Talk to any successful marketer about why you’re failing to convert your visitors into paying customers and they’ll likely mention the term ‘sales funnel’ in the first 30 seconds. As a startup business, or one with little sales experience, the concept of a sales funnel may be entirely new to you, but don’t fret. Whether this is the first you’ve heard of sales funnels or your here to find answers to why your current sales funnel isn’t working, you’re in the right place.
This comprehensive guide will cover everything that there is to know about sales funnels from the very basics such as what they are and how they work, to more complex questions such as how to manage your sales funnel metrics and how to optimize a pre-existing funnel. Because not everyone will be interested in every part of this guide, we’ve made it easy to navigate with this simple table of contents, so feel free to skip to the section you need rather than having to read the whole way through.
What are the sales funnel?
A sales funnel is a marketing concept designed to turn a prospect into a customer by breaking down the customer journey. The journey from lead to a customer is often referred to as a funnel as it is a useful analogy and can help people to visualize the fact that although many prospects may start at the beginning of the funnel, only a few usually end up making a purchase.
As a prospect moves further into the sales funnel this signifies them getting closer to their overall purchase goal and marketers and sales personnel can use this to guide their efforts at each stage.
A few different sales funnel models have been created over the years but the one which forms the backbone of most sales strategies is AIDA.
AIDA was developed in the late 19th century by advertising and sales pioneer Elias St. Elmo Lewis and stands for:
It’s important to mention here before we go any further that while researching sales funnels you are likely to come across another entirely different form of a sales funnel, sometimes called a revenue funnel, which is used by sales teams and management to track where clients are within their sales pipeline to help them predict revenue. Companies such as Salesforce and HubSpot offer these kinds of digital services but they are not the same as the kind of sales funnels mentioned in this guide.
How do sales funnel work?
As the world of business has become more digital two types of sales funnels have formed. Offline sales funnels and online sales funnels.
Offline sales funnel
Offline sales funnels don’t rely entirely on the internet and make use of traditional marketing methods such as print and TV advertising. For example, in an offline sales funnel which follows the AIDA formula, a business may start by publishing print advertisements to attract the attention of their customers.
Of the hundreds if not thousands of people who saw those advertisements a much smaller proportion would then move to the next stage of the funnel by showing interest, this could be by signing up to the companies’ mailing list or requesting a copy of their product magazine.
Once their interest has been captured these potential customers could then be communicated with to increase their desire, this could be by sending them more information in a newsletter or by sending them a special offer. The potential customers who have gotten this far can now be referred to as warm leads and they’re the ones most likely to act by making a final purchase.
Online sales funnel
Online sales funnels represent the new age of digital marketing, not only do they follow the AIDA framework, but they take this to the next level by automating the stages. For example, potential customers may be attracted to your company by seeing an online advertisement or a blog post.
Somewhere within this advertisement, or at the bottom of the blog post, they may be encouraged to click a link which will usually take them to a landing page. If they click this link, then they have shown interest giving you the opportunity to put something on that landing page to increase their desire. An online sale funnel then ends in much the same way as an offline funnel where a potential customer acts by either making a purchase or filling out a signup form.
What sets online sales funnels apart from offline sales funnels is their ability to move a potential customer between pages rather than relying on one single page (or advertisement) to close the sale. For example, whereas one person may click the blog post, go to the landing page, see the offer, and purchase straight away, another may click the blog post, go to the landing page, want more information, read more about the packages on offer, read a testimony, then see the offer, and then make the purchase. If set up correctly your online sales funnel should work effectively to convert both red hot and warm leads into purchasing customers.
How to create a sales funnel strategy
Creating a sales funnel strategy involves working with the value ladder. A value ladder determines what offer your potential customers will see at each stage of the sales funnel and then which sales funnel they enter next. For example, you may start out with a low-cost offer such as ‘free delivery’ at the bottom of your ladder, this is designed to entice potential customers. Once they have used this offer and completed this sale funnel, they can then be entered into the next rung of the value ladder where they can be targeted with a slightly higher value product.
