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eCommerce Essentials: What is a Sales Funnel?

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Are you looking to convert more of your website traffic into potential new customers? 

Well, the first thing you’ll probably want to learn is this: what is a sales funnel?

If you manage an online store or offer digital services, a sales funnel helps you understand your users’ buying habits.

In this article, you’ll learn about the basics of what is a funnel in general. As well as the importance of the sales funnel, how to understand the different sales funnel stages, and how to use the sales funnel in your business.

What is a sales funnel and how does it work?

So, what is a sales funnel? 

Well, in short sales funnel is a sales process developed by sales and marketing professionals to describe the ideal path of a client as they move towards a conversion.

It is a funnel because the number of users involved will naturally decrease as it gets closer to the final sale.

In essence, by employing the sales funnel methodology your company is trying to “funnel sales” of a product or service as effectively as possible. Still confused?

In short, a sales funnel can be split into the four sales funnel stages each potential customer goes through to make a conversion.

This includes awareness, interest, decision, and action (sales) – often referred to as the AIDA model

Each stage of the funnel serves its own purpose, and you need to think of ways to push people down to the next stage. 

For instance, Interest is the stage where customers are considering your brand. Here, you can focus on sharing informational content that can persuade them to explore your product or service.

With that said, sales funnels help businesses identify customers’ needs, what’s stopping them from converting, and what a business can do to encourage purchases.

Sales funnel stages explained

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Most sales funnels only consist of AIDA – that is, it stops once a conversion is completed. 

However, some marketers include an additional stage called Retention. It emphasizes on building an ongoing relationship with customers and thus creates a new funnel model called AIDA(R).

1. Awareness

At the top of the sales funnel is the awareness stage. Potential customers find your website for the first time and are introduced to your business and the product or service you have to offer.

Users at the top of the funnel are only prospects in business terms. They can come from various sources such as Google search, social media ads, backlinks, or word-of-mouth from online forums.

2. Interest

When customers reach this stage in the sales process, they have already become aware and are actively searching for information about your brand to decide whether you can solve their problems.

These actions can include following your social media channels, subscribing to newsletters, and reading your blog posts. Your sales and marketing efforts are vital at this stage.

3. Decision making

At this stage, a potential customer has the desire to make the purchase, however, but is not completely confident whether your solution matches their needs.

They are still reading reviews from previous buyers or comparing prices to what others have to offer.

4. Action

Finally, this is the part of the sales funnel you make product sales. Prospects become conversions and hopefully turn into a profitable part of your company.

You’ve successfully persuaded someone into buying your product, this is the bottom of the funnel marketing model. However, the sales funnel isn’t over simply because a client has purchased a product. 

Every one of your customers are prospects for your competition. To increase your clients lifetime value it is important to think about the final step in the sales funnel.

5. Retention

Once clients buy from you, your work in the sales funnel isn’t done yet. Your next step is to make sure your clients want to keep making sales from you in the future.

Retaining customers also helps you get new prospects and leads. Loyal customers are four times more likely to recommend a brand to their friends and family which means increased sales. 

Sales funnel template

Creating a sales funnel isn’t as hard as you might imagine. Follow our sales funnel template to understand the steps you need to take in each sales funnel stage to maximize conversions.

1. Drive targeted traffic to your business

Let’s begin the sales process by driving traffic to your site, which will boost brand awareness and create new prospects.

There are two ways to do it – organic and paid advertising. 

For starters, try blogging regularly. Write how-to guides that provide helpful information to solve customer problems, so they’ll keep coming back to your site. Blogging is a great activity to bring people into your business at the top of the sales funnel.

To cater to different needs, make a video version of your blog posts as well. Stream live videos to promote your brand on Instagram or other platforms. Optimize video titles and descriptions on YouTube to increase views. 

Host an online event like free webinars to discuss related topics that tackle important questions your customers might have. For example, if you’re a financial advisor, hold a webinar on building emergency funds for beginners.

Finally, paid advertising is optional when you still don’t have a budget or are just starting out. It’s only recommended if you already know the average value of a targeted lead to your business.

For example, let’s say it costs you $1 to get a new website visitor. One customer spends $15 while nine spend nothing. With this calculation, you still have a profit by earning $1.5 on average per visitor.

Recommended reading: How to Advertise on Instagram: A Complete Guide (2021)

2. Educate and give solutions to your customer’s needs

Once potential clients become aware of your existence, the goal of the next part of the sales funnel is to keep them coming back to your channels and keep their interest and increase the chances of making sales.

For this purpose, you need lead magnets – some kind of incentive is offered in exchange for the customer’s email address. This can be anything from ebooks, samples, or free trials.

First, you need to build a landing page for lead magnets. Explain what you’re offering, why it’s beneficial to the customer, and include a newsletter form with a call-to-action button. 

Here’s Marie Forlo’s landing page, for example. It’s simple, yet it provides all the elements needed to make visitors sign up for the newsletter.

You can direct visitors to this landing page by using pop-ups, preferably when they visit your website for the first time.

Once you collect their information, don’t forget to send regular newsletters – whether it’s daily or weekly. Send emails about your latest blog posts, or offer something even more interesting, like video series or live Q&A sessions.

