What are sales funnel stages?
The sales funnel stages are ideal paths that businesses create for their prospects to take and convert as customers. Marketing and sales teams create sales funnel stages to attract new customers to their business and retain them for recurring revenue opportunities.
A sales funnel, with little variations, goes by many other monikers, such as the buyer’s’ journey, sales pipeline, lead funneling, and so on. The best way to understand a sales funnel is to envision it as the inverted pyramid model as propounded by the pioneering American advertising and sales scholar, E. St. Elmo Lewis in 1898:
Following the AIDA model makes it easier for ad professionals, sales, and marketing teams to create a sales funnel.
How do the sales funnel stages work
Sales funnel stages are designed to attract a wide but relevant base of customers and then narrow down the list to the most suitable set of buyers interested in pursuing business with a brand. A successful sales funnel built on this model gravitates the right kind of people to your brand and helps them flow seamlessly down the pipeline.
A great way to understand how sales funnel stages work is to apply them to a real-world example.
Suppose you are in the business of selling sunglasses online. The first place for you to start would be to create awareness about your brand, especially because the eyewear industry is pretty crowded. You might want to create meaningful content on your website so that when people are looking for a certain type of eyewear, your brand name ranks in the search result page for them to notice.
Once you get the word about your brand out, you should apply techniques to get people to generate interest in your brand. This means you have to offer something that creates a hook to your brand. For the founders of Warby Parker, it was getting rid of the middlemen who incurred huge markups in the sunglasses and offering branded eyewear at a great price.
Once you have a unique selling proposition (USP) to differentiate yourself and grab people’s attention, you should nudge them to make a decision to explore your brand deeply. This can happen when you market your social proof to your target audience. For example, you can launch an influencer campaign, build a website with client testimonials, write your customers’ success stories, etc.
If you do all the above well, it leads your prospects to take action with your brand. You might have to make this easy for people, such as by letting them sign-up on your website with their existing Google account or allowing them to redeem discounts upon downloading your mobile app.
Creating the sales funnel stages
Creating the sales funnel stages from scratch is not too far away from replicating the AIDA model into your overall sales strategy. Apart from the business acumen that is necessary to create a sales funnel, you also need to develop a curiosity to understand human psychology and what drives your customers to take the desired action. Below, let’s discuss the nuances to build the sales funnel stages for your business.
1. Market identification
To make sure you attract the right crowd to your sales funnel stages, you must first identify who your ideal customers are. It’s an exercise in analyzing your product-market fit, and you can start by creating a buyer’s persona for your marketing and sales campaigns. Make a list of those who might be interested in buying your products; categorize them by their location, demographic association, behavioral traits, age cohorts, profession, and even gender.
Coming up with a buyer persona is critical for you to bridge the gap between what you have to offer and what your ideal customers expect to buy from you. The study of persona can help you understand their hopes and fears, the struggles and frustrations they have in their everyday lives, what is stopping them from exploring the right solutions to their problems, what can enable them to take action, etc.
(Mailchimp buyer personas)
Talia Wolf, founder and Chief Optimizer at GetUplift, explains the importance of emotional conversion:
“As marketers and business owners, we tend to treat our customers as points of data. We look at them through analytics or a heatmap and we think about the age, or their geographical location, what browser they’re using, their device, but we keep forgetting that behind those screens are actual people.”
Once you crack the code on who your personas are and what you can do to help them, it’s much easier to build the rest of your sales funnel stages.
To get the right buyers interested in your products, you must first make your presence felt to your ideal buyers. You must advertise your services to the right crowd and make sure you flank your competition across all possible channels. Depending on the nature of your business, you might want to carry out all efforts necessary to create awareness such as bidding on Google Ads, advertising on billboards or primetime television, or participating in trade events.
However, creating awareness is not limited to outbound marketing; you can also apply “pull” strategies such as creating content, organizing an event, investing in affiliate marketing channels, and so on.
A great way to get people’s interests in your business is by producing top-notch content in the form of blogs, landing pages, videos, webinars, ebooks, case studies, etc. Getting people interested in your business becomes much easier when they can recall your brand name, a success that depends on how well you were in creating awareness around your brand.
Creating a buyer persona and developing interesting content is heavy on the top of the funnel (TOFU) marketing and it can have an amplified effect on the rest of your funnel activities when carried out well. For example, if you can create viral content for the awareness or interest stage, its effect will naturally reflect on the conversion and sales numbers.
In 2012, Australia’s Metro Trains company did just that; they hired McCann Melbourne ad agency to create interest in the message they wanted to sell to young train travelers. These customers stood too close to the train platform or crossed the tracks recklessly, which led to frequent injuries and sometimes even death. So they created a slapstick video song on YouTube that would grab the audience’s attention in the most unlikely way. Here’s the video:
The video got over 70 million views within the first year of its launch and compelled the Metro’s travelers to pay interest in what the company was trying to sell. The result was a sharp 30% reduction in railway accidents during the first year of the campaign launch. It’s not your typical sales conversion story, but the principal takeaway is pretty generic—create good content assets for your prospects to notice you.
3. Lead generation
Now that you have your prospects’ interest, it’s time for you to take your casual acquaintances to regular interactions. In the sales parlance, it’s time for you to generate leads for your business. It’s the real-life equivalent of exchanging phone numbers or business cards.
