What Are Sales Funnels and How to Build Them
A sales funnel is a system set up on your website that builds rapport and trust with new and returning visitors, qualifies leads and encourages them to make a purchase.
By the time you finish this free training you’ll understand what a sales funnel is, why it’s so important and how to set it up. At the heart of your sales funnel is the idea of conversion – turning casual visitors into buyers.
What is a Sales Funnel?
The sales funnel is an often used metaphor that describes the process of attracting potential customers to, and moving them through, your sales process to sort those who would be your ideal customer from those who would not.
Surely all customers are ideal customers?
That is not so. Your ideal customer is one who not only benefits from your product or service greatly but understands why they do so and are happy to act as brand ambassadors. A less than ideal customer might be one who buys your product because they like the packaging, advertising or heard about it by word of mouth – yet they might not fully understand how it works or its benefits to them.
Such customers often ask for refunds or spread false information by word of mouth.
There are other reasons your potential customers or clients may not be a good match for you:
- their budget may not reach your product
- they may already have a supplier that offers them a product they are happy with
- and others may have requirements from the product that yours cannot provide
In the offline world of sales, a sales funnel is the equivalent process of qualifying your leads.
Understanding this concept explains why you should vet your prospective customers to find a perfect match between your product or service and your customer. That’s why sales funnels exist – and that’s why it’s vital you take the time to build and understand your funnel.
Like many systems and processes in digital marketing, your sales funnel will require consistent monitoring and tweaking to make it as effective as possible. Sales funnels may also change seasonally which demonstrates how important it is to understand your funnel and how it converts.
The sales funnel isn’t just a system that moves your potential customers through a qualifying process.
It’s also a tool that allows you to predict how many customers you can expect to convert. Without understanding how many customers you convert it’s impossible to properly budget for your advertising.
For example, if you understand that as part of your sales funnel, 12% of those potential customers who are exposed to your PPC advertising campaign become customers with a dollar value, then you can gauge appropriately how much money to spend on advertising and still realize a profit.
Sales funnels also show problems in your sales process, such as not having enough sales people to follow up on leads, a lack of knowledge about the product on the part of your sales people, a financial leak in advertising expenses, and more.
All sales funnels should involve a flowchart where the sequence can easily be visualized.
- It might be cliché, but what gets monitored gets managed.
- The sales funnel will include several steps and each can be evaluated separately.
It’s important to spend some time monitoring your sales funnel. Analyzing how changes affect the conversion rates of each part of your workflow helps you fix what’s losing you revenue.
It takes several months to build up a picture of your sales funnel, so be patient. You can’t expect to learn anything by skipping the process and it’s a huge mistake to do so. That means changing one thing at a time and giving it enough time to make a difference or not.
Making more than one alteration to the process doesn’t allow you see which one is making the difference to your funnel, or what that difference is. You’ll only end up confused about what’s working.
Why Build a Sales Funnel?
After that overview, you may recognize how you’ve become part of other people’s sales funnels when you have visited their websites, read content, taken advantage of free offers or discounts, downloaded free information products or tools, or booked a free consultation.
That experience should hint at why you need to build a sales funnel.
Simply put, a sales funnel is a highly effective tool to maximize your profits, with minimal human intervention. Sales funnels take cold leads – those whose prior knowledge of you or your product was non-existent – and warm them up.
Creating warm leads is a process that depends on content marketing to a large degree and that’s what the outermost layer of your funnel will consist of: web content.
Web content comes in many formats, each appealing to a different kind of customer.
Many businesses offer discount fliers to the public, offers like buy one get one free, and free samples. They are all examples of businesses turning cold leads into warm. They want to build a rapport with you without pressuring you into a sale.
The idea is that if you like the sample or freebie, you’re going to trust the business enough to buy from them.
That’s how cold leads are turned warm in the offline, real world. Online, it’s not so different. Even in today’s highly connected society, we tend to distrust a website where the landing page asks for our credit card number in return for a product. We need to be wooed a little. We need to learn more about who’s behind the website and why they are a good choice to buy from. We need to trust that they are an authority in the niche and not some shyster who set up a website to dupe us out of our money.
That’s why businesses who sell through a website face the greatest opposition to the sale and it’s also why you need to establish and maintain an effective sales funnel if you hope to make your site profitable. Doing anything else only strengthens the perception that your site is untrustworthy.
