The Sales Funnel: What Is It and Why Should You Care?

By August 14, 2019 E-Commerce No Comments

If you’re involved in online business of any kind, you’ve probably heard of the concept of a ‘sales funnel’. Likewise, there’s an equally strong chance you’ve set up some kind of sales funnel – one that’s probably doing its thing right now.

Nevertheless, evidence suggests most smaller business owners could do with learning a little more about the concept. The better your understanding of the sales funnel, the easier it becomes to channel customers in the right direction.

All of which could ultimately mean improved sales and bigger profits for your business.

What Is a Sales Funnel?

Far from a new concept, the idea of a sales funnel has been around for more than a century. It was right back in 1898, when E. St. Elmo Lewis created and published the first model of a sales funnel. At the time, it was referred to as a ‘purchasing funnel’ or ‘purchase funnel’, but the idea was essentially the same. 

Whatever you choose to call it, a sales funnel provides a visual depiction of a theoretical customer’s journey from start to finish. From attracting the interest of the customer in the first place to closing the sale, each stage is presented within the sales funnel. While the specifics of the purchase process will always vary from one business to the next, the basic framework of the sales funnel remains the same.

A sales funnel is:

  1. Timeless– Times change, but the principles remain relevant
  2. Universal– Applicable to almost any business in any sector

In a very typical example, the ecommerce sales funnel begins when the customer finds the product or service online. Traffic is driven to the seller’s website using SEO or paid advertising, after which they go through the purchase process, convert and become a customer. Irrespective of what’s being sold, the fundamentals of the sales funnel remain the same.

Why Assess Your Sales Funnel?

Whatever you sell and however you sell it, you have a sales funnel of some sort in operation. However, there’s an important difference between having a sales funnel and getting strategicwith your sales funnel. Depending on the type of business you run, the journey from product discovery to closing a sale and satisfying the customer could be long and complicated. 

When you take a closer look at your sales funnel, you gain invaluable insights to work with. It breaks the customer journey down into its component stages, which can be considered both independently and as part of a whole. Even the most minor adjustments to any aspect of a sales funnel can have a marked impact on customer engagement and their likelihood of converting.

How Does a Sales Funnel Work?

The objective of any sales funnel is always the same – to drive sales and generate revenues. It’s a fundamental part of every business that sells any kinds of products or services to any audience. At its most basic level, the original sales funnel comprises three equally important stages, as follows:

  1. Awareness.  The moment the customer discovers the product or service you’re selling.
  2. Interest.  Demonstration of an active interest in your product or service. 
  3. Decision.  The customer decides the product or service fits their needs or desires.
  4. Action. The product or service is purchased by the customer.

For more established and customer-focused businesses, the basic sales funnel may be expanded to incorporate additional stages. Examples of which may include the following:

  1. Awareness.  The moment the customer discovers the product or service you’re selling.
  2. Interest.  Demonstration of an active interest in your product or service. 
  3. Evaluation. Your products and services are compared with those of rival sellers.
  4. Consideration.The customer takes time to evaluate all available options/alternatives.
  5. Desire.  The customer decides the product or service fits their needs or desires.
  6. Action. The products or service is purchased by the customer.
  7. Revaluation.  For some time after the purchase, the customer continues to consider whether the product or service suits their needs. 
  8. Repurchase.  A customer is happy with their purchase and decides to come back for more.

These represent just some of the stages in a more advanced sales funnel. Both individually and combined, each of the stages can be used to help formulate a blueprint for a more effective marketing strategy. 

Key Elements of a Sales Funnel

The physical process of creating an online sales funnel can be as easy or complex as you want it to be.  In this instance, we’re not looking at the complexities of marketing and promoting your products to a viable target audience. Instead, we’re focusing solely on the actual sales funnel/checkout process on your website itself.

The technicalities of putting a sales funnel together vary enormously from one website to the next. You may have used WooCommerce to build an online store, or one of dozens of other CMS platforms or coding suites. Nevertheless, the basics of creating a sales funnel always follow similar lines. 

Basic Sales Funnel

If deemed appropriate for your business, the simplest sales funnels on the web comprise just two elements:

1. The Checkout Page

The sales page features all the necessary fields to gather enough information from the customer to make the sale. Their personal information, payment data, details on what it is they’re buying and so on.

2. The Confirmation Page

After which, they are presented with a confirmation page with a summary of the order, usually accompanied by an order number. The payment may have been processed at the time the order was placed, or remains pending to be processed at a later time. 

It’s also likely that in the case of a basic sales funnel, an automated email will instantly make its way to the buyer’s inbox – typically featuring the same information as the confirmation page.

Full Sales Funnel

It’s becoming increasingly rare for the above model to be used by today’s online business. Streamlining sales funnels for the benefit of the customer is advisable, but such a bare-bone approach isn’t the norm. 

Instead, most business opt for a more advanced or ‘full’ sales funnel, comprising some or all of the following elements.

1. Signup Page 

The option to open an account should always be presented, but must never be mandatory. Communicate the benefits of opening an account and encourage your customers to do so, but also allow for guest purchases with no account necessary. Mandatory signups never fail to kill conversion rates.

2. Product Recommendations

It can also be useful to present additional product recommendations to customers during the checkout process. Never in an irritating or distracting way, but more as helpful suggestions. These will usually be incorporated in the checkout page.

3. Order Summary Page

Prior to payment being taken, the customer may be given the opportunity to once again check the full details of their order. During which, they’ll be able to alter the quantities of the products ordered and check their payment info etc. 

4. Offers and Incentives

Where applicable, the seller may choose to highlight any special deals or incentives of relevance to the customer. Spend £50 and qualify for free delivery, add X item for just Y extra and so on. 

5. Confirmation Email 

A confirmation email doesn’t have to be a basic summary of the order placed. It could also contain some kind of incentive or special deal to get the customer to come back for more. Make another purchase within 7 days and qualify for a 10% discount, for example.

6. Cart Abandonment Email 

Last but not least, there’s no harm in giving customers who abandon their carts a gentle ‘nudge’ in the right direction. They’ve already walked away without making a purchase, so you might as well see if you can encourage them to change their minds. Again, something as simple as an automated email with a 10% discount offer or free delivery could do the trick. 

These are just some of the ways a sales funnel can be expanded or customised, in accordance with the preferences and general behaviours of your customers.  

In Summary…

It’s rare to come across two sales funnels that are identical, given the uniqueness of all businesses. There’s always room for experimentation, which can help determine what works and what doesn’t. 

For some, the key to success lies in making the conversion process as quick and easy as possible – absolutely no unnecessary extras. For others, capitalising on cross-selling opportunities throughout the purchase funnel yields outstanding results.

In any case, the message remains the same – give your sales funnel the time and attention it deserves. It is, after all, one of the key differentiators that will determine your performance and profitability.

About Tait Pollack

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