What are Sales Funnels and How to Create an Effective One

This post has been updated on October 10, 2023.

What are sales funnels, how do they work, and how can they help you sell more products or services? When you hear about sales funnels, you might think back to your college marketing classes or webinars you’ve seen online. But the problem with many teachings, including what’s covered in Marketing 101, is that they often don’t align with real-world practices.

This article covers the following key points:

• The components of a sales funnel
• Common misconceptions about what a sales funnel entails
• Guidelines for creating sales funnels
• Several practical examples of how sales funnels can be utilized
• Strategies for optimizing your company’s sales funnel to reduce expenses and significantly enhance sales performance

Results First

Before we begin this article, let us show you the value. Imagine this: in some cases, we can take a $10,000 per month sales pipeline and turn it into a $60,000 per month pipeline. All it takes is three months of analysis and one month of effort, without changing the product. If we hadn’t seen it happen ourselves, we might have thought it was impossible. But it’s not. Achieving this kind of growth isn’t an everyday occurrence, but when we work on an established sales pipeline, positive outcomes happen 99% of the time, sometimes with remarkably successful results.

Understanding Sales Funnels

When thinking about your sales funnels, the essential question is: How much money does it take to bring one new person to your website? Now, compare that cost to the expense of keeping that same person engaged in what you’re doing. Almost all the time, the cost of bringing an interested buyer to your website is substantially greater than the cost of just keeping them interested in what you’re doing. This process isn’t just about improving your overall acquisition and conversion rate; it’s also about saving money in customer acquisition.

What Are Sales Funnels – The User Awareness Journey & Sales Funnel

A sales funnel is a visual representation of the step-by-step process that potential customers go through before making a purchase. It’s called a “funnel” because, like the shape of a funnel, it starts with a broad pool of potential customers and narrows down as they progress through various stages, ultimately leading to the final purchase. Here are the typical stages in a sales funnel:

Awareness

Awareness means that somebody has to be aware that the problem exists and that they have this problem. Once they’re aware of this, then they can go look for a solution. This is actually a bigger issue than a lot of businesses realize, because very often new products and services are created to solve problems that people are only vaguely aware that they have. But once the person has the realization, then they have an interest in solving the problem.

Interest

Now that the person is interested in solving their problem, they can start looking for a solution. That may encompass things like searching the web, making phone calls, or asking their network for help.

Consideration

Once the person has one or more solutions, then they move into a consideration phase where they start asking themselves questions such as:

• Is this right for me?
• Is there a better solution?
• What color matches my hair?
• Is the same product available at a lower price?

Evaluation

Next, in some cases, they’ll evaluate. People will seek out a demo, take a test drive, download the free trial, etc., of your product or your system. If it is a difficult decision, at this point they’ll probably ask their friends, peers, coworkers, or mentors for help as well.

Decision

The evaluation and consideration phases are done, and now it’s time for a decision. During the decision phase, the buyer decides which item they are going to purchase, or if they are going to purchase anything at all.

Purchase

The decision has been made, but there is another step. The buyer has to actually give you money for the thing they’re buying. This is an important distinction, because so often people decide, but don’t actually purchase. If you’ve ever run an eCommerce business, you know that many, many consumers put items into their shopping carts but never actually check out. In fact, in eCommerce, one of the best things you can do to increase sales is to set up abandoned cart emails. These emails remind the person that they have items in their cart and encourage them to check out.

Repeat

After somebody makes a purchase, very often your goal is now to help them do it again. Obviously, this depends on what the thing is that they bought. For example, if you’re selling them a subscription, they’re going to auto-buy again anyway. However, it’s a different process if you’re selling lawnmowers. Whether your new customer makes a secondary purchase or not, you want to take them from being just a buyer to being a loyal buyer.

Loyalty

Once someone has made a purchase, the show’s not over. If you continue to provide value and offer a great product (or sometimes even if you don’t), you can help buyers become “loyal,” meaning they’re going to keep coming back to you time and time again.

Advocacy

Finally, the highest level in this funnel is advocacy. Advocacy means that your amazing, loyal customer is recommending your product or your service to other people. This kind of advocacy then leads to building more awareness, thus increasing the size of the top level funnel entrance–after all, now you have more people that are aware they have this problem because somebody is out there telling them about it. Congratulations, you’ve created a brand ambassador, the best kind of customer.

