What Are Sales Funnels? The Ultimate Beginner Guide

Have you been hearing digital marketing buzzwords about sales funnels and automated lead generation? Did you immediately feel “out of the loop” even though you KNOW they sound like valuable business assets?

I admit… I am pretty new to the funnel building world. 

The little I knew about marketing funnels made be believe they were not relevant to my busines. I honestly thought using online funnels was a FAR more advanced strategy than I was ready for. 

BUT… 

All it took was a little bit of time and building my first simple funnel and something clicked for me. 

Suddenly it was easy to understand so many ways to use funnels to support and grow my new online initiatives as an entrepreneur. 

If you have ever caught yourself thinking “I’m not ready for funnels,” read this before you lock in that mindset. 

Honestly, we break it down and compare online funnels to traditional retail shopping and marketing. Visualizing each step can help expand your idea about the opportunities funnels offer in all stages of your business. Yes, even if it is brand new! 

What are Sales Funnels / What are Marketing Funnels?

Sales Funnels and Marketing Funnels (often terms used interchangeably,) are not new to e-commerce and internet businesses. 

Funnels have long been a marketing concept, though different industries may have used different terms or theories.  

In a simple way, it boils down to this. 

Sales funnels are tools used to monitor and expedite the customer’s decision making by handing them exactly what they need at each stage of the buying process.

Sales funnels are tools used to monitor and expedite the customer’s decision making by handing them exactly what they need at each stage of the buying process. 

How Do Sales Funnels Work? 

Traditional marketing methods inundate prospects to build attention and awareness for a product or brand. The goal is to learn who the target audience is, and what the ideal customer will be interested in.

If somebody opts-in to an email list, clicks to download a freebie, watches a webinar, or otherwise shows interest, they become a “lead” and become valuable to directly market to (as in, straight to their email inbox.)

The communication continues as the company adds value and educates the prospect on topics related to their service. This way, when the customer is ready to make a purchase, they have had the opportunity to know, like and trust the businesses. 

Stages of Sales Funnels

1. Awareness:

Audience first becomes aware of your business or brand. A customer is considered in the top of the funnel the first time you get their attention. Awareness starts with social media, search engines, traditional marketing or any way you get in front of prospects.

2. Interest:

At this stage in the funnel, you should be adding value and offer to help your customers. People are becoming more invested in the product or service. They may be reading reviews, comparison shopping and doing more research to understand what they need. As a company, do not sell or pitch yet. Customers in this stage are not ready. It may likely turn them away if you push too early.  

3. Decision:

The customer is ready to make a purchase. They have narrowed down all of their research from the Interest stage to two or three companies they are interested in. Hopefully your business is included!

At this point, you should be aiming to have the most irresistible offer across your competition. Your service should be irresistible to the customer and convince them to make the purchase before leaving the page.

4. Action:

The customer takes action. You got the sale (or the email sign-up, or whatever result your sales funnel intended to trigger.)

Just because this is the bottom of the funnel does not mean the work is done. Now that you have made the sale and brought in a new customer, there are plenty of other pieces to the puzzle. Trying to up-sell, build loyalty, and gain repeat customers for the long haul.

Why is it called a Sales “Funnel”?

Sales funnels are aptly named based on their inverse pyramid shape. The largest number of prospects will always be at the very top of the funnel. This is where all of the advertising and marketing is captured, creating the earliest stage of brand awareness. 

As the “mouth” of the funnel engages prospects and converts them into leads, there are less people following through at each additional stage. 

Pin and share this cheat sheet for later!

Not every customer who first hears of your business is ready to begin a longer conversation. Then, even less will be ready to compare brands and make a decision. And finally, the fewest will take action to specifically become YOUR customers with a new sale.

Why is a Sales Funnel Beneficial? 

Think about your marketing and sales process as a whole. Considering the full process “through the funnel” helps understand the path your prospects take. You need to understand how they move across the span, from when they first learn about your business. Eventually they become a buyer – and hopefully, a loyal returning customer. 

If you are not following the path of your prospects, you are missing gaps in your business. It's important to recognize where people are “dropping out of the funnel.”

At those stages, you are leaving money on the table!

That is why there are so many articles about “funnel optimization,” which simply means, let’s see what is happening along your prospect’s decision path. Then, we can fix the parts where they decide not to move forward with the next step.

What is a Funnel Builder?

Some confusion about what a funnel truly is comes from the rise of e-commerce funnel builders. These are software systems you may have heard of that allow you to create sales funnels to get customers or generate higher sales. 

One of the most commonly known funnel builder software programs is ClickFunnels. A new competitor to the game is GrooveFunnels.

Using these systems, business owners and marketers create a “funnel” through a webpage by simplifying customer options. Only ONE action is allowed to be taken on each page. Therefore, it acts like the sales funnel we discussed, because less and less users will trickle down through each stage of the full funnel to ultimately reach the business owner’s desired end action. 

Once they reach the “end” action, they continue down a path in this funnel you have created, now offering them an upsell (“Since you bought our book, would you be interested in our flash sale for an upcoming webinar, 50% off for only $299?”) or a downsell (“Not interested in that webinar? Got it. Well we do have a second book about to launch and you can be the first to own it for only $27 right now. Interested?)

Online funnels do not have to be long, complex pathways at first.

As you build out funnels and learn more though, you will recognize that the longer you keep a customer in one of your funnels, the longer they are focused only on you, and whether they are interested to spend a few more dollars with your company (because of all the previous value you have already delivered, of course!) 

How is a Funnel or Funnel Builder Different from a Website? 

The value of online funnel builder software is that a company can create what LOOKS like a website, but is actually a single page (which can be known as a landing page, sales page, etc.) 

Most importantly, it does not have a menu bar with tabs to browse through. 

There is no “about us”, “read our blog,” etc. 

It has just ONE call to action for the reader. 

This simplifies the decision-making process, and keeps the reader focused on the company’s goals. 

For instance, if you have launched a new lead magnet, and your end goal is to collect new email addresses to build your email list, your first funnel page would have no option other than to “enter email, get freebie.” (Of course, they can always just exit the page, so you are not forcing them if they are not truly ready.)

You do not complicate the system by saying “either enter your email address OR click here to buy our $27 book OR just get personal coaching with me for $2000.”

That is too many options, confuses the reader – and likely makes them question what you are even pitching.

Sales Funnels Summary

Going back to basics, let’s consider what the ultimate goal is for any business. To make sales, right? Let’s work backwards to how that gets done… 

Well, to make sales, we need to convince customers to buy OUR product, not the competitor’s. 

Part of the convincing is making sure they know, like and trust us before they make a decision. 

To know, like and trust us, they have to be aware of us – they have to at first, at bare minimum, HEAR about us. 

Because retail has grown hyper-competitive with the rise of e-commerce, the savvy business owner needs to be able to map out their customer’s decision making process, and show up at every stage so they are front-of-mind and seen as the clear winner when the customer makes their end decision (hopefully, a sale from you!)