3. Present an irresistible offer

Offering something irresistible is the key to convince customers getting towards the bottom of the sales funnel to make a purchase. If you don’t know where to start, you can use Robert Cialdini’s “6 Principles of Persuasion” and tailor each aspect according to your goals:

Reciprocity. The basic idea here is you need to give something to get something in return. We already checked this principle by providing informative articles and offering valuable lead magnets.

Scarcity. Highlight the exclusivity of a deal and limited time offer. Use catchy copywriting content to point out the uniqueness of the offer and what would a customer lose if they miss it. That way, they’re more likely to continue down the sales funnel

Authority. Hire brand ambassadors or provide testimonials from well-known figures. On top of that, case studies and scientific reports can also give credibility to your products and increase sales.

Consistency and commitment. People love consistency and feel obligated to deliver on a commitment. As such, convince your target audience to commit to something small. If you’re a writing coach, for instance, offer an exclusive 10-day coaching program for free.

Liking. If you’re likable and approachable, people will more likely buy from you. Share stories and content that resonate with the audience, like telling them why you created your brand and how it impacted others’ lives. 

Social proof. Sharing what others have to say about you. You can post them on your site, landing page, or social media. Gather all customer testimonials and use their validations to prove why you are better than others.

4. Optimize your business for conversions

To start, the best way to boost conversions is to improve your site’s user experience and drives users through the sales funnel. 

Recognize what factors of your website contribute to the conversion rate, such as page layout, placement of elements, web copy, etc.

Then, perform A/B testing and focus on changing a single element of the site and see how visitors interact with it for a specified period.

For instance, you can change the color of the “buy now” button or move the newsletter subscription form to another page.

5. Focus on customer retention and lifetime value 

Every customer brings revenue to the company. To keep them within your ecosystem, focus on customer retention, and give them the best experience your brand has to offer.

Here are some ideas on how to renew customer interest:

  • Upselling. Encourages existing customers to unlock premium benefits
  • Subscription plan. Offer monthly or annual plans so users are locked-in to your service.
  • Customer loyalty programs. Give out rewards, merchandise, coupons, and discount codes as an incentive to return.
  • 24/7 customer support. Use social media, live chats, and other channels to answer queries in an instant.
  • Invest in a CRM system. Collect and analyze user behavior for further research and product development.

Editor’s note 📝 – segment your existing customers to maximize your marketing opportunities and give people a more personalized experience of your brand.

Examples of successful sales funnels

Here we’ve listed some of the best examples of successful sale funnels out there, examining their strategies in each stage.

Keap

Keap offers CRM, email marketing, and automation tools that help businesses get new leads and sales. 

Here are some strategies that Keap uses in its funnel stages:

  • Awareness – actively posts useful content and webinars invitations on Facebook, Instagram, and Twitter
  • Interest – site visitors will get a pop-up box that offers a limited-time deal.
  • Decision – offers a 14-day trial and live demos, no credit card needed. It also publishes case studies and success stories to establish credibility.
  • Action – the order form shows a breakdown of the cost, highlighting a 70% off discount on the first two months of subscription.
  • Retention – the company gives out $250 for every successful referral you make.

This type of sales funnel works thanks to its soft-sell tactic. Free trials, no credit card requirement, and quick demos are the more appealing aspects to their customers, as they are free to explore the service without any commitments.

Doyoueven

Doyoueven is an eCommerce site that sells sportswear for men and women. It’s also known for producing seamless collections of leggings and sports bras. 

  • Awareness – works with athletes and fitness models to create brand awareness and promote their products.
  • Interest – users who subscribe to their newsletters are promised to get early access to sales, restocks, and new releases.
  • Decision – offers ZipPay as a pay-later option where buyers can repay weekly, fortnightly, or monthly. Brand ambassadors also promote the new collections on their social media channels and offer discount codes for a limited time.
  • Action – an Express Checkout option is available so users don’t have to fill out long checkout forms.
  • Retentioncustomer support via Facebook and Twitter, and live chats during business hours

Doyoueven truly understands its products and their audience, and it knows what to do to lead their users to go to the next step.

For example, the company offers flexible payment options since the high price tag may deter people from buying.

Coursera

Coursera collaborates with prestigious universities and companies to offer online courses with certifications.

  • Awareness – engage followers with live videos, blog posts, and free video courses on YouTube.
  • Interest – the homepage shows logos of universities and companies they collaborate with, which establishes credibility.
  • Decision – displays the course syllabus and career outcomes of its students.
  • Action – offer free online courses on selected topics, but students can pay to get a certificate.
  • Retention – sends newsletters to update existing students about new courses based on their profiles and interests.

Coursera perfectly demonstrates how sales funnels need to be adjusted to fit your customer needs.

Optional certifications cater to a wide range of users, so people won’t be discouraged from trying the courses.

This method can potentially increase revenue in the future since students are more likely to purchase other courses if they find the platform helpful.

Written by

Author avatar

Damien

Damien is a self-professed, semi-obsessed word-freak that wants nothing more than to tell small-business stories in a big way. Always scouring the market to find the right tools for the job, he is focused on finding creative ways to bring them to the people. When not writing, Damien is known to be a massive music bore, amateur radio enthusiast, and woodland wanderer.

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