But it’s not all rainbows and butterflies

It looks so pretty, like a real funnel! But it doesn’t actually look or work like that at all. What it actually looks like is a bucket of money that you’re using to catch droplets of money, and that bucket has dozens of holes. Money leaks out all over the place, and sometimes the entire thing flips over and dumps money all over the ground where it disappears. This is a much more realistic picture of the situation. Every time somebody comes out of this funnel, that’s just money lost.

Creating Sales Funnels – Plugging the holes in your sales funnel

What most people think of when they think of creating sales funnels is the entry point. They think about advertising, a web search, an email or phone call, or something like that. Most people believe that it goes something like this:

1. Advertising or marketing was paid for, so now buyers start flowing into our website.
2. Buyers are going to land on the homepage.
3. Then they’re going to look around and call or send in a contact form submission.
4. Now we’re going to send them some emails, and maybe we’re going to have a meeting. 
5. Next, we send them a proposal and they buy something. Voila! 

You’re probably thinking to yourself “hmmm…this sounds pretty sarcastic, so maybe things don’t actually go that way.” If that is you, then you’re spot on.  Here’s how it actually works if you have no sales funnel and no marketing automation:

1. Maybe you spent some money on advertising and marketing at some point in the past, or maybe someone just found you for a vast number of reasons. 
2. The person who found you lands on a random blog article having something to do with the problem they are facing and realizes that your company might be able to help.
3. About 98% of the time the person just leaves. About one percent of the time someone calls you or emails you, and then disappears and doesn’t return your call when you call them back. The other 1% turn into meetings or potential sales (numbers vary based on industry and product or service).

Different kinds of products and services require different kinds of funnels. If you’re selling a course or an information product online, the process is going to be different than if you were selling home building.

Creating Sales Funnels – The Shift & New Approach

So let’s think about this whole process from a different angle. Instead of thinking about it as one thing, let’s break it apart into the following steps:

1. Funnel Entry Points
2. Engagement Points
3. Follow-up Touchpoints
4. Sales Automations

Funnel Entry Points:

Your sales funnel can have multiple entry points to attract potential customers. These entry points can be diverse, depending on your business and target audience. Some common options include social media platforms like Facebook, Facebook Private Groups, LinkedIn, and Instagram. You can also leverage platforms like Twitter, Pinterest, and other social networks.

In addition to social media, consider platforms like YouTube, Vimeo, and Daily Motion for video marketing. Search engines like Google, Bing, and Yahoo are excellent for attracting users actively seeking your products or services. You can also initiate outbound efforts through strategies like cold outreach, or you can welcome inbound leads through webinars, courses, and books on Amazon.

For more traditional approaches, events like trade shows, public speaking engagements, and print, radio, TV, magazines, and billboards can be valuable entry points to reach potential customers. The key is to understand your target audience and choose entry points that resonate with them, increasing the chances of turning these leads into loyal customers.

Follow-up Touch Points:

After people enter your sales funnel, maintaining regular contact is crucial for nurturing leads and converting them into customers. This can be achieved through various follow-up touchpoints, including:

• Emails: Email marketing is a versatile and cost-effective way to stay in touch with your leads. You can send newsletters, promotions, and valuable content to keep them engaged and informed about your products or services.
• Texts: SMS marketing can be an effective way to send personalized messages, promotions, or updates to your leads’ mobile phones. It provides a direct and immediate communication channel.
• Snail Mail: Though less common in the digital age, physical mail, such as postcards or brochures, can make a memorable impact and demonstrate a high level of commitment to potential customers.

Using a combination of these follow-up methods allows you to cater to different preferences and communication channels, helping you maintain a strong presence in your leads’ minds and increasing the likelihood of successful conversions.

Engagement Touchpoints:

In many instances, establishing a more personal connection becomes crucial for closing a sale. These engagement touchpoints include:

• Meetings: Face-to-face meetings, whether in person or via video conferencing, provide an opportunity to build rapport, address specific concerns, and tailor your sales pitch to the potential customer’s needs.
• Calls: Phone calls are an effective way to engage with leads in real-time, allowing you to answer questions, provide immediate support, and guide them through the sales process.

These personal touchpoints enable you to create a deeper connection, instill confidence, and address any reservations potential customers may have, ultimately increasing the chances of a successful sale.