Imagine if you found a website when searching for a wedding photographer but there were no photos of previous weddings, no blog posts that shared information about the site owner, and no pricing breakdown. Instead, there was just a button asking for you to click the buy button on an expensive photography package.
Your first reaction would be to leave the site and go look elsewhere, right?
Now imagine the same search, but instead of the last website, you found a site where you could browse through lots of photos from previous weddings, see the social shares of other pictures, read customer testimonials, see the pricing structure and a breakdown of services offered, and download a free guide to getting the most from your wedding photographer.
I’m guessing that given the choice, you’d go with the latter.
Take this analogy a step further. You’re not fully committed to the second photographer but continue to look for your ideal guy or gal. In the meantime, you receive emails from the second photographer who shares valuable tips and insights with you about making the most of your wedding photography with fun ideas like leaving disposable cameras on the dinner tables for your guests to use. He even sends you a discount voucher for his own services and offers free framing for a photo of your choice.
Since visiting his site, not only have you been engaged via email, but during your other web searches, you continue to see his website advertised online. By now, this photographer is front and center in your thoughts whenever you think of the words wedding photographer. You know a little about him, you trust him because you have evidence that he knows what he is doing and you feel some rapport because you have been reading his emails.
This is what going through his sales funnel has done. And the best part for him? After setting up the sales funnel, he didn’t need to become involved in following up with you at all. It has all been automated. The next thing he need do is pick up the phone when you call him.
This working example of a sales funnel should fill you with excitement at how effective a marketing funnel can be – turning your website into a real 24/7 sales person.
How to build a sales funnel
When approaching the process of building your sales funnel, it’s important that you don’t overthink the concept. It’s not an overly complicated one unless you make it so. Many small business owners and entrepreneurs have never heard of a sales funnel and become anxious when they discover the idea, but they needn’t – and neither should you.
Let’s take a look at how marketing professionals typically approach building a sales funnel.
The funnel itself is so named because typically the concept is described in such a way that a large number of potential customers are attracted to the “top” of the funnel and as they pass through the process, the funnel becomes narrower as it moves towards the “bottom” where the smaller number of prospects make it through.
Start at the end.
Understanding your end goal is a must. It’s just like any other process you undertake. The expression that a goal without a date is just a dream is very true. You wouldn’t start a diet without an idea of how much weight you wanted to lose or start training for a marathon without knowing what distance a marathon actually is. Smart goals have deadlines!
What is the business goal of your sales funnel? Usually, it’s to sell something. The more specific you can be about your goal the easier it will be to achieve it. Are you selling a service or a product? Maybe in this case you want to build a subscriber database? The goal may differ. You may require more than one funnel.
Let’s just focus on one for now and we’ll discuss multiple funnels later.
Having decided on the specific goal of this particular funnel, you’ll need to decide on how you will measure your success. That means understanding your customer value (more on that later) or profit margin for your products.
So, beginning at the end, what is it that performs the function of completing the sale for you? Is it a sales page with a buy button? Or is it a phone number where people call you with their credit card?
Define it as specifically as possible.
- What happens to get your customer to that page?
- Is it another web page?
- Is it a poster at a bus stop, a QR code or a flyer?
You need to play detective with the process by which your customer arrives at the final step in your funnel. Your sales funnel is based on encouraging a gradual building of trust between you and your lead, from the moment you acquire that lead until the point of sale.
Usually, such a journey begins with the publication of free and helpful information about the product and its benefits, graduates to the offer of an ethical bribe in the form of a free resource, and culminates in a sale. Along the way, the lead may experience further helpful free information and/or encouragement to make a purchase via the email he gave in return for the free download.
Such emails are part of an autoresponder sequence – a series of emails designed to build a relationship with the lead in order to help move them further down the sales funnel.
While the initial stage of the sales funnel encourages a lead to take up the offer of a free resource, and the final stage is a prompt to make a purchase, there will usually be a gradual sequence of offers in between. These would be offers of products that might lie within a smaller budget than the high ticket item. Their purpose is to establish trust with the lead that experiences a smooth transaction with no issues – solidifying the expectation that all future transactions will go just as smoothly.
A small product also builds something else that’s just as important: the evidence that your products–even the budget-friendly ones–are high quality and that you over deliver on value.
