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Sales funnel
6 min read

What is the sales funnel? | Marketing sales funnel tips

So you’ve launched your business, set up a website, started your social channels, dabbled in some pay-per-click advertising and email marketing, and are beginning to gain some word-of-mouth momentum. But… the sales aren’t starting to roll in yet. Why? The issue could lie with your sales funnel.

What is meant by the marketing sales funnel?

The sales funnel is a crucial element of any successful marketing campaign. It’s the process by which potential customers move from awareness of a product or service to making a purchase. It’s therefore critical to understand your sales funnel in order to develop an effective marketing strategy to increase your sales.

A visual representation of the steps that a potential customer takes before making a purchase, it maps out the journey from awareness to interest to desire and finally, to action. Also known as the marketing funnel or the conversion funnel, it’s a vital concept that helps businesses understand their customer acquisition process.

Four stages of the sales funnel

Here are several stages of the sales funnel, each of which represents a different level of customer engagement with a product or service. These stages include:

  • Awareness. Potential customers become aware of your product/service through a variety of marketing channels such as advertising, social media and word-of-mouth.
  • Interest. Once aware, they might start to research it further to determine if it meets their needs, whether it’s visiting your website and social media channels, signing up for your email newsletter or reading through customer reviews.
  • Desire. This is the stage that potential customers reach once they’ve decided they want to purchase the product/service, and are actively considering making a purchase.
  • Action. The potential customer makes a purchase and becomes a customer.

Understanding your sales funnel

Here are some data areas – which are at your fingertips! – that can help you view and assess the effectiveness of your sales funnel:

  • Conversion rates

    One of the most important metrics to look at is your conversion rate, which is the percentage of potential customers who move from one stage of the funnel to the next. According to Statista, in the second quarter of 2021, about 4.2% of visits to e-commerce websites in Great Britain converted to purchases. In the same quarter of the following year, the conversion rate by British online shoppers was nearly identical at 4.1 percent. So, on average, only 4.1% of potential customers who become aware of a product or service, will actually make a purchase.

    It’s important to set up conversion tracking on your website via a website analytics tool such as Google Analytics. This will track the number of visitors who have completed your desired conversion action e.g. making a purchase, filling out a form or subscribing to a service. You then have the data to calculate your conversion rates (dividing the number of visitors who took the desired action by the total number of visitors to your website and multiplying by 100 to get the conversion percentage). It’s also important to track and analyse conversion rates for different channels including email marketing, social media advertising and search engine optimisation.

    By working out your conversion rates, you’ll be in a better position to evaluate the effectiveness of your marketing and sales efforts, and make data-driven decisions.

  • Cart abandonment rates

    A common problem for e-commerce websites is cart abandonment, which is when potential customers add items to their cart, but don’t complete the purchase. According to Baymard Institute, 69.99% of online shopping carts are abandoned. Let’s really think about that… For every 100 potential customers, almost 70 of them will leave without purchasing from you. Imagine how much your revenue would increase, if you captured these sales, instead of losing them?

    Ways you can improve your cart abandonment rates include simplifying the checkout process, providing guest checkout, offering multiple payment options, displaying trust symbols, optimising your website speed, improving website design and implementing abandoned cart recovery email campaigns (such as a follow up email reminding them of the abandoned purchase, and offering a discount to entice them to follow through with the purchase).

  • Landing page conversion rates

    Designed to convert potential customers into leads or customers, landing pages play an important role in the sales funnel. According to research by Unbounce, the average conversion rate for landing pages across 10 different industries is 4.02%. The lower your conversion rate, the more work you need to put into developing your landing pages.

    Ways to improve your landing page conversion rates focus on the design, messaging (benefits before features!) and user experience of the page. For example, including a clear and compelling headline, using a strong call to action (CTA), using high quality visuals to support your message, ensuring your page / site is mobile-friendly, and keeping any submission forms simple – will all help to increase the effectiveness of your landing pages.

    Read more: 8 Ways to Improve Your Website’s User Experience

  • Email open rates

    It’s time to dive into the data of your email marketing campaigns. Are your emails being opened in the first place? Are your subject lines appealing enough? Could your emails be too image-heavy, causing them to alert spam filters and go straight into junk folders? Are they being opened, but the calls to action aren’t encouraging click throughs to your website? Taking time to review the results of your email campaigns will help refine your activity moving forward.

    Email marketing still remains one of the most influential digital marketing strategies for both B2C and B2B businesses. It’s therefore important to assess just how effective your current email campaigns are as part of your sales funnel analysis.

