Sales funnels are a way for marketers and business owners to view the journey of a prospect from their initial search to identify a product or service that fulfils their needs right through to the successful completion of a purchase.
Sometimes called a sales pipeline rather than a sales funnel, sales funnels enable you to view a big-picture snapshot of how customers find you, the journey they make between finding you and making a purchase, and what makes some prospects bow out before you secure a sale.
Sales funnels are useful for SMEs because they allow you to fine-tune and improve your marketing and sales endeavours to reach more prospects and secure more sales. They allow you to identify where and why prospects decide for or against making a purchase, measure how effective your sales processes are, and forecast your future sales too, all of which can help you to increase sales and improve your ROI.
However, research conducted by Salesforce indicates that 68% of companies of all sizes don’t use or measure their sales funnels, and that 79% of the leads that they do generate don’t ultimately convert into sales.
Knowing how to construct sales funnels and use them to their full potential is a valuable skill for the owners of SMEs, and doing so isn’t difficult once you understand the value of effective sales funnels and how to use them properly.
In this article, I will share some advice on how sales funnels can be used by SMEs to direct the customer journey, how to create an effective sales funnel, and what to do if things don’t go to plan. Read on to learn more.
What value do sales funnels hold for SMEs?
There are a number of benefits to integrating sales funnels into your business model, regardless of the size of your operation.
- Sales funnels can help your team to understand and enhance the customer journey at every stage of the process, from their initial need to purchase a product or service through to the successful purchase.
- Sales funnels can provide a highly accurate forecasting tool that enables you to predict future sales, fine tune your approach, and drive growth.
- They also help to keep different departments within your business aligned and on the same page about the goals and supporting activities pertinent to each funnel or campaign. This ensures that the different players on your team speak with a cohesive, brand-appropriate voice and portray the same message to prospects and customers.
- Sales funnels allow you to identify where prospects are lost along the customer journey, enabling you to negate or tackle pain points that are compromising the effectiveness of your campaigns and sales endeavours.
How a sales funnel can direct and channel the customer’s journey from prospect to purchase
Before you can build an effective sales funnel of your own, you first need to develop a better understanding of the customer journey itself. This is defined as the thought process and decision-making stages that each prospect passes through on their way to making an eventual purchase. This can help you to visualise the different stages of the customer journey in order to serve it more effectively.
The best way to do this is to view things as if you were a potential customer, from the point at which they identify a need or a desire to purchase a certain specific type of product or service, or begin looking for an as-yet unknown product or service to fulfil a need.
This allows you to visualise the customer’s decision-making patterns and thought processes throughout the funnel, so that you can predict and direct the buyer journey to win the sale.
A sales funnel is constructed of individual, linear stages or key points in the prospects’ decision-making journey, and the number of stages within any given sales funnel depends on the way your business works, what you are trying to achieve, the competition out there within your niche, and the behaviour of your existing customers and potential prospects.
Anything from around three to nine stages is normal for a sales funnel, and for SMEs, three to five stages are often all that is required to be effective, and to ensure that things don’t become overly convoluted.
As an example, if you are working with a five-stage sales funnel, here is a basic outline of what those stages might be:
The awareness stage is when your prospects realise that there is something that they need to buy, or that they have an issue or desire that requires a resolution, even if they are not sure what might provide this.
For SMEs, the awareness stage is the point at which you might use ads and marketing campaigns to raise awareness of your product, so that people who need it can find it or become aware of it.
The factfinding stage comes next, and this is the point at which your prospect starts looking for options to fulfil their need and supporting information surrounding it. There may be several different types of goods or services that might be viable for your prospect at this point, or the same or similar products offered by competing retailers, all of which would theoretically suit the task at hand.
3. Comparison and evaluation
The comparison and evaluation stage is where your prospects begin to compare and contrast the different merits of the products or solutions they are considering, and evaluate them to further narrow down their choices.
At this stage, your prospect might pick a specific type of product for the task at hand, or narrow things down even further by discounting certain retailers offering the same products as each other.
The factors that your prospects use to do this can be variable, and may pertain to either a product type or the USPs of different individual sellers; such as price, shipping options, and product enhancements.
This is also the stage at which prospects are most likely to make contact with your business to request further information, submit an enquiry, or otherwise give you an opportunity to progress their journey through the funnel to close the sale.
4. Purchasing intent
Stage four is the point at which your prospect confirms in their own minds their intention to make a purchase, and they’re a long way through your sales funnel at this point but still more than capable of dropping out.
Often by this point prospects are highly committed to making their purchase but are still capable of being swayed in the opposite direction by seemingly minor pain points and objections; for instance, if your prospect gets as far as the checkout stage and baulks at the shipping costs or timescales.
