Every business wants more customers. But cold calling is hard work — and often not worth the time investment. That’s where a sales funnel comes in.
In the world of content marketing, we hear about sales funneling quite a bit. But unless you’ve taken the time to really understand what that term means (and how it works), you might not be executing effectively.
Let’s take a look at some sales funneling basics so we can properly understand what they are, how they work, and how you can use them to get more customers for your business.
History of the Sales Funnel
The tactic of moving potential buyers down through a sales funnel began all the way back in 1898, when E. St. Elmo Lewis created a marketing model that mapped out the customer journey toward making a purchase.
This is referred to as the AIDA model.
A: Awareness — Customer becomes aware of the product or service
I: Interest — Customer expresses interest in the product or service
D: Desire — A sense of wanting for the product or service arises
A: Action — The customer takes the next step towards purchasing the product
Using this model, marketers created an inverted pyramid that helps visualize the customer moving from the top of the funnel (general awareness stage) down to the point (where the action happens.)
So, to summarize: A sales funnel is a systematic approach to leading customers (leads) through a journey that ends in conversion — whether that’s via making a purchase, downloading an eBook, etc.
A Sales Funnel in Action
Let’s look at a sales funnel in its natural habitat and study what the process looks like for business that’s actively using this strategy.
Netflix uses a two-step process that invites potential leads to enter the sales funnel via a free one-month trial offer.
Once the user clicks on the call to action button (CTA) for the free month trial, they’re lead down the funnel to the pricing page where package information is provided.
After selecting a paid plan, Netflix collects email addresses for the one-month trial offer participants so they can follow up with those who decide to opt-out of the paid plans.
On the next screen, credit card information is collected. This means that everyone who enters the sales funnel and reaches this point technically becomes a paying customer — the only way to escape payment is to cancel the monthly subscription before the 30 day free trial period ends.
Even then, with the email addresses they’ve collected, they can follow up with those who exit the funnel in hopes of bringing them back in.
Why this works:
Netflix uses a single CTA button on its home page that’s placed front and center for the user to see.
Entering the sales funnel through this CTA is basically the only action you can take on the whole page.
A means of follow-up communication is established in step 2 of the funnel, so there’s always a way to track and converse with every single potential customer.
Anyone who makes it through the funnel to claim the free one-month trial offer has the potential to be a paying customer (since they are required to pre-select a monthly plan.)
Does a Sales Funnel Work for Everyone?
Netflix’s sales funneling process is just one example of how to execute this strategy, so that got me thinking…does sales funneling work for every business?
I asked around and got some opinions.
Helps Identify Improvement Areas
Ramon Khan of National Air Warehouse talked about how sales funneling can help businesses identify which areas of marketing strategy need to be improved as well as creating a clearer picture of the ROI of marketing efforts.
“Without proper sales funneling, businesses do not have a clear visions of where their customers are dropping off or which areas they need to improve,” he said. “One client I worked with was not tracking leads. After collecting data, we realized there was at least $10K of marketing efforts that weren't working. We then identified a stronger channel and boosted it from producing 10% of conversions to 50% by re-working the sales funnel.”
Not Always Effective for Smart Shoppers
Daniel DiGriz of MadPipe argues that a sales funnel is obsolete based on the way modern shoppers pre-educate themselves before pursuing a product.
“Linear models of consumer behavior are obsolete. Instead of starting at the top with no awareness of what the market holds and no interest until marketers trigger it, the modern consumer arrives at the virtual or brick and mortar door of a business already deeply into the purchase decision,” he said. “Google's statistics are most telling: 88% of consumers have already done research, consulting an average of more than 10 media sources by the time we meet them as individuals.”
Michael Peggs of MarCCX says that sales funneling works because the nature of sales has changed. Yes, buyers are more informed than ever, but by nurturing potential leads over time and building relationships, sales funneling can be a powerful conversion tool.
“You're competing for fractured attention spans. It's one of the reasons 98% of website visitors will leave your site without converting — they're surfing the web somewhere else. How do you continue the conversation? You set up a sales funnel using email marketing. Would you walk into a networking event and immediately pitch your product? Of course not, it takes time to build a relationship and 69.7% of US Internet users agree that email is the preferred method of communicating with businesses. Use email to engage and educate your audience, pushing them from prospect to paying customer,” he explained.
Testing a Sales Funnel with Your Audience
The consensus may be mixed about sales funneling, but the only way to find out for certain if it's an effective tool for your unique audience is to test it out — and to test many different modifications.
What are your thoughts: Does sales funneling work for your business?