At each level of the value ladder, the sales funnel will differ. By tailoring your sales funnel to the different levels of your value ladder you can personalize each users’ experience, increasing your chance of creating high-value conversions and repeat customers.
Using sales funnel templates
By now you may be starting to feel a little overwhelmed and maybe thinking that creating a sales funnel for each of the stages of your value ladder sounds like a lot of hard work. Thankfully, sales funnels have been around for a while which means a few templates have begun to appear. To get the most out of the following templates you will need to look at them with an open mind and find ways to adapt them to your unique business structure.
Ecommerce sales funnel template
- A customer sees an advertisement for your product and clicks the attached link. The link contains a tracking pixel which means you can now display re-targeting advertisements to them once they leave your site.
- The link in the ad takes them through to your website where a live chat window pops up to ask them if they have any questions about your products.
- A pop-up window appears on the screen with a low-value signup offer.
- As the person goes through to the checkout, you capture their email so that you can send them targeted coupons or offers if they fail to complete the sale.
- As the person finishes the checkout process, do not complete the order without offering an upsell by showing them related products that they may be interested in.
- If the person leaves the checkout at this stage they show them a down-sell page with similar lower-priced items.
- Once the purchase is made the customer can progress onto the next rung of your value ladder and begin the next sales funnel.
Webinar sales funnel
Webinars are another great way to gain business and are as close to face to face contact as many companies can get. Webinars are also a great way cleverly manage your marketing as they can be recorded and used again and again.
- Direct potential customers to a squeeze page with a sales pitch and short video explaining why they should sign up for the webinar.
- Leads who sign up can then be added to a mail list and reminded of the webinar date and time or asked to confirm their seat.
- After the webinar, send each subscriber a recording of the webinar with a one-time webinar offer to entice them to make a purchase.
- Create a unique email series depending on whether potential leads engage or do not engage with the webinar.
- Leads who engage may be ready to buy as those who did not may need to re-enter the funnel.
Mailing list sales funnel template
Mailing lists are a valuable way to communicate with potential customers making growing your mail list is an important part of a competitive sales strategy.
- Create an informative and quality piece of content that is relevant to your target audience.
- Include a button within the content to sign up to your mailing list to receive new content direct to their inbox.
- Include links to other relevant material at the bottom of the blog post which should also contain sign-up links.
- Create a pop up with a sign-up offer for those who sign up to your mailing list.
How to design your own sales funnel
In some cases, it can just be better to create your own sales funnel and the best way to do this is with funnel hacking. Funnel hacking involves analyzing the sales funnels of your competitors and combining them to create the ultimate sales funnel for your business. The reason why funnel hacking is so successful is that often your competitors have done the hard work for you and have found what works for your target audience.
To funnel hack your way to sales funnel success start by making a list of all your competitors. Next, visit each of their sites one by one and make a note of their sales funnel process. Pay attention to the copy they use, the positioning of their buttons, whether they have any pop-ups or videos, the fields they use in their signup forms and whether they offer any upsells.
To get a good feel for their sales funnels, you will need to go all the way through to the end of the process, which includes going to the checkout and then leaving the site to see whether they send targeted offers via email to lost customers and whether they are also using remarketing techniques. As you begin working through your competitor list you will start to see trends in their sales funnels and can begin pulling together ideas for your own
What not to do when designing a sales funnel
If you already have a sales funnel in place but aren’t seeing the returns that you were expecting, then you may be making one of these 10 common mistakes.
- Not funnel hacking
Assuming that you know best and ignoring what your competition is doing could cause you to miss out on one simple trick which is costing you, valuable customers. Even if you are the most experienced company in your market you could learn something new from your competitors so don’t skip this stage even if you already have a sales funnel in place.
- Overcomplicating things
Online sales funnels can quickly become complicated and instead of funneling customers in they can end up driving customers away. Keep funnels simple.