5. Closing the sale
The close or purchase is the stage at which your prospect hands over the cash for their purchase and seals the deal. Historically, this often meant interacting with a salesperson either by phone or in person, or in more recent times, via email or contact form. However, these days the entire sales funnel often takes place with no interaction between prospects and the sales or customer enquiries team at the business itself.
At each stage of the sales funnel, your prospects decrease in numbers; this is the nature of the funnel model of mapping the customer journey. A large pool of initial prospects at the awareness stage winnows down significantly on the way to that eventual purchase.
Prospects can and do drop out along the way at every stage of the sales funnel; but for every additional step your prospects take through the funnel to their eventual purchase, the higher your chances of retaining them and achieving the sale.
Working out where and why you lose prospects within the earlier stages of the sales funnel is part of the process of improving your funnels to keep your prospects on track for a purchase, and to reduce the drop-off rate at each point.
How to create a sales funnel for an SME
To develop an effective sales funnel, you need to be able to match each stage of the funnel with a sales and marketing angle and approach that is designed to negate objections, raise interest, engage the prospect, and motivate them to continue through your funnel.
Here’s how that works in practice for our five-point model outlined above.
1. Awareness >>> Information
At the first stage of the sales funnel, your task is to raise awareness of the products or services you offer, their applications, and what they do. This might take the form of either brand-led or direct response marketing (or both), but the purpose of this stage of the sales funnel is to get your product or solution out there and seen by the people who might be looking for it, or that are looking for a solution your product can provide.
Paid and promoted ads, keyword integration and SEO, generating a buzz about your product and spreading the word all form part of the awareness stage.
2. Factfinding >>> Qualification
During the qualification stage, your prospects have already determined that you have something that might provide a solution for their problem or need, but they will also be looking at competing offerings from others, and potentially considering a range of different products or services that could all fulfil their need.
At this stage of the sales funnel your job is to ensure that what you offer qualifies itself in the mind of your prospect so that they don’t rule it out at this early stage and choose another product or vendor. This means demonstrating to your prospects clearly and unambiguously why your offering fits the bill and if possible, demonstrating what makes it better than a competing offer.
3. Comparison and evaluation >>> Highlighting your USPs and incentivising a purchase
At the comparison and evaluation stage, your prospect has already discounted products that aren’t quite right or that are obviously inappropriate, and they have potentially ruled out sellers who aren’t competitive or whose approach they don’t like too.
At this stage of the sales funnel, your remaining prospects are likely to be comparing anything from a handful of competing offerings to just two, to determine the best choice for them. This is the stage at which you need to make your USPs clear, after first ensuring that they are competitive.
For instance, if a competitor offers the same product for the same price but with free shipping or an added bundle of accessories and all other things are equal, you are likely to lose prospects to that seller.
Make sure that your prospects can learn why not only your product but also your business and customer service are better than someone else’s, and ensure that they don’t have to hunt around to learn what they need to know.
4. Purchase intent >>> Removing pain points and reinforcing your USPs
At this stage, your prospect is invested in their imminent purchase and has ruled out competitors and alternative products. However, if you drop the ball here you can still lose the sale, so never view the purchase intent stage of the funnel as a done deal.
This point of the funnel is again where you need to highlight and reinforce the value of what you offer with its USPs, and you also need to critically review the customer journey to remove potential pain points that can lead to an abandoned purchase.
This means reviewing everything from the ordering process itself and how easy it is (which in turn might mean that you need to re-think forcing new clients to fill out pages of registration details in order to buy, or offering only relatively unknown and so, untrusted payment methods) to your customer service and the tone and approach taken on your website itself.
You also need to look critically to find and negate potential pain points, such as overpriced shipping, long despatch times, or a convoluted returns policy.
5. Closing >>> Learning and developing
Here at the final stage of the sales funnel, your prospect’s decision is made and they either purchase from you or walk away.
Establishing what you did right to win sales or where you are dropping the ball and losing sales is an important part of the learning process that allows you to develop more effective sales funnels in the future, and that helps you to find out where and why you’re losing prospects within the funnel in question itself.
Testing and fine-tuning a new sales funnel
A/B testing or split testing is one way to test a new sales funnel and compare its performance to existing or past funnels, and this can also help you to identify where improvements can be made or where there are weak points in your customer’s journey.
Integrating analytics across your ads, website and other components of your sales funnel is vital too, and can help you to make correlations between prospect losses or acquisitions and the point in the funnel that they occur at.
For instance, if abandoned shopping carts are the bane of your life (as they are for most online retailers) then you’re losing prospects at the fourth stage of the sales funnel, the purchase intent stage. What is discouraging your shoppers once they’ve got as far as the checkout stage? Find out, and you can fine-tune your funnel (and the content supporting that stage of it) to negate the issue.
Ensuring that you are clear about the endeavours that you undertake to support each stage of the sales funnel and having access to data and analytics that allow you to review them will help you to test the efficacy of different funnels and identify those that perform well and those that aren’t getting prospects through to the sales stage.
