What is a sales funnel? The Key to Building a Great Sales Funnel

Posted on: 14 March 2024

What is a sales funnel? A sales funnel is a marketing concept that maps out the journey a customer goes through when making any kind of purchase. The model uses a funnel as a metaphor because a large number of potential customers may begin at the top-end of the sales process, but only a fraction of these people actually end up making a purchase. As a customer passes through each stage of the funnel, it signifies a deeper commitment to the purchase decision. Imagine an actual funnel: at the top, it’s wide, and accommodates a large volume. As you go deeper down the funnel, it narrows significantly, illustrating a decrease in the number of people continuing through the process. This visualisation helps to understand how, at each subsequent stage, fewer individuals move forward, reflecting a natural selection or decision-making process that occurs at each phase of the journey.

Creating Your Sales Funnel

Define Your Target Audience

Begin by identifying who your ideal customers are. Understand their needs, pain points, and the solutions they are seeking. Creating buyer personas can be incredibly helpful in this phase, providing a detailed profile of your ideal customer based on market research and real data about your existing customers.

Map Out the Customer Journey

Visualise the path that you want your customers to take. All the way from discovering your company, to making a purchase. Make sure to optimise your funnel for your target audience. For example, without doing any research – if I ran an online betting company I’d tailor my paid ads to middle aged men (typical demographic for betting… maybe?), have a landing page with £X amount of free credit to bet with for their first time when they sign up. I’d also put in some positive imagery that they can relate to, or relate to the action they want to take on the online betting site – maybe a football player, or a group of guys winning around betting table. Show people the best of what they could potentially gain from your service. Once they’re signed up, they’ll be added to my email list which will prompt them every now and again to return to my platform.
The journey the prospect should typically take consists of 4 steps: awareness, interest, decision, and action. Tailor the journey to these 4 bases and you should have a solid funnel emerging.

Choose Your Channels

Determine which channels are most effective in reaching your target audience. This could include social media, search engines, email marketing, and more. The key is to be where your potential customers are and to use those channels to drive them into your funnel.

Develop Content for Each Stage

Create content that addresses the needs and questions of your audience at each stage of the funnel. Educational blog posts and videos work well for building awareness, while product comparisons and case studies can help in the decision stage. Ensure your content is engaging and provides value, encouraging prospects to move further down the funnel.

Implement Lead Capture Mechanisms

To convert visitors into leads, you’ll need effective lead capture mechanisms, such as opt-in forms, lead magnets, and landing pages. Offer something of value in exchange for contact information, like a free taster of your services, free e-book, webinar, trial or store credit. This not only provides immediate value but also opens the door for further communication. Providing immediate benefit plays on the law of reconciliation. I urge you to read the book ‘Influence’ by Robert B Cialdini. It’ll give you a true insight into neuromarketing.

Nurture Your Leads

Not all leads are ready to make a purchase right away. Use email marketing and retargeting campaigns to nurture these leads, providing them with valuable information and personalized offers that guide them towards making a buying decision.

Gathering Data to Strengthen Your Funnel

Data is your most invaluable asset when it comes to funnels. It shows where people are bottlenecking and allows you to refine their journey to get them onto the next step. This allows you to make the funnel better at every point, which will ultimately increase conversions if done correctly. But in order to have the data, you must collect it first.

Implement Tracking Tools

The first step in data gathering is the implementation of tracking tools across your digital touchpoints. Tools like Google Analytics, CRM software, and marketing automation platforms can capture a wide range of data, from website visitor behaviour to email engagement rates. These tools help you understand how users interact with your content and which actions lead to conversions.

Monitor Customer Interactions

Every interaction a customer has with your brand, whether it’s on social media, through customer support, or during a sales call, is rich with insights. By monitoring these interactions, you can identify common questions, objections, and points of interest that can inform content creation, sales strategies, and product development.

Analyse Conversion Points

Examine the points within your funnel where conversions happen – and just as importantly, where they don’t. Look at the data surrounding these key moments to understand what drives success. For example, if a particular landing page has a high conversion rate, analyse what sets it apart: Is it the clarity of the message, the design, or perhaps a compelling call-to-action? If your data gathering tools have been configured well enough, they should give you an insight into this.

Segment and Personalise

Use the data collected to segment your audience based on their behaviours, preferences, and stage in the sales funnel. Personalised marketing messages tailored to each segment can significantly increase engagement and conversion rates. For instance, retargeting campaigns can bring back visitors who didn’t convert the first time, using messaging that addresses their stage in the buying journey. This is where a good email marketing software could come in handy – email marketing is one of the best way to retarget your existing customer database. It acts as a nudge – not too in your face like a text message would be, but just enough so to prompt them to use your services again.

Using Consumer Psychology To Progress User Through The Funnel

Understanding and leveraging consumer psychology is key to guiding users effectively through the sales funnel. By tapping into the motivations, behaviours, and decision-making processes of your audience, you can create a more persuasive and user-friendly journey. Here’s how to apply consumer psychology principles to facilitate movement through your funnel:

Principle of Reciprocity

The principle of reciprocity is a powerful motivator in consumer behaviour. It suggests that people feel obliged to return a favour when they receive something of value. In the context of a sales funnel, offering something valuable for free — such as a helpful guide, a trial version of your product, or exclusive access to content can create a sense of indebtedness, encouraging users to engage further with your brand and hopefully end up purchasing!

Commitment and Consistency

People have a natural desire to act consistently with their commitments and past behaviours. You can use this to your advantage by encouraging small initial commitments, like signing up for a newsletter or following your social media. These small actions can pave the way for larger commitments, such as making a purchase, as users seek to remain consistent with their initial positive interaction.

Social Proof

Social proof is the idea that people will conform to the actions of others under the assumption that those actions are reflective of the correct behaviour. Showcasing customer testimonials, user reviews, and social media mentions can provide the reassurance potential customers need to progress through the funnel. Seeing others who have had positive experiences reduces perceived risk and encourages conversion. Now, I’m not saying do this next bit, but even if the social proof is fake, our subconscious mind will still perceive it as sufficient proof. I urge you to get real testimonials however, as they’ll serve as actual references that potential customers can even speak to.

Scarcity and Urgency

Scarcity and urgency can significantly impact consumer decision-making by creating a fear of missing out (FOMO). Limited-time offers, countdown timers, and notifications of low stock can spur users into action, moving them more quickly through the decision-making stage. These tactics make the opportunity to purchase more compelling, as people are more motivated to act when they believe an offer is exclusive or available for a limited time only. Be careful with this one though, because if people see it happening too often, they’ll see it as a ploy and know another deal is around the corner.

Authority

People tend to respect and follow the guidance of authoritative figures or brands. Establishing your brand as a thought leader in your industry can build trust and credibility. Use expert endorsements, certifications, and detailed case studies to demonstrate your authority. This can reassure users at the decision stage, making them more comfortable with choosing your product or service.

Likability

The principle of likability suggests that people are more inclined to say yes to individuals or brands they like. To make your brand more likable, use a friendly tone in your messaging, share relatable stories, and engage positively with your community on social media. Building a likable brand persona can foster a positive emotional connection, encouraging users to progress through the funnel.

And that good sir/madam, is how you build a sales funnel!

Further reading is as follows:
“Influence: The Psychology of Persuasion” by Robert B. Cialdini
How to Create a Powerful Marketing Funnel Step-by-Step – Duda
“Predictably Irrational: The Hidden Forces That Shape Our Decisions” by Dan Ariely
“Hooked: How to Build Habit-Forming Products” by Nir Eyal