Both aspects of the small purchase serve to break down possible barriers to a sale and reduce the perception of risk that new customers might associate with your website.
Not every step of a sales funnel suits every business, which is why marketers who are new to building sales funnels get tripped up when they try to figure out how many stages theirs should include.
Many businesses will use their own blend of web content, free downloads, and email marketing. Others will include free webinars, consultations and other means of engagement. There is no one typical blend of activities or sequences. One thing is common among all sales funnels: they escalate the level of engagement between the lead and the sales team.
Given the variance in steps, confusion seems inevitable.
All we can say for sure is that it takes multiple contacts with a sales person before rapport is built and a sale is made. There may well be stages of your sales funnel that don’t add value to either you or your lead. The only way to truly understand whether a stage is necessary is to test it and eliminate as necessary.
Always test everything about your funnel, from the download button to the sales copy.
We’ve touched on the content you might use in your own sales funnel, but let’s take a closer look at that.
Content marketing has been a growing field in digital marketing for over a decade now, yet its value is still much undervalued. It’s a logical first step because it ties in so closely to the buyer’s journey. The first step on that journey is an awareness that the reader has a problem. Blog content is the ideal tool to educate your reader about their problem.
They may not understand what is making the whirring noise at the back of their fridge, why the starter motor on their car is whining or why their front door is warped – but when they search for solutions to those problems and find your helpful content that explains why they face those problems and what they need to do to fix them – you establish yourself as an authority they can trust.
This is the first stage of your funnel.
How you choose to present your knowledge is up to you – it could be in the form of videos uploaded to YouTube, blog posts on your own site, social media shares or article syndication. You can even guest post on other people’s blogs to drive traffic to your own.
Content marketing falls under the general scope of inbound methodology – the attraction of clients at different stages of the buying journey through SEO and free information.
The second stage of a sales funnel almost always involves the exchange of the website visitor’s email address in return for a free resource you make available. E-Books and other forms of information products may prove worthwhile resources to offer free – depending on your niche. Some niches have become saturated with free information products to the point that they are viewed as nothing more than shiny objects.
If an information product such as an eBook doesn’t attract email sign ups, try giving away a higher value product. Discount vouchers and codes for your products are often a viable solution because they represent a real monetary value rather than something vague.
The value in email marketing for you is that it remains the highest performing marketing channel above blogs and social media. Thanks to mobile technology, people spend a lot of time checking email on their phones. We tend to interact more personally with messages that come directly to us via email than we do those from other routes such as social media.
Email’s personal nature and easy access are just two aspects of its marketing potential that you should embrace as part of your funnel. Emails can be staggered, segmented and sequenced so that particular people on your list receive particular emails at particular times.
Open rates and conversions are easily tracked via email delivery providers such as MailChimp and Aweber – allowing you monitor and analyze your success rate and split test for greater conversions.
Many marketers fear getting in front of a camera, but that fear is unfounded. Video uploads to YouTube are an excellent inbound marketing tool, but the webinar rules the roost. Not only can the video be repurposed as a video for syndication, it can be stripped of audio which can be harvested as podcast material.
Both new products are viable content for your content marketing but are just bonus material compared to the real value of a webinar. Webinars allow you create and develop a rapport with your leads at a faster pace than otherwise possible. You can get in front of them at any stage of the buyer’s journey, answer questions and prompt them to take the next desirable action.
Video is the ultimate content marketing tool for establishing a personal connection with your leads, but webinars go a step further by allowing real-time interaction and engagement.
You can also use webinar replays as the ethical bribe you use to offer something of value in return for their email address.
Free Personal Services
Another way to encourage personal engagement in your sales funnel is to offer a free consultation.
For the most part, a sales funnel should guide and respond to website visitors automatically. Although webinars and personal consultations are not strictly automated, as we would expect our sales funnel to be, they can be events that are triggered by automated responses such as email registration and calendar bookings.
Having built trust and authority with free content, expert guidance and lower priced or heavily discounted products, the final part of your sales funnel will be a call to action for your main product.
Your Site Layout
A successful sales funnel relies on a simple formula. Drive qualified traffic to a highly relevant landing page with an effective call to action. Each product or service you offer should have its own landing page. Landing pages vary from lengthy sales pages to very simple single page calls to action with nothing but a headline and an email subscription field. Your niche or industry will usually have a consistent type of landing page that is most effective at collecting email addresses. Do some research on your competitors and learn from what works for them.
