What is a sales funnel, how does it work, and how do you use it to generate more sales?

When you hear about sales funnels you mind may wander back to marketing classes from college or a webinar you heard at some point online. The problem with what most people teach, and especially what so many professors teach in marketing 101 is that it doesn’t actually happen in reality. 

https://www.youtube.com/watch?v=wFRz2YR6Igo

A good sales funnel is always a good idea, especially now. With COVID-19 having a negative impact on sales for most businesses, a solid sales funnel is that much more important. Though consumers and businesses are being cautious with their spending, 75% of the world is currently being asked to stay in their homes (including myself being quarantined to my “home office” as you can see in my video). And staying at home generally means more screen time, which is a great opportunity to build your audience. A few years ago I had a paradigm shift in my understanding of sales funnels, how they really work, and what a well organized and data-driven funnel can do for business. This article breaks down:

• The aspects of a sales funnel
• What most people think a sales funnel consists of
• How you to put together a well designed funnel
• A few examples of what you can do with the sales funnel
• How to rebuild your company’s sales funnel to cut costs and improve sales dramatically

Results First

Before we get going on this article, let me convince you of the value. What would you say if I told you that in some cases you could improve a 10k/mo sales pipeline to a 60k/mo sales pipeline with 3 months of analysis and 1 month of work and NO change to the product?  Had I not seen it done myself, I would have thought it was impossible. But it’s not impossible, it just takes some finesse, hard work, a lot of data, a sharp mind, and a little bit of luck. I’m not saying that this kind of growth happens every time or even often, but if you work on an established sales pipeline, you can for sure have positive results 99% of the time and sometimes really striking results.

The Basics of Sales Funnels

Understanding how to go from a small amount of money to a large amount of money with the addition of some emails and the right words was a complete paradigm shift for me. But there are more layers than just increasing sales, starting with the cost of acquiring new users vs maintaining existing users. Thinking about your sales funnels; how much money does it cost for you to bring one new person to your website?  Now think about that cost versus the cost of keeping that same user engaged in what you’re doing. Almost all the time, the cost of bringing somebody to your website, who’s an interested buyer is substantially greater than the amount of just keeping them interested in what you’re doing. This process is not just about improving your overall acquisition and conversion rate, this is also about saving money in customer acquisition. 

The User Awareness Journey & Sales Funnel

If you took marketing 101 in school or if you’ve done any marketing at all, you have probably seen the user awareness funnel. This is also what most people think of as a sales funnel. The funnel goes from top to bottom:

• Awareness
• Interest
• Consideration
• Evaluation
• Purchase
• Loyalty
• Advocacy

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 people 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. They’ll probably ask their friends, peers, coworkers, or mentors at this point for help as well if it is a difficult decision. 

Decision

The evaluation and consideration parts are done, 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 put things in their shopping carts and never actually check out. In fact, in eCommerce, one of the best things you can do to increase sales is have abandoned cart emails that send people reminders that they have things in their cart and ask them what they want 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 to something then they’re going to auto-buy again anyway. But 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

So once someone has made a purchase, the show’s not over. If you continue to provide value and you have a great product (or sometimes even if you don’t) you can help them 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 having more awareness, thus increasing the size of the top level funnel entrance because 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 with that 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. 

Plugging the holes in your sales funnel

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

1. Advertising or marketing was paid for, now money 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 gonna have a meeting. 
5. Next, we send them a proposal and they buy something. Viola! 

You’re probably thinking to yourself “hmmm… he’s being pretty sarcastic here, 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. 

The Shift

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. Followup Touchpoints
4. Sales Automations

Funnel Entry Points:

Below is a list of potential areas where users come into your funnel.

Followup Touch Points:

Once people are in your funnel, your primary methods of automatically contacting them regularly are: 

• Emails
• Texts
• Snail Mail

Engagement Touchpoints:

In many cases, to close a sale you need to get a bit more personal and need an engagement touch point. 

• Meetings
• Calls

Sales and Marketing Automations:

The different ways to send personalized messages to different audiences include the following shortlist:

• Automated emails
• Automated SMS text messages
• Automated letters
• Adaptive Design
• Automated messages in chatbots

Sales Funnel Magic

Example Sales Funnel from SupportMy.Website:

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

1. Write down your current funnel. Seriously, 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. But you NEED to know. This may end up being a place where you’re paying for users or it may not. It doesn’t really matter for right now
3. Figure out a way to get people coming into your funnel to give you their email address. I 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, 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 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, start them back at the beginning of the promotional emails automatically. 
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. So 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 trick here is to never let someone out of your system and to do every step automatically.  At any time they can unsubscribe, 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.

Just the start

That’s it! The basics of the sales funnels are yours. 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; cut your costs by keeping the people in your funnel, and you’re making more money by monetizing those people.  Every different kind of product or service has a different kind of funnel and 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 by sending them more cool stuff, more freebies, more discounts, more ways that they can use your product better, and make more money or save more time with your product. By doing this, you move people from the awareness stage down to the advocacy stage, and then bring more people into the top of the funnel again. I hope this was a paradigm shift for you as well. Please let me know if you have any questions! – Jason