    For example, how do you encourage prospects to subscribe to your emails? How do you transform these subscribers into paying customers? Do you include email opt-in forms on your website? Once subscribed, are you adding contacts to segmented lists, in order to send them the most relevant content and offers? If you are, how effective are they? Are the offers you’re sending given a short expiry date, so you can capitalise on ‘warm’ leads? You need to be asking yourself these types of questions when drilling down into your data.

    (Remember, you can only send marketing emails to those who have opted in.)

    Read more: How to Write an Effective Marketing Email

  • Social media engagement rates

    This is the rate in which potential customers engage with your business’s social media content.

    It’s the best way to tell if your audience cares about what you’re posting on social media and what they want to see more of.

    As you can imagine, there’s a great deal of data offered up by various social platforms to help you refine your activity, from post impressions to levels of engagement. Even sites such as Hootsuite offer a free engagement rate calculator. Many social media marketing experts agree that a good engagement rate is between 1% to 5% – but the more followers you have, the harder it is to achieve.

    Top tip: If you’re not in a position to hire a social media / digital marketing professional currently, make sure your time is being spent wisely on the social channels that are used most amongst your target audience. For example, according to Statista, as of the third quarter of 2022, WhatsApp was the most active social network among internet users in the UK, with nearly 75% of internet users reporting use of the service. Facebook was very close behind, with a rate of 70.7%t, followed by Instagram with 56.4%.

    Just because a social media channel is available, doesn’t mean it’s the right marketing channel for your business. Avoid spreading yourself thinly across too many accounts – it will be hard to keep up and any gaps in communication can reflect poorly on your business. Spend your time wisely, and don’t forget to utilise the benefits of social media scheduling tools to ensure regular communication.

Tips for optimising your sales funnel

Your sales funnel will help you to identify the marketing and sales processes within your business that need improvement.

Here are some ways you can optimise each stage to identify areas where potential customers are dropping off, ways to improve your customer experience and generally move them closer to making a purchase:

  • Identify your ideal customer. Understanding your market and targeting customers is crucial for creating a sales funnel that resonates with them. While this is essential to know before launching your business, it’s also important to revisit, as customer requirements, interests and trends can change over time. Conduct market research to get a firm grasp of your prospects’ pain points, motivations and purchasing habits.
  • Analyse your data. Identify where prospects are dropping off in the sales funnel and why by looking at web analytics tools such as Google Analytics.
  • Improve your content. Informative and engaging content that’s aimed at your target audience is an effective way to communicate your expertise, which helps to increase trust. Share your knowledge via blog posts, videos, whitepapers, case studies – anything you feel will resonate most with your audience.
  • Streamline the process. Keep your sales process as simple and straightforward as possible. Remove any barrier of friction that might prevent a prospect from purchasing. For example, reduce the amount of steps involved in the checkout process, offer a variety of payment options, or consider providing free shipping. According to Signifyd’s State of UK Commerce 2023 report, payment preferences are changing, with ‘buy now pay later’ rising by 68%, while PayPal and Apple Pay were up 274% and 70% respectively. The report also highlighted that ecommerce sales via debit or credit card have dropped by 20% YOY. It seems that speed, ease and increased trust are all playing a part in customer preferences for using online payment gateways compared to more time consuming alternatives. You can take your streamlining one step further by customising the checkout experience on your online payment provider’s platform. For example, PayPal lets you include your company logo on its checkout page, and can auto return your customer back to your website. And let’s not forget the speedy benefit of simply logging into your PayPal account to approve an online purchase. Rather than having to fill your address and billing information in every time, your information gets auto-filled via the details in your payment platform. By conveniently speeding up the payment process for both sides, everyone’s a winner.
  • Personalise the experience. This is a key factor in building a strong relationship with prospects. By tailoring your messaging and content to the individual needs and preferences of your target audience, you’re immediately improving the quality and relevancy of your interactions with them. There are a number of ways you can personalise the experience, from segmenting your email list to using personalised product or service recommendations.
  • Test and refine. Optimising your sales funnel is an ongoing process, which requires continuous testing and refinement. By experimenting with different variations of your marketing and sales strategies, you can work out what works best for your audience and encourages the most conversions.

When it comes to optimising your sales funnel, knowledge really is power. Never assume that your industry or target customers stays static – values, requirements and trends can shift and change. What used to be effective, might not be any longer. New technology on the market is also evolving, with new tools and insights available to refine your sales funnel even further.

Our best advice? Dedicate time to the data. Keep learning. Your customers, and your bottom line, will thank you for it.

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