- Complicating payment
If a lead has been funneled all the way through your sales funnel only to find that the payment is not clear at the end, then it may put them off at the final hurdle. Sometimes customers may not have their debit or credit cards to hand and an option such as PayPal will allow them to pay there and then regardless of whether their wallet is in the same room.
- Failing to monitor data
Sales funnels can always be improved, and monitoring data and analytics will help you to see where leads bounce so that you can work on funneling them further.
- Selling high priced items first
Remember that the value ladder is an important part of a successful sales funnel strategy. Offer lower priced items first to secure sales and then upsell with more expensive items once you have developed greater trust.
- Not following up properly
Once a lead enters your mailing list you need to follow up with them promptly and consistently to ensure that they remain thinking about you and your product. If you wait too long, they may see your email and have already found a competitor’s product.
- Forgetting to include a call to action
Believe it or not, people like to be told what to do and the best way to ensure lead acts is to ask them to do so. Include calls to action for every next step in your sales funnel even if they seem obvious.
- Discarding the no’s
Discarding the people who fall out of your funnel or don’t seem interested at first could be your downfall. Offer several down-sell options and even target people as they leave your site to increase the chances of making a conversion.
- Receiving the wrong traffic
If you’re confident that your sales funnel is set up correctly and are still baffled as to why you have yet to make the conversions you envisioned then your inbound traffic could be wrong. Are you misleading customers with what you are offering? Are your advertisements targeted at the wrong audience? Do you need to change your keywords so that your site appears for more relevant search options?
- Pricing yourself too high
Finally, if all else fails and you are still not converting, then you may be pricing yourself too high. Be sure to benchmark yourselves against your competitors and if you are substantially higher then ensure that you can justify this and explain it in your sales funnel so that potential leads do not simply end up feeling ripped off.
Using sales funnel software
Although it is perfectly possible to create great sales funnels yourself with a little web design experience and the information in this guide, there are also several software service providers out there whose aim is to make your life easier.
Sales funnel software usually provides a range of templates that can then be customized to suit each business. Simply drag and drop elements such as images and videos and write your own text into the template and within a day or even as little as a few hours, you could have created a professional sales funnel.
You may now be thinking that sales funnel software is surely the only way you should proceed but the technology does have its cons. Firstly, your creativity may be limited by the templates available on the site and for very complex funnels you may be better off going solo. Secondly, the software can be costly, with many companies requiring monthly or even annual licensing fees for you to continue using the software, this can leave you without a funnel if you choose to stop paying, setting you back in the long run.
When creating your funnel, regardless of whether you use software or do it yourself, be sure to remember to keep your brand colors consistent and proof-read your copy text. Simple errors in copy or misalignment of colors can cause leads to question the authority of your site and the quality of your product.
How to start driving traffic to your sales funnel
The temperature of your traffic will affect every stage of your sales funnel.
Cold traffic refers to people who are aware they have a problem and need a solution but aren’t aware of your brand or product. To attract cold traffic, you will want to start by producing content that answers a question that cold traffic may have about their problem. For example, if your company sells food allergen software for restaurants then you may wish to produce a series of content around food allergen regulations in your target audience’s country and how to remain compliant.
When creating a sales funnel designed for cold traffic remember that they have yet to gain any trust with your brand and so it is best to start out with a low-value product or a low-cost incentive such as a free demo or free shipping. In general, cold funnels tend to require larger frames that other funnels as cold traffic can take longer to reach the action stage.
Warm traffic refers to people who are already aware of the solution to their problem and are aware of your brand. They may follow you on social media or be signed up to your mailing list and the content you show to them should directly frame your solution. Using the same example as above this would look something like writing an article entitled “How can technology help improve allergen compliance” or “5 ways software is helping kitchens with allergens”.
The best funnels for warm traffic have a 1-2 step buy-in process, making it easy for the warm traffic to find the information they need and make the sale.
Hot traffic refers to people who know your brand and have purchased from you before. You have already built up a level of trust with hot traffic and so your focus now should be on repeat purchases and continuing to provide value in order to retain them. Content designed to attract hot traffic should be like that aimed at warm traffic except you no longer need to convince them you just need to show them.
