What is a Sales Funnel? And How To Build One in 2024

Martin Zhel
Martin Zhel

Last updated on

April 25, 2024

Ever wondered about the journey your customers are going through before they end up making a purchase from your business? 

The journey — mapped by a sales funnel — outlines all the checkpoints at which your customers will interact with your brand before they are ready to make a purchase. In order to build a successful sales strategy, your sales funnel has to be top-notch. 

Your primary goal with your sales funnel is to move people from one stage to another until they are ready to purchase. 

I talk about everything sales funnel in this article — what is it, how to build one, and what kind of content you would require for each step of your funnel. 

All-In-One Suite for Capturing Leads and Converting Them Into Customers
With Mailmunch, You get an all-in-one solution for capturing leads, converting them into customers and automating your entire sales funnel.
Sign up today!

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 an analogy because a large number of potential customers may begin at the top end of the sales process. Still, only a fraction of these people actually end up making a purchase. There are multiple sales to a sales funnel, usually called as the top, middle, and bottom of the funnel, depending on a company’s sales model. 

Infographic: Sales Funnel Stages

As prospects pass through each stage of the funnel, they signify a more profound commitment to the purchase goal. Most businesses, whether online or conventional, use this model to guide their B2C marketing efforts in each stage of the sales funnel.

The four basic Sales Funnel stages are:

  • Awareness
  • Interest
  • Desire
  • Action

Before discussing these stages, let’s first discuss why we need a sales funnel. 

Why do you need a Sales Funnel? 6 Benefits

There are many benefits to creating sales funnels and using them to effectively guide leads into becoming paying customers. Here are six of them:

1. A focused sales and marketing strategy

Your prospect can get in touch with you at any moment of their customer journey, whether it’s early research or late decision stage. So it’s important to align your marketing and sales efforts so that they receive the information they need even when you don’t have the ability to deliver it directly as a sales person. With a proper sales funnel in place, you can deliver the proper offer to your prospects outside of your sales conversations. 

2. The right message at the right time

 A sales funnel allows businesses to see the customer journey clearly and provides information for the stage the customer is currently in.

When prospects are newly introduced to your brand, they need content that is curated to make them get a better understanding of what you truly sell. So, in effect, they are at the Awareness stage of the funnel; they require blog posts, infographics, landing pages, and checklists to make them feel more familiar and comfortable with your brand.

Similarly, individuals (or leads at this point) at the desired stage understand your business and thus need product overviews, webinars, demos, and case studies that compel them to take the desired action.

3. Saves time and effort

With a full-sales funnel in place, not only your marketing and sales strategy will align, but you will save a lot of time by creating content just one time that is curated for all individual stages of the funnel.

For example, you can create a blog post that addresses a specific pain point and disseminate it among all the prospects in the awareness stage of the funnel looking for a solution to the problem. Also, you can create strategic lead magnets that you offer to leads on the Desire stage.

4. Increased sales

As prospects are nurtured as they go down the funnel, there are chances that, if your sales funnel is fully optimized, you can see an increase in your sales. Nurtured leads result in 47% more sales compared to non-nurtured leads.

Hence, work to optimize your funnel and ensure that all the pain points and all potential gremlins are fixed and your leads reach the bottom of the funnel ready and excited to make a purchase.

5. Improved forecast accuracy

Sales funnels can predict future revenue that your business will generate. Using metrics like conversion rate from the awareness stage to the action stage, you can calculate the percentage of leads you expect to convert and multiply the number by the total estimated deal size in the funnel. This will give you a sales forecast.

So, the formula for sales forecasting depends on the number of prospects in the awareness stage, the estimated deal value, and the likelihood of the prospect's purchasing.

Infographic: Sales forecast accuracy

Understanding the Sales Funnel Stages

From the first time your prospect hears about you until the moment he buys from you, he passes through different stages of your sales funnel. This journey might differ from one prospect to the next depending on your buying personas, your niche, and the types of products and services you sell.

understanding customer's journey

Before you start building your sales funnel, it is essential for you to have a clear business vision, develop an eCommerce marketing strategy, and then define your target audience to work towards your business growth. If, for example, you are looking at how to create an online clothing store, you need to hire a digital marketing agency to develop your business and stay successful.. You can add as many stages within your sales funnel as you want. In general, there are four stages of a sales funnel. 

What are the sales funnel stages?

As discussed above, the four main stages of a sales funnel are:

1. Awareness

awareness stage

This is the first stage and is called the “awareness” stage because it’s where people first become aware of your solution, service, or product. They might also become aware of the problems that they need to solve and the possible ways to deal with them. This is when they hear about you for the first time, through an ad, Google search, a post shared on social media, word of mouth, or another traffic source.

