What Is a Sales Funnel? (+3 Common Sales Funnel Challenges)

Tricia Dempsey
Tricia Dempsey  |  January 2, 2019

What do you think when you hear the word, “funnel?”

You might think of the kitchen tool or lab or construction equipment or maybe even a funnel cloud. But experienced salespeople might instantly think: Sale! That’s because, believe it or not, funnels are pretty useful in the sales industry.

The term is meant to help sales teams visualize the sales process and consider each step of the customer’s journey. This helps them better understand the successes and setbacks that can happen at any point during a sale. Think of it as an adventure with many stops along the way.

sales-funnel-definition

How a Sales Funnel Works

The visual of a sales funnel depicts the various stages a potential customer passes through from the start of the sales process to the end. But, before a prospect can even enter the proverbial funnel, they need to be drawn there some way, whether it’s via social media, advertising or other methods.

The funnel can be narrowed down to three sections:

Top of Funnel
Middle of Funnel
Bottom of Funnel

Each section corresponds to the major phases of a customer’s buying journey. Top of Funnel refers to the beginning, which is essentially the marketing phase. Middle of Funnel refers to the many steps in the middle of the sales journey, which involve keeping the prospect enticed enough to continue. Bottom of Funnel refers to the last stage, in which the prospect becomes a paying customer.

The Basic Sales Funnel Steps

The length of the journey, the steps involved, and journey management can differ between industries. However, the end goal remains the same: to convert the prospect into a buyer.

Take a deeper look at the steps involved with each section of the funnel:

What-Is-A-Sales-Funnel

Top of Funnel

The funnel shape is meant to reflect the number of prospects involved in each step. Just like a real funnel, the opening of a sales funnel is large. That’s because the prospective audience is at its largest during the initial marketing phases. As the process goes on, the audience is “funneled” down based on the reception of the initial marketing. This beginning phase is generally low-cost and has low personal interaction.

Awareness Stage

Your prospects have arrived! Somehow, you’ve made your potential customers aware of your company or service. Your first goal is to lead them through the funnel and keep their awareness piqued throughout the entire buying adventure. During this phase, it’s important the prospects know who you are and what you can offer them. Capturing the attention of your prospects depends on the business. Awareness techniques include social media engagement, webinars and more.

Middle of Funnel

The middle of the funnel focuses on moving the customer along the journey, since they’ve already made it into the funnel. This is an important and lengthy phase that involves gaining the prospect’s trust and providing a good experience that will lead to loyalty.

Interest Stage

Once the prospect is aware of your product or service, you need to excite their deeper needs and interests.  The effort you put into the first phase will make a difference here. If you successfully made your presence as a company known, and further showed how you can help them, the prospect will either continue to show interest or fall out of the funnel. Typically during this stage, you will conduct your first meetings with the prospect and dig deeper into your product or service.

Decision Stage

At this phase, your prospect will begin to evaluate whether or not your product or service is worth their interest. The decision-making process may involve the prospect comparing you to competitors. This phase will require effort on your part to win them over and continue to showcase how your product or service is necessary. Follow-up emails, meetings, or calls typically happen during this phase.

Bottom of Funnel

The bottom of the funnel is the shortest phase, but it’s filled with the prospects most likely to be converted into buyers. This phase is generally high cost and has more individual focus on each prospect.

Action Stage

Your prospect has made their decision. At this point, they’ve most likely proven  they want to buy from you. However, we aren’t at the very end yet. You’ll have to provide them a means to accept the offer to buy, which is typically via a proposal.

Loyalty Stage

At this stage, the deal has closed and congratulations are in order! The prospect has reached the end of their journey and agreed to become a buyer. In this phase, you’ll deliver the product or service to the buyer.

What's Next?

Leading a prospect through the funnel is cause for celebration, but the work doesn’t end there. It’s worth taking the time to figure out how you’ll keep them as a loyal repeat customer.

Proper funnel management involves working to keep the buyer loyal to the product and building a strong relationship. Think of it as a secondary, smaller funnel. Think of other departments in terms of a funnel, such as a marketing funnel.

Likewise, converting an existing customer into a returning buyer also requires strategic planning. Figuring out potential missteps will help set you up for success.

Sales Funnel Challenges


  • Not Managing Contacts Correctly
    Contact management doesn’t have to be difficult when the right tools are implemented. CRM software can help prevent potential customers from falling out of the funnel before reaching the bottom. CRM programs streamline all aspects of the sales process, automate basic sales tasks and help with contact management, email tracking and new buyer onboarding.
  • Funnel Holes
    It’s common for prospects to drop out of the funnel before hitting the end. Visually, think of a failing funnel as having many holes. A hole in the funnel is simply a misstep. A prospect falls into the hole, and out of the funnel, when they lose interest in the journey and choose not to become a buyer of your product. Holes can represent forgetting to follow-up with a customer, not stacking up against a competitor, or the prospect’s simple lack of interest in the product or service. Study the performance of your sales funnel on an ongoing basis to keep track of existing holes and prevent new ones from opening up. Sales training and onboarding software is a great resource for new salespeople to learn and prevent funnel holes.
  • Not Targeting the Right Leads
    There are many ways to entice an audience to the top of the funnel, but not all ways are right for your target prospects. For proper lead generation, Sales intelligence software is a helpful tool. It provides information and insights into potential leads and is a great way to target the prospects most likely to reach the bottom of the funnel.

Next steps in the sales management lifecycle process

Sales funnels are useful for determining whether a prospect is likely to become a buyer. Strategic planning will set you up for success and prepare you for any setbacks. Your sales funnel doesn’t have to be perfect the first time. Keep track of how it performs and adjust as you become more familiar with leading prospects through your funnel from top to bottom. 


Now that you know the stages of the buyer's journey, learn about the seller's journey in this sales pipeline guide! 

Tricia Dempsey
Author

Tricia Dempsey

Tricia is a Research Associate who joined G2 Crowd in October 2018. Tricia was raised in the Chicago area and loves reading and writing in cozy coffee shops. In her spare time, you can find her gaming, obsessing over her favorite bands or exploring Chicago's restaurant scene.