The overall key to an effective sales funnel is to remove stumbling blocks from the customer’s experience of your website.
Improving Customer UX
UX means User Experience. It’s a term that has come to the forefront of marketing jargon – for good reason. A negative customer UX is one where the customer finds it difficult to use or navigate your site. They may encounter a single overwhelming barrier to using your site (including making a purchase on it) or they may encounter a series of small niggles that results in their abandoning the sales cart at the last moment.
UX should always be taken into account as part of the buyer journey. It’s part of the trust you build. In the mind of your customer, if you can’t offer a glitch free buying experience, or it appears you haven’t taken the time to test it, you lose trust immediately.
The “Experience” of Buying from You
We mention “buying experience” which may sound a little trite, but how a lead “experiences” our sales funnel is part of the conversion process.
People make buying decisions based on emotional responses. Sure, they rationalize it afterward and try to make their decision seem logical, but emotion drives every part of the process.
It’s important that while your lead is experiencing an emotional reaction to your sales copy that prompts them to take action.
While we can’t always be persuasive enough in our sales copy to get a lead to strike while the iron is hot, we can at least use modern technology to be persuasive for us. Retargeting pixels are a cookie-based piece of code that shares information about the page our visitor has visited. That cookie stays on their browser when they navigate elsewhere and allow your advertising to appear on the advertising channels of other websites. Retargeting is also known as remarketing.
Traffic is the lifeblood of every website. You can have all the great content you want, free offers out the wazoo and the most enticing calls to action known to man, and still fail to generate new leads or convert them to customers.
Your website is not enough. You need to drive traffic to it. This process begins with understanding your niche and where they spend their time. To do this we need to revisit our buyer persona – our customer avatar.
Your customer avatar is a profile of what your ideal customer looks like. It consists of an accumulation of data culled from your market research, such as gender, age, marital status, geographic location, salary and disposable income, hobbies and interests and more.
The reason behind such profiling is that you can treat your customer avatar as your “typical” customer and understand more about what problems they have, how your products might help solve those problems and how much they can afford to spend on those solutions.
Understanding this data about your customer avatar doesn’t just allow you to target them with your best sales copy. It also allows you to understand where they are most likely to congregate online, where they will most likely spend time looking for answers to their problems, and who they will trust to help them.
All of this information means you can optimize every stage of the sales funnel to match their journey, but it also means you have the fastest route to traffic. Go where there are already people.
Almost every highly trafficked site has an advertising program.
LinkedIn, Facebook, Twitter and Pinterest are the most highly known – but other sites that may have a better fit with your customer profile include Reddit and personal blogs. Blogs are an often overlooked means of gaining traffic. Your SEO expert should have a good grasp on website analysis and by using tools such as those available from Moz and Ahrefs, should be able to find well-known blogs run by bloggers who would be receptive to charging for advertising.
What’s any part of your marketing campaign without sifting through the results and making changes to maximize results? Analytics are a vital part of your sales and marketing. It can’t be stressed highly enough that continuous testing is the key to evolving a high performing sales funnel.
Whether you are new in the game or a seasoned pro, Google Analytics has something for everyone. Aside from giving you metrics about your customer demographics, social media presence and search engine visibility–all highly valuable data–Google’s analytics platform can be used to track goals on your website.
Goals measure how well your site performs against expectation and consist of almost any relevant action taken by your site visitor:
Destination: when a visitor arrives on a specific page. This could be a thank you page, a download page, a product page – any page of your choice, allowing you track any movement on your site.
An example of its usage would be to track how many customers land on your product download page after payment processing, or how many arrive on your squeeze page.
Duration: how long a person stays on your site. You may wish to lower bounce rate or increase engagement with your content. A duration goal will let you track if your site visitors are staying above or below a set time.
Pages per Session: how many pages a site visitor views. This is another great goal for measuring reader engagement.
Events: when an event such as a download, a click on an ad or a video is played. Monitoring events is a great way to see what interactive content is working and what’s not. For example, if a webinar replay or a how-to video is being watched.
One of the most exciting tools in the Goals dashboard of Google Analytics is the Goal Flow and Funnel reports which show where a lead enters and leaves your sales funnel, allowing you prioritize the fine tuning of specific parts of your funnel.
