A Complete Guide to Sales Funnel

A sales funnel visualizes the customer’s journey. Learn what it is, its stages, and why it’s important to implement one in your business.

business meeting discussing sales funnel

Published 27 Jun 2022

What is a Sales Funnel?

A sales funnel is a marketing term that refers to the entire process customers go through when interacting with brands. It illustrates every level from how target customers first discover a brand all the way to them coming back as loyal customers. It’s shown as a literal funnel in graphic representations to show how the customer base can shrink and what exactly happens during each step.

Sales funnels are different for every company, especially ones that follow different business models. However, they follow the same goal of getting into the customer’s mind. It involves putting the marketing and sales team in the customer’s shoes, where they get to see each step of discovering a brand and how they can improve the overall customer experience.

A sales funnel makes it easier for companies to determine how to improve marketing, increase conversions, and receive more referrals while monitoring the entire sales process.

Example

sales funnel example

Example of a Sales Funnel

As you can see in this example, the widest part of the funnel is the part of the journey where customers discover a brand. This is because this is the point where companies can reach the widest audience possible. Throughout the stages, the funnel gets narrower as turning every person who sees ads and marketing materials into paying and loyal customers is nearly impossible.

A sales funnel is designed to be a realistic representation of the customer’s journey. Every stage of the funnel shows a different customer commitment level, and companies should aim to bring as many customers as possible to the end of the journey, which is re-engagement or remaining loyal to the company.

The Importance of a Sales Funnel

Sales funnels are specifically designed to align the sales and marketing teams. Additionally, these visual representations help put the sales and marketing team in the customer’s shoes. This process makes it easier to see what else they can do to increase conversion rates and what stages of the sales process they fall short and can improve upon.

The goal of the sales funnel is to help the teams reach their target audience. It’s also there to help them determine how to increase the number of people who end up in the last stage of the funnel, which is turning into loyal and paying customers.

Having clear visual representations of each stage of the process makes it much easier to formulate marketing strategies, figure out your target audience, and boost conversion rates. While it is a very simple graphic, it speaks a thousand words, which could be the boost the sales and marketing team needs.

The Five Stages of Sales Funnels

One important thing to remember when learning about sales funnels is that no two companies will have the same sales funnel. Companies follow their own sales models, sell different products, use certain marketing strategies, and target different customers. Sales funnels are designed to follow the customer’s journey when discovering specific brands, so they vary greatly.

With that said, most sales funnels usually tackle the same five stages. The five stages of a sales funnel remain constant throughout most companies even though some brands may have different names for these stages or include extra stages in between.

But when creating a basic sales funnel, here are the five main stages the team needs to cover:

Awareness

Awareness is the first part of the sales funnel where companies can reach the widest audience. This is the point of the process where customers learn about a certain brand. This aspect could be done through ads, word-of-mouth, or trying out the product themselves.

An example of this is a potential customer discovering a brand through a Facebook ad. The goal at this point is to play a courtship game with the customer and entice them to take the next step, which is learning more about the brand.

Interest

This is the stage where customers research what makes a brand special, the different features they offer that beat the competition, and compare one company’s products to another brand. During this stage, companies need to figure out how to help customers learn more about their products without directly selling to them.

This stage is all about research and learning. So an example would be a company creating high-quality content on their website to educate potential customers without using overt sales talk.

Desire

If you were able to convince an audience member that your product or service can beat out the competition, you ignite desire. So, during this stage, customers will likely try and learn about the prices, subscription length, and potential promotions that could get them a better price.

So, companies can offer great discounts, free shipping, or extended memberships to drive the deal home. This is where things take a more “sales-like” tone as companies aim to really convert customers and help them take the next step.

Action

The second-to-the-last stage in the sales funnels is action. This is where the customer takes action based on everything they learned during the other stages. Ideally, you want the customer to take positive action: buying your product or subscribing to a service.

Reengagement

Customers buying a product or subscribing to a service isn’t the end of the sales funnel, at least from the marketer’s perspective. This is because your goal is to turn one customer into ten customers and continuously grow your customer base. So, companies can take the extra step to offer customers something that will keep them coming back.

This can come in the form of a referral bonus, thank you e-mails, and anything else that will leave an impression in the customer’s mind. There’s no marketing strategy more powerful than honest referrals, so reengagement and customer retention are one of the sales funnel’s last and most important stages.

How to Optimize Your Sales Funnel

Missing a sale can be painful for any business or company. It’s important to make the most out of your audience and turn as many people into paying customers as possible.

But the thing is, sales funnels aren’t perfect. These are estimations of the stages of the customer journey, but any experienced marketing professional will say that it’s much more complicated than that. So, when using a sales funnel, there may be a couple of holes you may not even notice until it takes a toll on your sales.

This is why it’s important to constantly update and optimize the sales funnel to meet your customer’s expectations, needs, and wants. And in this day and age, software such as iAuditor by SafetyCulture is there to help you out.

With this platform, you can find where the team falls short in terms of the sales funnel, assign corrective actions, and bring your sales funnel to the next level. The tool can also help you ensure service operations run smoothly, which is a great way to find out where you need to improve and how you can convert more of your audience into loyal customers.

SafetyCulture staff writer

Leon Altomonte

Leon Altomonte is a content contributor for SafetyCulture. He got into content writing while taking up a language degree and has written copy for various web pages and blogs. Aside from working as a freelance writer, Leon is also a musician who spends most of his free time playing gigs and at the studio.

Leon Altomonte is a content contributor for SafetyCulture. He got into content writing while taking up a language degree and has written copy for various web pages and blogs. Aside from working as a freelance writer, Leon is also a musician who spends most of his free time playing gigs and at the studio.