One example of the awareness stage is when a prospect learns about your company for the first time. Perhaps they stumbled on one of your ads, found your website through Google search, or heard a colleague talking about your product or service. 

2. Interest

interest stage

Once a prospect has learned about your brand, they will evaluate it based on the level of interest and the solutions you provide. 

At the “Interest” stage, the prospect is actively looking for solutions to their problems and ways to achieve their goals. They search for solutions on Google. They’ll think about the problem they’re trying to solve and conduct competitive research to make sure your offering is the best solution. 

3. Desire

desire stage

Now that the prospect knows about your company and the solutions it provides for the prospect’s pain points, they will dig in deeper. The prospect will find information like pricing and packaging options. Sales pages, webinars, and calls are very helpful in this stage to help the prospects make a decision.

4. Action

action stage

The most important stage of the funnel — whether the prospect makes a purchase or not. If they don’t buy from you now, that doesn’t mean the deal is lost forever. You can create nurture campaigns to make sure you stay on top of their mind for any future needs.

Customer Retention — Important Part of Sales Funnel 

When you have your customer on board with your company, it is important that you do everything to retain them. This stage requires you to focus on keeping customers happy in order to convert them into repeat customers and brand advocates. Word of mouth is a powerful force, and no one can do it better than a happy customer.

To keep customers happy, you need to help your customers with all aspects and problems related to their pain points. Basically, you want them to stay engaged with your product/service. You can do that by sharing content such as:

  • Emails
  • Special Offers
  • Surveys/Outreach and follow-ups
  • Product usage guides
  • Customer Feedback Forms
  • Technical assistance literature

How does a Sales Funnel Works ?

Let’s take a sales funnel example that you own an online book shop. You know that your target audience is mostly on Facebook; they are mostly males and females between the ages of 20 to 50. 

You build a landing page with a form for prospects to sign up with their emails in exchange for a lead magnet. In this case, the lead magnet is the first ten pages of a new novel that’s just launched. 

selling probability

You run an ad on your Facebook page that drives traffic to your landing page. Prospects add their email addresses and download the lead magnet. Now you have leads instead of prospects. They are moving through the funnel.

What you will do now is nurture the leads. You can send out educational content related to books, or share the new books that will be coming soon to your book shop, or DIY tips to build a bookshelf. All these email drips will be focused on educating your audience. 

At the end of this drip campaign, you offer a 10% discount coupon on the first order to your entire list. Now you are selling your books like crazy, and your prospects are converting into customers. 

You continue sending educational content to your email list. Give them ideas for bookshelves, how to take care of their books, or suggest different books as gifts. With this content, you are asking them to come back for more. 

There you have it — a perfect sales funnel, leading prospects through the funnel and converting them into paying customers. 

To summarize, this sales funnel has four stages as follows: 

  • Awareness: You created a Facebook ad to lead people to your landing page.
  • Interest: You offer something of value in exchange for lead capture (email addresses).
  • Desire: Your content educates your audience and prepares them for a purchase.
  • Action: You offer a coupon your leads can’t resist, then begin marketing to them again to boost retention

If you want to see more examples of what is a sales funnel and how it works, then you can check out this blog post that covers six examples of a sales funnel from real brands.

How to build a sales funnel from scratch ?

For a properly built sales funnel to exist, you first need potential customers who can move through that funnel. Once you have those prospects, you can track behavior and engagement using lead scoring to identify where they are in the funnel.

Let’s delve into the steps to help you create a sales funnel:

1. Gather Data and Understand Your Customers

The best way to understand your audience is by talking to them. The more data you gather about your audience, the more effective your sales funnel will become. 

One important thing to remember is — you aren’t marketing your business to everyone. You are marketing it to people who are a good fit for what you sell.  

That way, you can adjust your funnel to focus on those key and most relevant selling points. You may also gain insights that lead you to adjust your product or service and make it better.

The most important questions you should ask your customers are:

  • What are your current challenges with [the area that you cover]?
  • What are your current fears and frustrations? 
  • What are your goals and aspirations?
  • What have you done to try to solve your problems/achieve your goals? 
  • How well did it work?

Based on your data, you can create content for each stage of your sales funnel and help prospects move down your pipeline. You can also take the help of content marketing tools to create content for all stages that will make you stand out.

2. Capture Your Audience’s Attention

The only way your sales funnel works is if you can lure prospects into it. Without prospects and people interested in your business, there is no sales funnel. This means putting your content in front of your target audience.

