An effective funnel has become synonymous with growth by streamlining your lead prospecting and nurturing processes. How exactly does it work? Let us understand this in detail.
Table of Contents:
- What is a Sales Funnel?
- Why Do You Need It?
- Stages in a Sales Funnel
- Understanding the Type of Audience
- Best Practices for Your Organization
- It's Your Turn!
What is a Sales Funnel?
A sales funnel maps the prospect's journey from when they come to know about your company and your product to the final purchase. It is wide at the top and keeps narrowing down as prospects move to the next buyer journey stage. There are a lot of prospects at the top of the funnel. Through the filtration process in the sales cycle, qualified prospects are moved to the next stage in the funnel. The prospects that are not the right fit are dropped off and not moved to the next stage.
In this way, only some qualified leads from the initial leads generated reach the bottom of the funnel to become a customer eventually. It, thus, makes sure that only qualified prospects are targeted and helps better sales conversion. It also helps identify where qualified prospects are dropping out of the funnel and thus helps improve the customer's buyer journey.
Why do you need it?
Did you know that according to SteelHouse, targeting can help increase conversion by almost 300%? However, a sales funnel goes further to strengthen your sales cycle and processes. It offers various benefits to your organization. Some of these are:
Quality Over Quantity
Identify Gaps in your Sales Cycle
Understand Your Prospects
Better Sales Conversion
Unlike traditional sales, modern-day sales focus on generating and interacting with quality leads rather than volume. A funnel helps filter out unqualified leads. It ensures that you interact and engage with interested prospects who become eventual customers. It helps create highly qualified customers that are likely to stick around for years.
The sales funnel breaks down the customer's buyer journey into different stages. Evaluating the stages reveals where qualified leads are dropping off. It helps in identifying inefficiencies and gaps at the right time.
A funnel allows beyond targeting the qualified prospects. It enables you to understand prospects by mapping their journey from the point the customer comes to know about you to the final purchase. A thorough analysis of the leads at each stage reveals your target audience's pain points and preferences.
The sales funnel improves the sales conversion rates with the quality of leads generated. It provides guided selling to help prospects at every stage of the purchase journey. It helps align your prospects' needs with your product or service offerings. If the needs don't align, the prospect is dropped off so that you can focus on converting the most qualified leads.
Stages in a Sales Funnel
A funnel is divided into different stages depending upon your organization's sales cycle. Sales reps move prospects to the next stage based on qualification. Only relevant and interested prospects are further converted into customers. Typically, there are six different stages. These stages can be defined as follows:
Awareness is usually the first stage. It is the stage where prospects are made aware of your product or service. The aim at this stage is to make the target customers aware of the availability of your product through various channels and marketing efforts.
In this stage, prospects demonstrate an interest in a product either by browsing through the website, downloading an e-brochure, or interacting with your organization. The sales reps initiate initial engagement with the prospect and try to qualify them by understanding their pain points, needs, and motivations.
As the name itself suggests, this is the stage where the prospect evaluates the alternative product or solution available to them. They might consider various factors like pricing, features of the product, or after-sales services while comparing your product to that of the competitors'. The aim is to make the prospect aware of the company's USP or key differentiating points, which will make them choose your product over the competitors'.
In this stage, the prospect makes the final decision. their intent to buy or not is clarified. Once the final decision has been made, the sales rep and prospect indulge in negotiations. They decide upon the terms of the deal.
In this stage, once the prospect and sales rep have agreed upon the terms in the intent phase, the deal is closed. In other words, your product or service is purchased by the prospect.
Once the prospect has been converted, the next stage is making sure that they become long-term loyal customers. It includes maintaining customer relationships and offering them seamless after-sale support. It is essential to do this because acquiring a new customer can be five times costlier than retaining existing customers.
It is where loyal customers advocate your product to their close ones based on your merit and functionality. It can be achieved by inducing loyalty among customers and serving them perfectly.
