘touches’ you can use to bring your customers in and to establish that all important trust and familiarity before you sell to them:
The First Touch
The most obvious first touch that a lot of sites and businesses will use is the blog. This is a great place to provide some free value, to demonstrate your knowledge and authority and to provide tips and advice.
Your blog should include:
- free information and articles relating to your business/niche
- and you should work to make sure these are well thought-out
- well written
- and provide tons of value
The more unique, useful and insightful information you offer here, the more people are going to trust you and believe that you can offer the value that they’re looking for and that is going to be worth them paying for!
A squeeze page is a page that is all about trying to get people to subscribe to a mailing list. You can drive people here using PPC and other forms of advertising and then simply set out an excellent case for them to subscribe to you. It can work alongside a blog or it can work on its own.
You can use YouTube as an excellent place to have your first touch. Here, you can create a video you know people will search for and attempt to offer some real value, or you can create a video like the one Tai Lopez uses that we discussed earlier. The great thing about a video is that it is so engaging and will be so effective at grabbing attention, holding it and allowing you to convey your points to an audience that is listening.
There’s no reason that your first touch needs to be on your own site. If you write a guest post for another big channel, then you can get their fans and followers to find your content and you can then bring those viewers and readers over to your own channels.
The Second Touch
A mailing list is a great second touch and one that the vast majority of brands will use. Email still has a great level of conversion and open-rate and this is due to the fact that it is so personal and direct. It also means you’re not relying on a third party (like Google or Facebook) and it allows you to address your audience directly.
The next best thing to a mailing list is social media. If you can get someone to like you on Facebook, or to follow you on Twitter, then you are giving yourself the opportunity to contact them in future. And like subscribers, people who follow you on social media are taking that psychological step that makes them ‘fans’.
- You can also try alternative options for your social media too.
- SnapChat for example has a surprisingly high engagement!
Forum, Comments Section
Inviting people to take part in a community is a brilliant way to get them excited for your brand and committed to the idea. Once people start having conversations in a group with your name on it, they will feel like they ‘belong’ and it will be very hard for them to turn off from your brand and to break their engagement.
The YouTube equivalent of this is to get someone to subscribe to your channel. When they do this, they’ll then see new videos as you post them and this is an excellent way to get them to see your new content and to reach them with new promotions and offers.
The Third Touch
The third touch should be something that requires them to take another action and it should be something a bit lengthier that forces them to engage with your content. A free report is a great example of this and it’s a good chance for you to demonstrate the value you’re capable of delivering.
Video seminars are great because they are live events. This means people will need to prepare to listen to them and will hopefully be looking forward to the event as they anticipate it. Making people wait for something is a perfect way to get them to want it more! What’s more, a live video seminar is something that people will feel very engaged with and that will give them a very direct interaction with you – it’s like they’re able to talk to you in person!
Similar, is to offer some kind of free chat or consultation. Going back to our example of selling a training program for instance, you could offer a free ‘fitness consult’ and recommend some exercises, diet plans etc. to your audience.
This can be one-to-one if you’re willing to put the time in. Another option though is to have a group chat, such as one on Google Hangouts. Want to make this even more exciting? Make it invite only!
The Fourth Touch
Your fourth touch is going to be the small sale that will help to engage your audience. Ideally, this will be something that will offer a similar service/value to the main product that you’re trying to shift and that way it should be able to demonstrate that the thing you are in fact selling for more is going to be worth more money.
Super Cheap Items
Or, if your only interest is getting people to buy from you and demonstrating your trustworthiness, then you can always just sell something incredibly cheaply. This might mean something as simple as selling a phone case or a t-shirt – perhaps just for a couple of dollars.
Selling Lots of Items of Increasing Value
Many a sales funnel will be built around just sales. The sales funnel we’ve described so far is one with a low ‘free line’. The more you give away for free, the better.
But it’s also possible to put multiple purchases below the free line. Rather than selling one item, then your big ticket item, you can instead go through gradually more expensive products and build this up to the point where your customer eventually pays for something very expensive.
This is the best way to get people to buy the very highest ticket items.
This way, they will be making multiple purchases that increase in value and thereby each step will seem slightly smaller. This way, it won’t seem like such a big deal to eventually spend that much money. The steps are incremental and thus they seem smaller and more palatable.
If you are selling SAS (Software As a Service) or similar, then another good option is to offer a free trial of whatever it is that you’re going to sell. A free trial is much easier to convince someone to try than actually selling to them but if you handle this correctly, they’ll still be handing over their details and they might even input their card details so that you can charge them should they fail to cancel their membership after the first month.
T-Shirts and Gifts
Another alternative to actually selling, is to give something away for free. One of the best examples of doing this is to give away a free ‘promotional gift’. These are things that have your branding on them and might include the likes of t-shirts or mugs.
These are very cheap to produce, which makes them ideal as ‘loss leaders’. What’s more though, is that you can include your branding and that way get free marketing and exposure every time your fans use those items. At the same time, by wearing a t-shirt with your brand on it, your visitors will feel much more engaged and committed to your brand, to the point where they might want to demonstrate their allegiance in other ways!
The Final Touch
It should go without saying that your final touch is going to be your actual sale. This is what everything up to this point has been leading up to and when your visitors arrive on your site, they should hopefully be engaged, committed and ready to buy from you.
All that remains is for you to make that final push to convert them into a customer – and you might do that with a series of emails, or you might do it with an effective ‘sales page’.