Sales funnel: what is it and why do you need it? Definition, history, and applications.
A sales funnel is a marketing tool that creates a model of user behavior from the moment they meet a company until they make a purchase or a deal.
The term “sales funnel” was introduced over 120 years ago. The model of consumer behavior created at that time is still considered a model. Any type of consumer funnels are based on it. They can be supplemented according to the specifics of the business and the individual company.
Figuratively, a funnel is a vessel with a wide inlet, where all the multitude of people interested in a specific issue or product enter. As you move towards the company’s goal (for example, making a purchase), the vessel becomes narrower since potential customers are eliminated at each stage. The bottom of this funnel is the narrowest point for customers who have taken the targeted action. All areas of business use them successfully. It is suitable for stores, service companies, industries, information resources. In the latter case, the target action is not a purchase but a subscription to news or mailings, reposts, etc.
Why a sales funnel is needed.
The principle of using a sales funnel is to understand what steps the path to the (final or intermediate) target for business action.
This tool allows you to:
- think over a system of motivation for promoting a potential client at each stage;
- detect errors and problems that prevent you from bringing a person to a deal;
- adjust the company’s work at problematic stages and increase sales;
- get more accurate forecasts of potential profits and business development.
What the sales funnel consists of:
Stages of achieving the goal The classic sales funnel includes four main steps. They are also the basis of the AIDA model. Let’s study each step separately, its tasks, and the main problems that block further movement towards the planned result.
1. Awareness (A – Awareness).
At this stage, an informational image of an object is created, which the potential consumer has not even thought about before. The main task is to provide information to people who do not plan to study or buy anything yet, in that place and in such a way that they agree to read. The solution lies in finding effective traffic channels and increasing points of contact with users. The focus is on brand awareness.
- internal optimization;
- quality content and its promotion;
- external links; social activity;
- participation in offline projects;
- publication of valuable articles on thematic sites.
The main mistake at this stage is the incorrect definition of the target audience, its nature, interests. It also leads to choosing a traffic channel: a potential client does not have the opportunity to see the offered information and study it.
Another common problem is trying to convince users to take action. They are not ready for this at the moment. Purpose: to draw attention to the brand and product of the maximum number of target users interested in what the company offers.
2. Interest (I – Interest)
The acquaintance of the potential client with the brand and the product is complete. He gained an understanding that the company is worth attention and a willingness to continue acquaintance with the information it offers. At the same time, the idea of the desire to perform the target action has not yet been born. The task is to generate interest in more detailed information about the product that the company provides. Users already have a basic understanding of the subject and are ready to expand their knowledge. The solution is to establish interaction with “warm” contacts to create the basis for continued interaction. It is essential to draw up a portrait of a potential client as accurately as possible to adjust further work for him.
- analytics of behavioral factors;
- content that offers to delve into the topic and develop an interest in the product; capture forms;
- reminder via email newsletters;
- blog post loops.
The problem is the low quality of the content and the lack of helpful information. If the user has doubts, he will try to dispel them “on the side”. As a result, the work done earlier on the formation of interest in the topic will play into the hands of competitors.
The goal is to create a conscious interest in the direction and the company’s proposal. Only after laying a solid foundation of trust can one move on to working out a specific recommendation.
3. Desire (D – Desire).
A representative of the target audience at this stage turns into a potential consumer. The idea of action has been formed already, and the user is ready to go further and is open to suggestions.
The task is to form a willingness to place an order, make a purchase, or any other action with you. Throwing away all doubts and objections, the user must decide that your offer is the best.
- market and competitor analysis;
- promotions and discounts;
- elaboration of winning terms of cooperation;
- personalization of the offer; loyalty programs;
- reviews of satisfied customers;
- professional work of managers-consultants.
The main problem of business at this stage is a “raw,” unfinished offer. It usually arises from a lack of awareness of the market situation and competitors. As a result, there is no way to offer a solution that the buyer considers the only right one for himself.
The goal is to bring a potential client to the coveted button, page, or call. As a result, he is not only ready to perform the targeted action but has already made a choice in favor of your offer.
Action (A – Action)
The final stage at which the final transformation of a potential client into a real one takes place. This step should be as simple as possible and consist, if possible, of one understandable action.
The task is not to interfere and to simplify as much as possible the implementation of the planned action.
Stage tools are more technical in characteristics. It can be a button “Buy” or “Make an order,” an online consultant, a reminder of the products put in the basket. The work of the operators accompanying the transaction is also performed here.
The problem that will not allow you to successfully complete this stage of the sales funnel is related to the company’s unwillingness to bring the matter to its logical end. The client is not only ready, he is already taking action, but technical imperfections, inconsistencies, poor management, incorrect work of service assistance, and other mistakes can prevent him from fulfilling his plans.
Sales funnel: examples and varieties.
The classic sales funnel model characterizes the chain of relationships between the company and the target audience in a general sense – from the creation of the information field to the target action. Depending on the direction of the business, it can be supplemented with separate stages that are necessary to achieve the company’s goals.
If the business is aimed at a long-term relationship that evolves over time, you can add a stage for continued cooperation. It can be a loyalty program for regular customers or customers who have made a purchase for a certain amount. In addition to the main consumer funnel, middle funnels can be created for each stage of interaction. They reflect not so much the actions of users as the work of specialists. The funnel of the sales department may look like: “cold” call – sending an offer to the mail – test call – presentation at a personal meeting – conclusion of an agreement – payment.
Delivery department employees can move along such a funnel: receiving products from the warehouse – transferring them to the courier – receiving reporting documents – closing order in the database.
Secrets of building an effective sales funnel
CRM systems allow you to build a funnel that reflects the realities of your business and automate all the processes associated with it.
Depending on the selected CRM, here you can:
- maintain a customer base and track their location relative to the stages of the funnel;
- monitor the actions of employees and users;
- track the audience’s reaction to any changes in the process of interaction with the brand and product;
- generate reports on various indicators;
- keep track of the efficiency of departments and employees;
- integrate data into other services.
CRM simplifies the work with the sales funnel and with all business processes, makes it as effective, transparent, and informative as possible.
2. Clarity and simplicity adjusted to a specific business
The classic sales funnel is not universal. It must be viewed as a skeleton or specimen. Each company needs to develop its own (sometimes more than one) funnel, which will reflect the reality of its interaction with customers.
At the same time, it is important not to complicate or burden the sales funnel with unnecessary stages that will increase the user’s path to the target action. Redundant steps and the elements created for them can negatively affect data analysis, confusing and leading to non-obvious and erroneous conclusions.
3. Testing and Analysis
The consumer funnel is great for assessing the effectiveness of a particular stage and changes made.
Each new element (additional traffic channel, advertising video, assortment expansion, etc.) must be tested and analyzed separately to see exactly how it affects the situation.
The consumer funnel with the right approach to work is a transparent, informative, and very effective marketing tool. But it won’t be useful if you make mistakes when constructing it or evaluating the data. Start building your company’s sales funnel from the main stages and gradually expand it, creating a unique design that fully reflects the interaction of your business with potential customers. As a result, you will receive a lot of useful information on how to improve the work and individual suggestions. What stages would you include in your company’s sales funnel?