Sales and Marketing Automations:

There are various methods to send tailored messages to different audiences, including the following options:

• Automated Emails: Email marketing platforms can automate the delivery of personalized messages based on user behavior and preferences.
• Automated SMS Text Messages: Automated texting allows you to reach customers with quick, direct, and personalized messages, often with high open rates.
• Automated Letters: For a more traditional approach, automated physical letters can be sent through mail services to deliver personalized content or offers.
• Adaptive Design: Tailoring your website or marketing materials with adaptive design ensures that the content is displayed optimally on various devices and screen sizes, providing a personalized user experience.
• Automated Messages in Chatbots: Chatbots can engage visitors on your website with automated, personalized responses, answering questions and guiding them through the sales process in real-time.

These methods offer a range of options for delivering customized messages to your audience, enhancing user engagement and overall marketing effectiveness.

Sales Funnel Magic

Example Sales Funnel from SupportMy.Website:

The formula for creating a sales funnel that works is actually fairly simple. Below are the step-by-step instructions. Please keep in mind that this is just one kind of funnel, and there are many.

1. Write down your current funnel – get a piece of paper and a pencil and write all this stuff out.
2. Identify where people are currently coming into the system using analytics. This could be a high ranking blog article, an email campaign, a call campaign, a survey, social media, and much more. It’s CRITICAL for you to know this.
3. Figure out a way to get people coming into your funnel to give you their email address. We recommend using a ‘Lead Magnet’ for this to start. A lead magnet is something on your website that offers to give some information away in exchange for the email address. A great lead magnet system is Convertful.com, and we use it on tons of our systems. 
4. Once you have the email address, send them the thing they asked for, but also send them great information about how to solve the problem that you now know they have. 
5. Based on what they click on in the emails you send them, figure out what other problems they have and what they’re interested in. 
6. Send them information that educates them on how to solve those problems as well, and how your product or products solve those problems.
7. Take them to a page where they can opt-in to a meeting, webinar, or call.
8. Send them to a calendar where they can sign up online for the meeting time.
9. After the meeting is set up, take the user to a form that asks them what they want to accomplish. In the form, ask filtering questions that help you identify if they are a good fit for your company. If not, cancel the meeting and send them to someone you have a referral deal with. 
10. Now you have a meeting set up with a qualified lead.
11. After your sales call or meeting or webinar or whatever, send them to a place where they can pay quickly and easily. 
12. After they have paid, show them more stuff they can buy!
13. Very important – After each step, if they don’t progress to the next step, remind them about what they are missing multiple times. If they don’t continue, automatically start them back at the beginning of the promotional email sequence. 
14. If the user did buy, start them over anyway, but with more content focused on what they want to do or the problem they want to solve.
15. Now that you have written it all down, figure out where you can:
    1. Get more emails from people – what information do people want that they will trade their email address for?
    2. Remind people to come back. Where did they drop off, and what would be a good reminder email (or two or three) to get them to come back?
    3. Sell more stuff. Remember, when someone has made a purchase, they are in a purchasing frame of mind and will much more easily buy something else. What else can you sell them as soon as they have made the first purchase?
16. Implement changes, track effectiveness, and start over. Continue to do this pretty much forever.

The tricks here are to never let someone out of your system and to do every step automatically.  At any time they can unsubscribe, and then you have to let them go. But if they don’t unsubscribe, then keep them in the funnel and keep sending them great information and hooking them back in.  If you do this, when they are ready to make a purchase, you will be top of mind.  No matter what you’re selling, if you have a well tested and well thought out sales funnel, you could multiply your revenue while decreasing your efforts.

What’s Next?

After someone makes a purchase, they should generally fall into yet another sales funnel process that keeps them moving from being a purchaser to a loyal customer to an advocate for your company. This sales funnel can work by sending them more cool stuff, more freebies, more discounts, more ways that they can use your product effectively, and ways to make more money or save more time by using your product. Moving people to the advocacy stage will then bring more people into the top of the funnel again. 

Conclusion 

That’s it! The basics of the sales funnels are yours. You now know what sales funnels are and how to create sales funnels on your own.  Cut your costs by keeping people in your funnel, and you’re making more money by monetizing those people. But please remember, this is just the first lesson in how to set up an effective funnel and how to think about the entire system. Also, don’t forget that every type of product or service requires a different kind of funnel. 

If you find yourself in need of assistance when it comes to establishing effective sales funnels, please don’t hesitate to get in touch with JH Media Group. We’re here to provide expert guidance and support in creating, implementing, and optimizing your sales funnels. Our team has a wealth of experience and a proven track record in helping businesses to increase their sales and revenue through well-crafted funnels. Don’t navigate this journey alone – reach out to us, and let’s work together to propel your business to new heights.