The often tried-and-tested method to generate marketing qualified leads (MQLs) for your business is to offer valuable resources that appeal highly to your buyer persona. Plain and simple lead forms on your website work too if you have created enough interest around them. But if you want to ensure higher sign-ups, come up with branded content assets such as newsletters, webinars, ebook, free trials, and case studies that are useful to your audience.
The Hustle media company acquired more than 550,000 subscribers to sign-up for its daily newsletter with a simple trick. They gated their entire content and asked their existing subscribers to refer their newsletter to their extended circle of friends and families.
Talking to Freshchat in an interview, here’s what Sam Parr, founder and CEO of The Hustle had to say about their secret to the 5X growth:
“Word of mouth has been our top traction channel. One of the ways WOM has worked for us is The Hustle ambassador programme. The programme gives subscribers access to a private online community, free swag, and tickets to The Hustle Con when they refer other people to the newsletter. Followed by WOM, it’s Facebook that has helped a lot. We also made the processes slightly more optimized, like changing the copy to increase conversation rates or changing how often we ask people to share. It was just the same stuff in 2017 – same channels and mix, but with 5x more firepower behind it.”
That was back in 2017; the company has ever since grown exponentially bigger with 1.1M+ active email subscribers, 10.4m+ monthly inbox impressions, and 66 average net promoter score.
Lead generation is a middle of the funnel activity where your prospects are more likely to commit to an engagement if you offer them the right kind of nudge. For example, when they land on your website, it shows that they are willing to take the relationship to the next step. You can leverage the power of live chat in your sales funnel in several ways. For instance, you can automate a chatbot to engage with first-time visitors or trigger a UTM-based message for people who land on a certain page of your website. Because they are at the peak of their engagement, people are more likely to give their email addresses in exchange for something that can add value to their lives.
Until this stage, you have laid the bricks to build a new relationship with your prospects, but you haven’t earned their trust completely. For your sales pipeline to be successful, it’s critical for you to make your customers interact with your brand more often, keep them intrigued, and give them something to look up to with your brand.
There are many ways to nurture your warm leads, starting from writing a kickass welcome email to creating an enduring drip campaign. You can also leverage the power of email marketing to nudge them to install an app, for example, or give them tips on how to make the most out of their limited free trial. Depending on the overarching goal of your business, you can offer several incentives to your leads such as freemium plans, certification courses, product demos, seasonal discounts, or exclusive membership opportunities to help them convert.
Here’s an example of how Freshchat nurtures its trial users by proactively offering customer support:
For a majority of businesses, the number of MQLs that arrive at the pitch stage will be far less. This is a good thing because the ones making to this stage are sales qualified leads (SQLs) who are highly primed to buy your products. Now is your time to hit the iron while it’s hot.
You can pitch your product to qualified leads via several channels which also depends on the nature of your business. For instance, if you are an e-commerce business, you might witness more conversions through emails than phones. But if you sell a SaaS product for businesses, cold calling stands a better chance than emails. For many other businesses, it might mean a mix of both, combined with an extra dose of persistence.
Moo.com, an e-commerce website, brilliantly pitched their print products to leads with one of their clever email campaigns. Take a look:
Clicking on the “Pop that balloon” button took customers to Moo’s product catalog page where they offered a flat out 10% discount code.
You can imagine the campaign’s success given the piñata-popping experience it offered followed by a tempting discount.
This is the action stage in the funnel, the ultimate bottom of the funnel (BOFU) activity you have to ensure in your sales pipeline. The entire sales funnel is most effective when the buyer journey across the pipeline stages is seamless and convenient; it’s especially critical during the last stage. You will have to make sure your pricing page is simple for your leads to understand, the checkout page loads faster, and implement a hassle-free payment gateway.
If you are in the B2B segment, the sales deal will most likely ping-pong between you and the clients’ side for a few rounds. B2B sales inadvertently take a longer time to close, so it’s important to have a dedicated salesperson to maintain a high-touch relationship with your customers to see them through the deal. If they are trailing or freemium customers, you have to make sure that you have their explicit buy-in for the upgrade, and that the upsell experience is transparent and coherent.
If yours is a B2C company, make sure your product pricing is simple, you offer a good mix of payment options, and you have a robust payment gateway.
You should have a contingency plan around the last stage of your sales funnel to offer a convenient payment experience. Even if you partner with the best payment systems on your checkout page, sometimes your customers will hit a snag that can hinder their checkout experience.
You can use live chat as a backup for such situations. For example, you can automate a chat message with an alternative link on your checkout page for customers when their payment doesn’t go through. It’s just like push notifications, but better because the help arrives on the same page. Worried customers can even initiate a conversation with a live chat agent to clarify their doubts about a failed transaction.
Measure and modify
A sales funnel is like a dotted line that runs across the various stages of a buyer’s journey. If your marketing and sales team can connect those dots by making it easier for customers to follow, you will have more potential customers turning into returning, loyal customers. However, if your business is not generating enough leads or see a noticeable churn in the leads before they become customers, there might be discrepancies in your sales funnel that need some plumbing work.
Maybe you are not talking to the right audience, in which case you have to redo your buyer persona all over again. Or maybe your nurturing is not up to the mark which is why customers are turning away. In such scenarios, certain stages in your sales funnel might need a good fixing.
(Thanks Sudheesh Chandran for the feature illustration)