What Is A Sales Funnel and How Does It Work?

Updated · Mar 04, 2023

If you've been involved in online marketing for any length of time, you've probably heard of sales funnels.

But what are they, exactly?

And why are they so important for ecommerce businesses?

In this blog post, we'll take a closer look at sales funnels and how they can help your business succeed. 

What Is a Sales Funnel?

Sales funnels essentially comprise the steps that potential customers take from becoming aware of your product or service to purchasing it. 

It starts with raising awareness of your product or service, then moves on to consideration, and finally, decision-making. The makeup of sales funnels differs depending on a seller’s needs, but all of them share the same basic structure. 

Therefore we believe it’s beneficial to think of the sales funnel process as being malleable to your needs. Remember—the purpose of any funnel is to “convert”. 

When laymen think of conversion, the connotations are often religious, so it may interest you to know that the process of religious conversion was itself characterized as a funnel back in 1993, by Lewis Rambo as follows:

“Context, Crisis, Quest, Encounter, Interaction, Commitment, Consequence.”

As you’ll soon see, this formula is similar to that of sales funnels, so we may be able to borrow from it.

This is especially enticing as companies increasingly seek to promote their products as “lifestyle brands” in order to maximize their spread. 

The Benefits of Solid Sales Funnel Marketing

Sales funnels offer benefits by mapping out the customer journey. With them, you can identify where potential customers are getting stuck and optimize your funnel accordingly.

Not only that, but understanding sales funnels can also help you to allocate your marketing budget better.

For example, if you know that most people miss the awareness stage, you can direct funds to raise awareness of your brand and so on.

So now that you know a little bit more about sales funnels let’s take a look at their general structure.  

The Makeup of a Sales Funnel Stages

Sales funnels consist of a “top, middle, and bottom.”

The top of the funnel is where the visitor enters (lead), the middle is where the process takes place, and the bottom is where they exit as a convert/customer.

“Awareness” is at the top, “Interest” and “Deciding” are in the middle, and “Action” is at the bottom. 

Note that it’s possible to lose a lead at any step. If you notice this happening, that is where you must focus your attention. 

Let’s take a look at each step in greater detail. 

1. Awareness

In any business, the sales process starts by getting customers to become aware of your brand or product. It is the same for sales funneling.

There are a number of ways to achieve this, such as:

  • Advertising
  • Public relations
  • Word-of-mouth

No matter how you generate awareness, it's important to remember that customers won't buy from you unless they're interested in your offer. 

That's why it's essential to ensure that your marketing efforts are targeted at the right audience. 

Once you've captured their attention, you can move them further down the sales funnel by providing more information about your product or service. 

For ecommerce, this first step centers on advertising, either on social media or website banners. When clicked on, the ad should ideally lead to a landing page.

Landing pages are an ideal way to catch customers' attention and get them into the process.

2. Interest

Once you have your leads’ attention, you must entice them to seamlessly continue further into the funnel. Getting customers interested in your product is the second step in this process, and it is essential for generating sales. 

You want the lead to understand why they need your product or service. Ultimately it should solve a problem that they have or meet one of their desires. 

You must get the benefits of your product across in short form, with its most attractive features first.

Most importantly, your product funnel offering should stand out from the competition. This part of the sales funnel isn’t about getting a sale straight away, it’s still the stage of building up to it. 

Here your goal should be to establish direct contact with the lead.

The easiest way to do this is to prompt them to answer a less heavy call to action by getting them to give your their email address or even follow you on social media.

You want this to be the beginning of a “relationship.”

3. Deciding

The third phase of the sales funnel steps into conscious decision-making—whether or not to make a purchase. 

It goes without saying that this is an important stage in the process because it can be the last chance for you to influence the customer's decision. There are several ways that you can influence this decision in your favor. 

First, you can reinforce the reasons why the customer should purchase the product or service. Referring them to additional resources can be beneficial.

Second, you can offer a discount or special promotion that may push them over the edge to take the plunge. 

Lastly, you can provide social proof by showing how other customers have benefited from the product or service. 

The last part of the funnel process can be drawn out. Perhaps the customer has left an item in their shopping cart. In this case, you can “nudge” them through the use of email marketing.4.

4. Action

The moment of truth. This is the final step in the funnel, and it's also the most important. 

This is where you either convert a customer or lose them. Even if you lose them, you may still be able to win them over later. 

The key is to take action and keep trying.

Don't give up on a customer just because they don't buy something from you right away.

Wrap Up

Remember, a “high” conversion rate is lower than you might think.

In most industries, conversion rates are between 1-5%. You’ll see a lot more people pass through than convert.

Another important thing to keep in mind is that the process of building a sales funnel involves a lot of experimentation and data analysis. You have to strike the right balance between your needs and the needs of the target audience. 

Normally, it takes many tries and experiments before you get it right.

So, where do you start? There are several software solutions geared toward helping you build sales funnels.

Creating funnels might seem daunting at first, but it can be a lot of fun as it involves various approaches like psychology, marketing, data analytics, design, and more.

Ultimately, what is a sales funnel? It is an excellent and rewarding way to create a lasting relationship with your customers by understanding their needs and inclinations.

Garan van Rensburg
Garan van Rensburg

Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.