What is a Sales Funnel and Why Do I Need One?
A common term thrown around in the digital marketing industry is the phrase “sales funnel.” While the name may imply what it is, the actual function of it and why it’s important to have can be lost in the jargon. So what is a sales funnel, and why should you have one?
A sales funnel can help you automate your sales process and increase your marketing’s efficiency.
A sales funnel serves a handful of purposes. It allows you to track the customer journey, measure campaign performance across multiple channels, and identify potential sales opportunities among segmented audiences.
A sales funnel has three primary functions:
Automate sales process and streamline marketing channels
Measure and evaluate campaign performance
Track and improve the customer journey
A sales funnel is much more complex than a strategy or campaign. It segments audience members, outlines steps to achieve marketing objectives, and brings everything together as it relates to different parts of the customer journey.
Developing a sales funnel can help you generate instant sales and increase the ROI from your marketing efforts.
The best way to understand a sales funnel might be to use an example. Let’s say you own a real estate firm. Your primary marketing objective is to find new clients to help buy and sell homes. Your sales funnel might look a little something like this:
First, identify where your audience lies within their purchase process. Your audience members can fall into one of three segments.
Cold: This group has a problem or desire but is unaware of a solution.
Example: A recently married couple that is looking for a place to live but does not know where to start. Perhaps they don’t understand the benefits of owning versus renting, or want to find a good school district to live in.Warm: This group knows of a solution but does not know how to achieve it.
Example: A recently married couple that wants to buy a house and has a budget, but cannot find a home within their budget or negotiate on price.Hot: This group is ready to buy now and is actively searching for your product or service.
Example: A recently married couple that is looking to buy a home in your area and knows what they want.
After you identify the characteristics of each audience segment, write down specific questions that each group might have during their search. Your ability to answer these questions in your advertising campaigns, social media content, and website content will determine your success in each step of the funnel.
The funnel itself might look something like this:
A Facebook Ad that targets recently engaged or married couples within a 30 mile radius of your business. Perhaps they have not yet thought about purchasing a home, which would categorize this group as a cold audience. This is the first step of your funnel, targeting members of this group with Facebook Ads. Perhaps your ad encourages them to visit your website and browse local listings. You could also include a contact form to submit their interest in certain properties.
The second step of your funnel could include retargeting website visitors with a Facebook and Google campaign that encourages them to sign up for listing updates or use a free tool on your website. The second step of your funnel could also include targeting a new audience on a different platform (such as Google) that are actively searching for property listings in your area. Both marketing channels would be considered warm audiences, so your content should reflect that.
The third step of your sales funnel most likely includes reaching out to your contact list via email or phone with property listing updates. Your contact list is mostly accumulated from steps one and two, but can include external sources not listed on your sales funnel (such as organic website traffic).
The fourth step of you sales funnel could include an offer to schedule property tours, or perhaps could include an email with a property listing that you think is perfect for each individual audience member.
Your sales funnel really depends on your industry, but overall it helps organize your traffic sources, streamline your marketing channels, and understand how to reach and resonate with audience members in each step of the customer journey. Better yet, it allows you to measure overall performance and identify areas for improvement, which means that you are constantly driving more traffic, reaching more customers, and optimizing your marketing spend.
Most of the time, when a business sees a campaign or marketing channel underperforming, all they need is a tool that allows them to visualize where customers are losing interest in their product or service and understand how they can improve their results.
Both Facebook Ads Manager and Google Analytics allow you to create and visualize your sales funnels, and I encourage you to check those functions out if you haven’t already. You can also create a funnel for Facebook campaigns, which serves a similar purpose and can help improve your campaign performance dramatically.
An example of what a basic sales funnel looks like.
Pictured above is an example of a basic sales funnel that defines the steps it takes to achieve a marketing objective and how to successfully execute it. If you want to build an effective sales funnel for your business, sign up to download our free template here: Free Sales Funnel Template.