Inside sales managers and sales reps work in cognizance to develop strategies and tactics. It is done to optimize the customer experience at each touchpoint of their sales process. It involves mapping the customer journey and understanding prospect and customer requirements through various approaches.
Understanding the Type of Audience
Creating and evaluating the sales funnel aims at mapping the prospect's purchase journey by dividing it into stages. It helps you identify what the target audience is searching for and what works in favor of your organization's sales cycle. A common strategy to understand the type of audience at each stage of the sales cycle is by dividing them into the following three stages.
Top Of The Funnel,
Middle Of The Funnel
Bottom Of The Funnel
The leads or audience at the top of the funnel, are people who will know about their pain points but don't have a solution. The leads here are at the research stage and need reasons to purchase from you. They are unaware of your product or service and thus need to be made aware of helpful and educational content. The aim, therefore, is to provide them with support material like blogs or research reports to help them identify and clearly define their pain points. You have to qualify leads that are to be pursued based on the interest they show in solving their pain point.
The middle of the funnel leads are somewhere between TOFU and BOFU. The audience is aware of their pain points and delving deeper into them. They might not be looking at your company's product specifically but solutions similar to what you offer. The major aim here is to support the leads and help them move onto the purchase stage. It is done by assisting them in evaluating available options and providing them insights into their problems. The sales reps also try to qualify the leads. Sales reps try to determine if the leads fit their product or solution by asking them the right sales qualifying questions.
Bottom of the funnel is usually for highly qualified leads. The audience thus at this stage is beyond the awareness and discovery stage. They are more at the evaluation or purchase stage. They need encouragement or trust to buy from you. The aim here is to resolve any objections that they might have. It is done by giving live demos or trials to demonstrate the product's benefits and functionality. The approach here is strategic to provide the final push to the lead towards your product.
The approach of making sales and optimizing the customer experience differs at each stage of the funnel. For example, the top of the funnel approach would differ from the bottom. It is because the type of audience at each of these stages is different. It is, thus, essential for you to break down the funnel into TOFU, MOFU, and BOFU.
Best Practices for Your Organization
Creating a robust funnel is vital to streamline your sales and marketing functions. Organizations are increasingly looking for practices that help better integrate the funnel within their organization. Some standard practices that have proven successful are as follows:
#1 Align Sales and Marketing
The sales and marketing departments work in tandem with each other. To make the best use of the sales funnel, it is important to align these functions. The market positioning and messaging at each stage of the funnel with the aim of the sales team. It is important to provide a better experience to your prospects and improve sales conversion.
#2 Data-driven Customer's Journey
Relying on memory and experience alone is ineffective. Using sales insights is important to understand the customer’s journey and optimize your sales strategy. Looking at quantitative data involves determining the conversion rate at each stage and identifying inefficiencies. Besides quantitative data, talking to sales reps and gaining real-time sales insights can also help deliver a better customer experience.
#3 CRM Integration
Working with data isn't a one-time activity. You have to manage data across multiple prospects at the same time. Leads can easily go cold without personalized interaction and dedicated attention. A Customer Relationship Management or CRM platform can automate your sales process. It helps you track critical actions and close deals quicker.
#4 Revisit and Review
To optimize your sales process, you need to revisit and review your funnel periodically. The needs and preferences of your prospects change over time. It is important to adjust and adapt your sales cycle according to your prospects' changing requirements. Reviewing involves identifying where the prospects are losing interest and dropping off. It involves reviewing your sales and marketing campaigns. The sales tactics and marketing channels employed can be A/B tested to determine what is working the best with prospects. Any gaps in the techniques being used can be filled to optimize the customer experience. Each stage should be evaluated and tweaked to stay up-to-date with your prospects.
It's Your Turn!
By now, you must have understood that you must have a funnel in your organization to optimize your inside sales efforts. Creating it involves understanding your target audience, their motivations, and objections and mapping this across stages. It is your turn now. Get on with defining your sales funnel to ensure that your finite resources are focused on getting only qualified customers on board!