The sales funnel for your hot traffic can often be much shorter than that for your cold and even warm traffic and should focus on showing value and then providing a speedy payment option.
Creating content to drive traffic is all well and good but you still need to make sure that you are putting it in front of the right people, and this starts with knowing your target audience. To determine your target audience think about their pain points and then create a customer profile, this could include things like the average age, gender, and income of your target customer, where they spend their time, what their interests are and their geographical location.
All this information can help you to create targeted advertisements to promote your content, ensuring that it gets in front of the right people.
How to manage your sales funnel
Setting up a sales funnel is only half of the battle and the key to ensuring consistent success is managing it. Customer needs evolve over time and what may work one month may shift in the next. To stay on top of your sales funnel you will need to pay attention to a few key metrics to help you measure your progress and set achievable goals. A few metrics to consider measuring are:
- The click-through rate from your blogs and article to your landing page
- The cost per click if you are paying to advertise your landing page
- The cost per lead
- The value per lead
- The open rate of each email you send
- The click rates on each email you send
- The bounce rate of your email campaigns
- The number of subscribers and unsubscribes you get
Monitoring metrics such as the cost per lead is important but at the end of the day what matters most is your ROI (return on investment) some leads may be more expensive to acquire than others and this can skew your cost per lead average. If you focus on one thing let it be your overall ROI.
How to optimize a preexisting sales funnel
Even with significant marketing experience and expensive sales funnel software most marketers don’t create the perfect sales funnel the first time around and so it’s vital to continuously work on and optimize your sales funnels to ensure they are reaping their maximum reward. Optimizing sales funnels isn’t as complex as it may seem and simply involves testing and making small adjustments as necessary.
One of the most popular ways to optimize a sales funnel is through A/B testing, whereby you show two versions of your sales funnels to your prospective customers and see which one performs best. A/B testing which sometimes referred to as split testing, only really works with small scale improvements such as different font styles, a change in the heading copy, or the placement of a button.
With each iteration, you can begin building up a complete picture. If you show your clients two very different versions of the same sales funnel you won’t be able to tell which specific change was the one that made them click.
Checking for leaks
Funnel leaks is a term used for leads falling out of the sales funnel. Perhaps they lose interest, or the price is too high. Funnel leaks can happen at any point in your sales funnel and it’s important to catch them and patch them to avoid missed opportunities. Look at web statistics for your landing pages to see when people tend to bounce and then look at these areas to find the cause of the leak. Some common causes of funnel leaks include poor copy, and unenticing offer, or broken link.
Another great way to test for leaks is to conduct a usability study by having impartial individuals follow the user journey of your funnel and feedback on their thoughts at each stage.
How to get the most out of your sales funnel
To get the most out of your sales funnel you want to ensure that your customers are continuously ascending the value ladder, making bigger and more valuable purchases as they go. A newsletter opt-in or a small purchase at the bottom of the ladder is a great start but the money is in the big purchases and repeat sales. For most businesses, most of their revenue comes from a small proportion of their followers and it is these golden customers who you need to ensure you nurture.
Nurturing repeat customers
A repeat customer is one of the most valuable assets to your business and will require constant nurturing. Building a long-lasting relationship with your repeat customers is what keeps them loyal to your brand and stops them from straying to your competitors. Although you will still want to ensure that repeat customers re-enter your sales funnels you will also want to send them targeted campaigns to reward them for their loyalty and make them feel special. An example of this would be with a personalized subscription anniversary newsletter which may contain an anniversary offer as a reward for being subscribed to your newsletter for a whole year.
Consistently adding value
One of the most common reasons why brands lose repeat customers is because they no longer bring them value. Don’t be afraid of emailing your customers too often so long as in each interaction you are giving them good, honest, valuable content. The moment the conversation between you and your customers stagnates is when they are most susceptible to be targeted by your competitors, a clever sales funnel never ends and even when customers have reached the top of the value ladder it circles round to keep them engaged and entertained and making repeat purchases.