Sales funnel troubleshooting and problems to avoid
If you’re taking your first punt into the world of designing a sales funnel and you bear the above information in mind, you stand a good chance of building an effective funnel from the get-go and ensuring that you understand the funnel and its supporting processes well enough to benefit from it.
However, problems can and sometimes do come up along the way, so I’m going to share a few common issues that SMEs face when using sales funnels and some tips on how to negate them.
You aren’t using the right stages
The five-stage sales funnel outline I have provided above is a good representation of the average sales funnel, but it is not the right fit for every business or campaign. As I mentioned earlier on, sales funnels may have anything from three steps to nine or even potentially more, and what those stages are can vary too.
If your average customer’s journey from awareness to purchase is short and simple, three stages might well be sufficient. For more complicated niches or those with a high level of competitor activity, more stages might be more appropriate.
The trick here is to avoid starting with an outline of a funnel with a predetermined number of set stages and attempting to fit your customer journey into it; instead, map your customer journey organically and determine the different stages that they go through between awareness and purchase, and design your funnels around this information.
You’re blurring the lines between each stage of the funnel
Once you have determined the number of stages that are appropriate for your funnel and what those stages are, you have to ensure that your response to each stage is relevant to the customer journey at that point, and that it fulfils their needs.
For instance, getting the USPs of your products across to your prospects and outlining why those USPs mean that a prospect should buy from you and not a competitor is something you need to achieve after your prospect has already ruled your product into their shortlist of potential options.
Place too much onus on highlighting your USPs at the awareness stage and you run the risk of this information being forgotten by your prospect later on when it actually becomes pertinent, and also watering down your ability to fulfil the awareness stage of your prospect’s search because you’re concentrating on the fine details before you’ve actually qualified your product in your prospect’s mind.
Your results aren’t trackable
A sales funnel is effectively useless if you can’t track its success or can’t establish what’s going on after prospects enter the funnel. Ensure that you build in analytic metrics and data captures to enable you to track the progress of your funnels, and to identify problems and weak areas.
Measuring your success
You can calculate the value of your sales funnels and establish which of them are the most effective (and why) by measuring the success that each funnel achieves for you.
The most effective sales funnel is the one that achieves the greatest number of sales compared to the number of prospects that entered the top of the funnel (the awareness stage) and you can also calculate the drop-off rate along the way and where you lose prospects within the funnel itself.
For instance, if you start with a pool of 100 prospects at the awareness stage and these filter down to 10 eventual buyers, that funnel has a ratio of 10:1. Another funnel that only results in 5 eventual buyers from your initial pool of 100 has a ratio of 20:1, which indicates that your first funnel is more effective.
Knowing this – and where in the second funnel those additional prospects are dropping out – enables you to identify your most effective funnels and find out why this is compared to the funnels that don’t perform so well.
You can then fine-tune or replace your underperforming funnels to emulate or exceed the success of your better ones.
How to make your sales funnels more effective
Let’s finish off with some insights into how you can improve the efficacy of your sales funnels and use them to increase sales.
Raise awareness to the right prospects
Generating a huge level of awareness about the product your funnel is designed to sell is only valuable if that awareness comes from real, qualified prospects. Promoting or showcasing what you’ve got to people that aren’t interested in it or that will quickly disqualify it from their decision making process is not only pointless, but it will also make the supporting activities and promotions behind your funnel ineffective and costly, as well as meaning that you may well miss out on reaching prospects who genuinely might buy from you.
For instance, if you are trying to market a muscle car, unless its USP is that it is also eco-friendly and has low emissions, there would be little to no value in targeting the market of people who are looking for a Prius or other “greener” vehicle.
Having a goal for each sales funnel such as raising awareness or increasing sales helps to inform the structure of your funnel and how you address the different stages of the customer journey. Without a goal for each funnel, you won’t be able to measure its success or work in a meaningful way to enable it to achieve your aims.
Schedule supporting campaigns
Scheduling marketing campaigns and promotions around sales funnels can both help you to determine the success of your campaign itself and ensure that you convert the maximum number of prospects into sales. Without a trigger or point of inception to drive people into your funnel in the first place (such as by running a promotional campaign or awareness drive) you won’t be able to convert those prospects into eventual sales, and will be left relying on prospects that manage to find you anyway, which greatly narrows down your potential customer base.
Set review deadlines
Finally, a sales funnel needs to be permitted to run for a reasonable amount of time before you can really analyse its success and look at improving it, so it is wise to set a start and end date for each funnel during which time you can capture data for analysis to drive improvement.
You can of course continue a sales funnel and supporting campaign for as long as you want to and it proves effective for, but scheduling in regular reviews and revisions helps to ensure that you don’t waste time and money on the same old tricks that are no longer working.