Finally, Goal Value allows you set a value for each goal so that you can assign a dollar value to each action your visitor takes.
Part of nurturing your leads is establishing a personal relationship with them, and as we’ve already covered, email autoresponders do a great job of sharing valuable information and sales copy. However, don’t overlook one of your autoresponder’s most powerful features in customer relationship management: engagement.
Every good autoresponder allows you track how many subscribers open your emails, how many click the links in your emails, and the number of people who unsubscribe and why (if they choose to share that information).
This kind of information is invaluable.
This is going to sound like a broken record at this stage, but this kind of data allows you test subject lines, content, product recommendations and calls to action.
One of the most valuable aspects of an autoresponder program is the ability to segment your customers. Segmentation allows you to make your email promotions very highly targeted by sending emails only to those segments of your list who would be most interested in the content.
One of the most exciting aspects of segmentation is the ability to resend unopened emails to only those subscribers who didn’t open the original email. You have the flexibility to change anything you want in the email, including the subject, content or call to action and compare the results to your original email. In this way, you can split test and keep the higher performing email as part of your automatic email series.
Other CRM benefits include the ability to integrate your customer’s details with your e-commerce software – enabling you to collect customer names and emails from buyers, allow them to easily log in to their account, track their purchases and buyer behavior and identify bottlenecks in your funnel.
Check out Hubspot’s free CRM at http://www.hubspot.com/crm/e010a which allows you to get some hands-on experience before you make a decision on whether you need to invest money in a CRM tool or not.
There are many different CRM software applications available and they perform a dizzying amount of integrated services, but a simple email system is a great place to start!
How successfully your sales funnel is functioning is reflected in your conversion rates. Each stage of the funnel will have its own conversion rate, as will the funnel as a whole.
Your conversion rate can be viewed as a simple metric, expressed as a percentage of site visitors who take an action vs those who don’t. If you have 100 site visitors and 67 of them buy your product, your conversion rate is 67%.
That’s when we view conversion rates as a simple metric, but if only it were that simple.
CRO (Conversion Rate Optimization is your goal: to tweak and test until you convert the maximum amount of visitors possible. This is where the problems begin.
It’s tempting to rely on conventional wisdom when testing changes to your website. There are plenty out there, and three times as many pieces of advice about each.
Conversion is highly relevant for any sales funnel that incorporates paid advertising. Ignoring optimization leaves money on the table each and every time a visitor lands on your site.
So what are the most effective changes you can make to your copy?
The offer itself. Get creative. Free ebooks are dying out rapidly in most niches. No one has time to read every free download they collect on their hard drives. Free ebooks are suffering the same fate as display advertising has in recent years – “banner blindness”. We’re so accustomed to seeing them that they’re just another part of the furniture. The same can be said for other freebies, some niches having more trouble than others.
Take a look at your competitors and if there’s something they all use as their freebie or small introductory offer, avoid using it. Your offer should convert at least 5% of site visitors – any less and it’s not worth the cost of the download.
What do people actively search for in your niche? Can you offer access to software that helps them, or a database of resources? Often, just making your site visitor’s search for information easier or faster is enough to wow them.
Site UX. Yes, usability is a must – but what’s their experience of your introductory offer? Is it easy to access without having to fill in lengthy form fields? Does the submit button work? Does the captcha plugin work, or does it leave users frustrated that their chosen username already exists (even when it’s clearly unlikely that anyone else might have the username “justletmeregisterandstopannoyingme”).
Test, test, test. In as many different ways as possible.
It’s amazing how many major league businesses fail to test their own sales funnels! Open a different web browser where you are not logged in as a customer or admin and go through the process as if you just landed on your own site as a visitor. Ask someone unfamiliar with your business to test the process as an outsider – it’s easy to create 100% discount codes on almost any e-commerce platform so that you can test your sales process at every point of sale at no cost.
With the availability of cheap PPC advertising on social media platforms such as Facebook, Twitter, LinkedIn, and others, it’s relatively easy to test your conversion rate by driving paid traffic to your funnel for a limited period and tracking results.
Test your landing page layout.
Always keep an A/B test running for your landing pages, comparing one option to at least one other alternative. It’s helpful to test against more than one, but avoid going over four, as the data becomes messy and difficult to quantify. Each landing page should test a different offer, sequence, or content.