Hire an agency that know all about content marketing, an SEO company preferably. They will take the organic route and post a lot of diverse content across all of your platforms. Branch out with different content forms like infographics, flipbooks, videos, social media content, and other types of content. Organic traffic includes: 

  • SEO
  • Social media traffic (non-paid)
  • Referral traffic (from other sites linking to you)
  • Direct traffic (from people who know about your brand and have visited your website before)

You can add forms and popups to your website to capture leads. You can also run a few ads or do prospecting manually. The ideal place to run such campaigns depends on where your target audience hangs out. If you’re selling B2B, LinkedIn prospecting or LinkedIn ads might be the perfect solution. Always be open to A/B testing.

3. Build a landing page

Do you know that landing pages are the least liked sign-up forms? But we will still recommend that you build a landing page. Why? You may ask. And you have a right to do so! 

Landing pages are recommended because they have the highest conversion rate, 24%, to be exact.

Your ad and other content need to take your prospects somewhere. This is where a landing page with a cant-miss offer comes in. 

If they click on an ad, sign up for a webinar, or download an ebook, they’ll go to a landing page. 

Your landing page should communicate who you are as a company and your unique benefits.  Focus on capturing leads instead of pushing sales. This could be the one and only opportunity you have to impress your prospects and capture them. 

Make sure the landing page has a form for prospects to enter their information. You want to capture their email address so you can continue to communicate with them to steer them towards the next step. Your landing page should also have a bold CTA (call to action) that tells them exactly what to do, whether it is downloading a free eBook or reading a blog.

No coding required - Build high converting pages in minutes
Mailmunch makes it easy to increase leads, demos, and sales with powerful landing page templates and a simple drag-and-drop builder.
Sign up today!

4. Offer something valuable

Continuing on the subject of landing pages, you don’t want your leads to land on a landing page and find out that you only ask them to purchase your product without offering something valuable for them to take action.

To motivate your leads to take action, offer them discounts or a coupon code. You can offer access to some gated content if they take action and complete the purchase. However, make your offers available for a limited time. A sense of urgency is noted to boost sales by 6% to 9%. Therefore, make use of urgency and see your sales skyrocket.

5. Nurture the prospect

For your sales funnel to be effective and profitable, it’s important that the maximum number of prospects should reach the end of the funnel. For it to happen, however, nurturing is required at the top of the funnel (at the Awareness and Interest stages). 

So, to nurture the prospects, make their interactions with your brand meaningful by providing them content that helps them understand it better, like how-to-guides, eBooks, checklists, surveys, and case studies.

You can involve your customer support team to nurture the prospects and guide them on how they can get the most out of your products and services.

6. Create an Email Drip Campaign

Now that you have captured leads through the landing page, you need to communicate with them in order to close them. 

Market to your leads through email marketing by providing valuable and engaging content. Send updates regularly, but not too frequently. Maybe one or two emails per week should suffice. It totally depends on your audience and what you have to offer.

Start by educating your prospects first. Send them educational content rather than promotional content. Build up to the sales later. First answer questions like:  

  • What do they want to learn? 
  • What obstacles and objections do you need to overcome to convince them to buy?

At the end of your drip campaign, make an incredible offer they can’t resist. That’s the piece of content that will inspire your leads to act and make a purchase.

7. Keep the communication going 

Once your prospects convert into paying customers, you don’t forget about them. Continue to reach out to them. Keep sending them educational content that might be useful to them. Thank them for their purchase and send them regular updates on any promotions or sales. Involve them in your social media strategy and build a community out of your customers to develop brand trust and loyalty.

8. Upsell, Cross Sell, and Downsell

If the prospects are ready to buy your product or have already made the purchase, you can invite them to buy additional products. You can cross-sell by promoting complimentary products to the products they have already purchased.

There is also a possibility that your prospects might be hesitant to accept your high-tier offers or even medium-tier ones. In such cases, you can downgrade your offer and make it more acceptable to the prospects.

9. Optimize your sales funnel

An unoptimized sales funnel can spell disaster for your revenue projections. Here’s how you can optimize your funnel to ensure maximum conversion:

9.1. Research your audience

Thoroughly research and understand your target audience. Make buyer personas you can utilize later when reaching out to prospects.

9.2. Create measurable goals

Create measurable goals using Google Analytics, like bounce rate measures, session durations, and impressions, and gather data to make decisions. Also, you can invest in a CRM tool that allows you to store prospect information, identify sales opportunities, record service issues, manage marketing campaigns, and provide accurate sales forecasts.

9.3. Analyze and test your landing pages

Analyze your landing pages and ensure that the content is engaging for the prospects to convert. Conduct A/B testing of all the elements of your landing page and ascertain what works. Also, check the loading speeds of your landing pages and fix them if necessary.

