What is a Sales Funnel? Definition and How to Build One

By the end of this guide, you'll have a better understanding of some of the basic truths about sales funnels, including:

• How sales funnels fit into the marketing and sales processes
• Why these funnels are so critical to business success
• What elements are part of the process for creating a funnel
• How to build and optimize a strong sales funnel that contributes to success

What is a Sales Funnel?

A sales funnel is a method through which potential customers are funneled through your sales pipeline until they convert into a paying customer or client. It involves a variety of steps to nurture leads until they make a purchase.

Common Stages of the Funnel

While there are many different ways to define a sales funnel, most depictions include similar characteristics and stages. In fact, many traditional sales funnel models include the following steps, which are standard for most businesses: 

• Awareness: the point at which a buyer first learns about a new brand or service
• Interest: the stage of engagement, where buyers engage with content or do research
• Decision: the customer has answers to important questions and intends to buy soon
• Action: the point of a closed deal with a sales team member or a completed purchase

Occasionally, you might hear the sales funnel process described with the acronym AIDA. This is simply an easy way to remember what each stage of the standard sales funnel means. Remember, for every action that an individual customer takes throughout the funnel, there is usually a reciprocal or automated action that occurs within the business itself.

Why are Sales Funnels Important?

A sales funnel is important because it establishes the foundation for how leads become customers. Think of it as a visual example of physically walking alongside a new prospect, learning more about their needs and pain points, then offering a solution that helps them fix a frustration. When prospects can visualize how a business and product meets their needs specifically, there’s a greater probability that they will eventually purchase.

Sales funnels are also essential because they can facilitate a better order to your marketing and sales messages. If a prospect is just beginning to research options to solve their problem, you don’t want to oversell with aggressive tactics and strong language. These mistakes could have the opposite effect and turn away prospects who might otherwise have a need for your offer. 

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Sales Funnels Explained

As you consider the question, “What is a sales funnel?”, visualize what this looks like in real life. For instance, if you own a donut shop, imagine the day that a new customer walks by and sees your enticing storefront and signage. 

Intrigued, the potential customer steps inside to investigate, and there an employee provides them with a free sample.  After spending several minutes looking over the menu and bakery case, the shop visitor requests a dozen donuts and pays with their credit card. In a short time, they’ve gone through each stage of the sales funnel, from awareness to action.

This process also happens every single day in the world of digital marketing. Customers learn about new brands or services, research on websites, interact with content or team members, and decide to take action through a purchase. In the section below, we’ll provide more detail about the individual elements of the sales funnel process. 

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Elements of an Effective Sales Funnel

As mentioned above, there are four widely recognized stages of the sales funnel: awareness, interest, decision, and action. At some point, you ( or your marketing team) have a responsibility and play a role in moving customers through each stage. 

Awareness

Many times, businesses are focused on what happens once a customer is in the funnel. But remember, a customer has to become aware first before they can ever interact in a meaningful way. Although this is one of the primary responsibilities of a good marketing team, customers gain awareness in a number of ways, including:

• Organic Google search results
• Targeted ads on search results pages or social media
• A shared post by a friend of acquaintance
• Word of mouth recommendation

Simply put, building awareness is the point at which you successfully hook or capture a customer’s attention in a positive way. 

Interest

If you weren’t able to capture personal data about a lead in the awareness stage (with a contact form or landing page, for instance), then the interest stage is where an exchange of information must take place. At this point, the customer is researching, engaging with content, and trying to learn more.

Your efforts at this stage should focus on value - help the potential customer without being overly pushy or confrontational. Respect the consideration process, and connect the prospect to relevant resources that might assist them in making a future decision.

Decision

The decision stage could be one of the longest parts of the process, since many customers are cautious about making significant buying choices. The bigger the sale, the more time that it can take for a customer to exit this phase and enter the next. There are a few things that you can do to alleviate stress in the decision step:

• Provide case studies or testimonials from other real clients and customers
• Use retargeting ads effectively in order to stay top-of-mind
• Follow up via email with special offers or incentives, tailored specifically to them
• Deliver plenty of authentic value and support, no matter which way they’re leaning

Action

The final stage of the sales funnel is the point of action; this is when a new prospect converts into a paying customer. At this point, the customer officially becomes a part of your community.

Now that the customer has made a purchase or signed a contract, how can you work to retain them? Although the action stage is characterized by a completed sale, the customer’s experience is still vital. How can you nurture existing customers, solve any issues, and turn them into raving fans?