When driving traffic to landing pages, the benefit lies in conversion, so ditch any and all low-performing pages. Avoid thinking of your site as “the more pages the better”. The common analogy is that of a shotgun approach where your offers are scattered all over the place while the real path to success comes from a sniper approach to targeting the most desirable leads.
These changes are considered “big” ones. They’re the ones you should focus on until you get to the point that you just can’t beat the control. At that point, changing button colors and text might offer some value but focus on this 20% that yields 80% of your results first.
Final advice on conversion is to always retarget your visitors. “No” often means “not right now”.
Let’s turn our attention to automation. The whole point of a sales funnel online is to do all, or most, of the work involved in generating and qualifying leads for you. Didn’t we all expect robots to do everything for us in the 21st century?
Pre-internet, direct mail–or direct response–advertising and cold calling via telephone were the accepted means by which businesses attracted and qualified leads. But now consumers are far less passive. They’re willing to take the time to research and compare products and services online. A presence online helps build a customized sales funnel that works for you.
The sales funnel in traditional marketing comprises of driving the customer through:
Awareness -> Interest -> Decision -> Action
This was an outbound marketing funnel (the sales people actively went looking for prospects).
Today, the sales funnel operates a little differently with inbound marketing. Most of the prospect’s buying journey is done online, with a very high percentage of consumers indicating that what they learn about a product or business online has a direct influence on their buying behavior.
The modern sales funnel is all about automation. There are just too many points on the buyer’s journey for a sales or marketing team to engage with their customers.
Modern points of interaction include:
- Blog posts
- Banner ads
- Social media shares
- Online press releases
- Remarketing ads
- Q&A sites
This list changes on a regular basis. Without using automation, any business would get lost in a sea of unfocused effort.
We’ve already touched on inbound methodology and email marketing, which cover many of the available channels, but let’s not get too overwhelmed by the idea of automation.
Sales Funnel Automation is a really simple concept. By increasing your internet real estate with content that automatically attracts visitors through search, and driving that traffic to an automated email series, much of the work is done.
Using a CRM tool – and in most cases, an email autoresponder service is the only CRM you need – you can analyze the effectiveness of each step.
What’s the point of automation? Automation helps you:
- Follow up with leads
- Nurture with valuable content
- Up-sell products
- Down-sell other products
- Make affiliate recommendations
- Affinity marketing
- Analyze your sales funnel for optimization
Let’s recap on the top 10 takeaways you should have from this free training:
Sales Funnels are automated systems to generate and nurture leads. They still require ongoing intervention to optimize their results.
Optimizing a sales funnel happens at each stage of that funnel, and conversion is the primary goal.
Your sales funnel should be automated as much as possible so that its return on investment is as high as possible.
A/B or split testing needs to happen at each stage of the funnel on a regular basis.
Taking the time to do full market research and creating the best customer avatar means you will be able to target the best sources of traffic for your sales funnel.
Your funnel should mirror your prospects buying journey and should bring them from awareness of their problems to taking action to solve them.
Email marketing yields the highest ROI among other marketing channels and should be integral to your sales funnel. Make sure to segment your list so that you target offers only to those most interested in hearing about them.
Create goals for each stage of your funnel so that you have metrics to compare.
Understand that your marketing department’s job is to put together a sales funnel that feeds the most qualified leads to your sales department.
Always match your landing page to your traffic to ensure high relevance. When a visitor lands on a mismatched landing page only to leave it shortly afterward, your bounce rate goes up and your conversion rate takes a dive.
Sales funnels seem like a lot of work and effort when viewed from the outside, but while the initial setup is awkward (no metrics for comparison, lack of traffic, uncertain goals), the ongoing optimization and analysis takes a lot less time and effort.
In its simplest format, your sales funnel requires: Market research to determine your ideal lead
Traffic from those places that lead spends time online using:
- Paid advertising
- Inbound marketing
Capturing their email using an ethical bribe in return Following up with a sequence of emails
Setting conversion goals and analyzing the results Tweaking major elements of the sales funnel Comparing conversion rates with the previous month Keep only the top 10% of converting pages on your site
Finally, the less moving parts the better. Every sales funnel is different, and what works for someone else may not work for you – remember that the more barriers you place between your lead and your product, the less likely the sale.