9.4. Stay active on social media

It’s a possibility that some or most of your traffic maybe come from social media. Therefore, it’s prudent to keep a solid social media presence. Social media can be used to cover any stage of the sales funnel. It could be used for:

  • Building brand awareness
  • Directing traffic to your website or landing page
  • Making sales using the “Shop” feature in the apps

Hence, don’t underestimate the power of social media; instead, use it to forge better relationships with your customers and prospects alike. Post engaging and exciting content regularly to keep prospects interested.

9.5. Make use of social proof

In this day and age of mistrust, people want to be sure that whatever they buy is genuine and authentic and not a total waste of their money. So, they would thoroughly research the products they would like to buy by reading testimonials.

You can alleviate their fears by providing them with positive social proof on your landing pages and websites. You can collect testimonials from review websites where your business is listed as positive talk on your brand directly from customers will have a significant impact!. You can create surveys to collect additional feedback.

Moreover, you can integrate these reviews into your website and showcase them along with your products.

Adding social proofs can create trust between you and your prospects, which is an important part of a sales funnel. Also, repeat purchases will increase once the customer starts to trust your business.

9.6. Keep your CTA game strong

Call-to-action buttons are used for conversion purposes. They should feature heavily in your content and should also be part of any promotional emails you intend to send. Ensure that your CTAs, have a pop of color and have bold text. Be mindful of where you place your CTAs, as it can affect their visibility.

Principles of Persuasion for Effective Sales Funnel

Dr. Robert Cialdini, a marketing and psychology professor, introduced 6 principles of persuasion in his 1984 book Influence.

principles of persuasion

These are:

  • Reciprocity
  • Consistency
  • Social Proof
  • Liking
  • Authority
  • Scarcity

Here is how they work, according to psychologist Dr. Kendrick:

In brief, we are inclined to go along with someone’s suggestion if we think that person is a credible expert (authority), if we regard him or her as a trusted friend (liking), if we feel we owe them one (reciprocity), or if doing so will be consistent with our beliefs or prior commitments (consistency). We are also inclined to make choices that we think are popular (consensus [social proof]), and that will net us a scarce commodity (scarcity).

You can use the tools and strategies mentioned in this article to further push prospects along each stage of your sales funnel. For example:

  • You can create awareness by giving out freebies (guides, checklists, pdfs) using the principle of reciprocity and consistency. Regularly blogging or posting on social media shows consistency and also establishes your presence (awareness).
  • You can capture interest using principles of liking and scarcity. People will be more interested in what you have to say if they either like you or if they believe you are offering a limited commodity.
  • You can guide prospects in the decision stage if they believe you have authority in your domain and so will be more likely to listen to you. You can build authority using case studies, webinars, and tutorials.
  • You have a higher chance of closing a sale in the action stage if you use the principle of social proof. You can give social proof by showcasing reviews, recommendations, testimonials, and favorable luxury PR.

How to Create Content for Each Stage of The Sales Funnel

One of the biggest mistakes marketers make is that they don’t align their content marketing efforts with their sales funnel stages so they can close more deals. More often than not, they don’t go deep enough or look into lucrative avenues like repurposing their existing content to increase reach. Hence, their prospects don't progress through the funnel. What they need is a sales strategy for every stage to engage effectively.

That’s why I have decided to explain how you can use different content for each stage of your sales funnel. 

content funnel

Blogging (Awareness and Interest)

By blogging, you will generate awareness and interest around your business. It can be your main source of traffic for your website, and it’s also a good way to engage your list by sharing valuable content. 

The way you bring awareness by blogging is to optimize your content with the right keywords so you can attract your target customers from an organic search. Acquiring customers is essential to a flawless marketing funnel strategy that grips viewers and turns them into consumers.

Another way is to promote your posts on social media by influencing other people to share them or by using promoted posts. It’s important to state that blogging is not a “bottom of the funnel” activity. 

In other words, it won’t lead to people making a decision to buy from you. For that, you will need to create other types of content or push people to go on a sales call with you.

Lead Magnets (Interest)

Any type of lead magnet is used as a tool to generate interest in your product. You grow your email list by offering something of value to your audience that they’re already interested in, such as a guide or course.

Anything that can educate your prospects on how they can solve their problems and achieve their goals is helpful for this stage. Within the lead magnets themselves, you can place call-to-actions to check out your products/services, call your sales department, etc.

Webinars (Decision and Action)

Even though webinars can be used as lead magnets, they’re more focused on the decision stage and convincing people to take action and buy your products.

When people sign up for webinars, they’re already pretty interested in achieving a certain goal or solving a specific problem. This could be growing their traffic, losing weight, or finding the perfect soul mate. 

Your goal with the webinar is not only to educate them but to entice them in order for them to make a decision and buy your solution. 

In the end, you should always have a call-to-action to buy your product, start a free trial, or request a consultation.

Videos (Awareness, Interest)

Videos are more impactful for the awareness and interest stage, although they can be a very useful medium for the decision and action stage as well. 

YouTube is well-known as the second largest search engine, so by optimizing the videos for certain keywords, you can generate tons of awareness and traffic to your website.

Additionally, you can use services like Wistia to embed educational videos within your blog posts and your website to educate your audience on topics that interest them.

By creating explainer videos, you can build demand for your product or service.

Last but not least, with sales videos, you can entice people to make the final step and take action. You can also create tutorial videos for customer retention by giving customers a detailed tutorial on how to use your products.  You can also create a youtube channel or use an existing one to create sales videos for your audience on youtube.

Metrics to measure for the success of your sales funnel

Your sales funnel might need tweaks and adjustments as your business grows. With more data about your target audience, you learn more about your customers, and you diversify your products and services.

A great way to measure the success of your sales funnel is to track your conversion rates and track your retention rate as well.

For example, how many people sign up for your email list after clicking on a social media ad? 

Pay careful attention to each stage of the sales funnel:

  • Are you getting the attention of enough consumers with your educational content?
  • Do your prospects trust you enough to enter their contact information?
  • Have you secured purchases from your email drip campaign and other marketing efforts?
  • Do existing customers come back and buy from you again? 

Measuring the effectiveness of your sales funnel is also essential as it can help you make data-driven decisions instead of relying on intuition. Here are a few sales funnel metrics that you can track to set goals, identify gaps, and resolve issues in your sales funnel:

1. Leads 

Leads are the only reason why your sales funnel exists. Therefore, checking the number of leads can help you shape and align your marketing and sales strategies.

Also, by analyzing the cycle time, i.e., the time it takes for leads to progress to the next stage, you can find all the roadblocks in your funnel.

You should also focus on lead sources. By measuring how many are coming organically from referrals and social media, you can find opportunities to improve top-of-the-funnel activities.

2. Conversion rate

When all is said and done, it’s the number of leads that convert to sales that matter. Hence, you want to keep an eye on the conversion rate, calculated by dividing the number of sales by the total number of leads.

Infographic: Conversion rate formula

The question to ask here is what should be the target conversion rate for a sales funnel? According to industry experts, a conversion rate between 3.1%-5% is considered good. Therefore, you should target to bring your conversion rate in between this range.

3. Acquisition costs

Acquisition costs can be difficult to define as they consist of all the marketing and sales costs spent to acquire leads, and, subsequently, customers. To calculate lead acquisition cost, divide the total acquisition cost by the total number of leads.

Infographic: Lead Acquisition Costs

To calculate the customer acquisition cost, divide the total acquisition cost by the total number of customers.

Infographic: Customer Acquisition Costs

4. Customer lifetime value

Customer lifetime value (CLTV) can help you gauge your business's efficacy over time. CLTV tells you how much a customer has spent against your average customer acquisition cost. CLTV is necessary to calculate because it helps organizations set acquisition cost goals. 

To calculate customer lifetime value, simply multiply the customer value by the average customer acquisition cost.

Infographic: Customer lifetime value formula

5. Total Sales

By calculating the total number of sales, you can translate all your conversions, acquisitions, and sales funnel activities into a definitive number. Calculating total sales is pretty straightforward: just add up all the revenue generated for the date range you wish to analyze.

6. Average deal size

The average deal size is the number that describes what average amount a customer is spending on your products. Measuring this metric is important because it can provide insight into whether your deals are increasing or decreasing. So, to get average deal size, divide the total amount by the number of deals.

Infographic: Average deal size formula

Master the art of sales funnels with Mailmunch!

Your work is not done when you create your sales funnel. In fact, this is where it all begins.

It's important to measure your results once everything is set up. Choose your KPIs first, then set up a measurement program. Take time to build out a sales funnel that represents what you want and what your audience wants.  

Optimize it over time, adjust your approach to various sales funnel stages, and find out why your efforts aren’t working.

Gather data around, analyze, and improve your funnel if you want to get better results. Figure out where your strengths and weaknesses lie. Such questions will help you figure out where you need to work on your sales funnel. And then focus your resources there.
A good flow of people right from the top all the way to the action stage will ensure you have a healthy business.

Try Mailmunch today to automate your emails sales funnel
Connect with prospects and customers at every stage of the sales funnel to send personalized message and improve sales.
Sign up today!

Author Bio

Don't forget to share this post!

Related articles