Building an online business can get quite complicated—there are so many details and variables to sort out. But there are some pure, underlying constants that we can all cling to for comfort and stability. Case in point: the sales funnel.
All successful marketers use some form of this powerful tool, guiding all of the tactics they implement.
The sales funnel is the secret ingredient behind just about every successful online marketing strategy. It helps marketers bring clarity to their operations and scale their results.
If you want to learn more about what sales funnels are and how to use them, keep reading. In this article, you will learn the basics of sales funnels and how you can implement them to grow your online business. If you are more advanced and want to get right into sales funnel creation, check out our article, How to Create a Sales Funnel.
What Is a Sales Funnel? A Definition
A sales funnel describes the journey that visitors, leads, and prospects go through on the way to making a purchase.
It’s a framework that organizes the process potential customers go through from the moment they get to know a company to the moment of purchase and beyond.
Sales funnels help marketers prioritize their actions so they can help people move along the sales journey with the least amount of friction—that is, so they can end up making a purchase without any problems.
A sales funnel is made up of a set of steps, usually known as the top, middle, and bottom of the funnel.
At the top of the funnel, you start with a large number of visitors—people who have just visited your site for the first time and are learning about your offerings.
The fact is, no matter how many people you attract to your site, most of them won’t be interested in making a purchase. Many will never make a purchase, while a few may be interested in making one later on.
Marketers call this the “Buyer Pyramid,” or the “3% Rule.” You can hear sales expert Dan Lok explain the entire concept in the video below:
In the simplest terms, the 3% rule says that only 3% of your visitors will be ready to buy at that moment, while 7% may be interested in the near future. The other 90% aren’t interested at all, or could be interested if you nurture them with the use of educational content.
Marketers are aware of this fact, and that is why their efforts are geared toward making people take one step further to the middle of the funnel, instead of looking for a sale right away. In the middle section, you educate people so they know your organization—your products and services—can solve their problems.
The final step of the funnel, known as the “bottom of the funnel,” is made up of an even smaller number of people who are now interested in making purchases, but need a final nudge. This nudge could be in the form of a sales call, a proposal, an FAQ, or some combination of tactics.
Because most of the people who start a sales journey will leave as they move through the process, we get our characteristic funnel-like shape.
The length and complexity of each step changes, depending on the company’s business model. For example, an ecommerce store owner may find that its funnel consists of the following three steps:
- Top of the funnel: A visitor checks an ecommerce page.
- Middle of the funnel: A visitor adds a product to their cart.
- Bottom of the funnel: A visitor adds their paying information and makes a purchase.
A consultant, on the other hand, may see their funnel looks something like this:
- Top of the funnel: A visitor checks their services page.
- Middle of the funnel: A visitor contacts the company for more information.
- Bottom of the funnel: A visitor jumps on a sales call.
At each point in a funnel, the marketer will have to work on making sure the people who are truly interested in their offerings move successfully down the funnel.
Why Marketers Love Sales Funnels
As you can imagine, marketers love the sales funnel concept. It systematizes the entire marketing process into a simple structure you can work through, piece by piece.
Instead of implementing a set of different marketing tactics separately—SEO, email marketing, content creation, etc.—you know exactly where each tactic belongs.
If you want to increase the number of people who visit your site, you work on the top of the funnel (you will learn more about how to do this in the next section).
If you need more leads to contact you about your products or services, you need to work in the middle of the funnel.
If you need to close more sales, then you can work on the bottom of your funnel.
In a similar vein, a marketer can troubleshoot potential problems in their marketing strategy. With a quick look at your funnel analytics, you can find out the places where visitors drop out and never convert.
This requires good analytics tracking and visualization, something you can do through a mix of tools for web analytics (Google Analytics, Mixpanel), funnel tools (LeadPages, Clickfunnels), CRM and sales tools (Salesforce, Hubspot), and more.
As you find the leaks where people are leaving your funnel, you can work to patch them and improve the effectiveness of your marketing strategy.
For example, you may find out that compared with industry benchmarks, most visitors have a very low conversion rate by the time you send them an email to schedule a sales call.
You can then improve your email marketing strategy—whether that’s through a new campaign, an improved set of emails that answer the questions your leads may have, and so on—or you can implement a new strategy, like retargeting or paid ads, to increase the number of people who get to this stage of the funnel.
Instead of having to guess, amateurishly, a sales funnel brings a systematic approach to marketing.
What a Sales Funnel Looks Like in Real Life
As explained before, a sales funnel will vary for each company, based on their industry and business model. That means:
- Foundr has its own sales funnel built around our digital courses.
- Hubspot has its own sales funnel for its software.
- King Kong has its own sales funnel for its agency.
- Soylent has its own sales funnel for its ecommerce store.
While all of these companies are very different from one another, their funnels all share a similar structure, starting at the top of the funnel (also known as TOFU), moving on to the middle of the funnel (also known as MOFU), and finishing at the bottom of the funnel (also known as BOFU).
Let’s take a look at some examples of real-life sales funnels for each of these businesses.
Top of the Funnel (TOFU)
The top of the funnel is where you attract a wide audience of potential prospects to your site. The goal is to build brand awareness and solve problems for your visitors without focusing on your offer.
There are many marketing tactics you can leverage in order to attract people at this stage of the funnel, the most common being:
- Blog content (articles, guides, tutorials)
- Social media content
You can then distribute this content organically, through Google search results, platforms like YouTube and iTunes (for your podcasts), and your social media following.
And if you’re looking for more traffic, you can certainly pay for it. Google has a large advertising network known as Adwords, which can help you do just that. Facebook, Twitter, YouTube, and LinkedIn also have ad networks you can leverage to drive more traffic to your site.
Your top-of-the-funnel content should educate your audience on a need or pain point they’re struggling with. At this point, the job isn’t to generate sales, but to build trust and goodwill through the content you publish.
All the companies mentioned above, and all those with successful sales funnels in place, create content and distribute it to drive traffic into their funnels.
In fact, this article itself is an example of the top of Foundr’s funnel. The same can be said for all the content on our blog.
Similarly, Hubspot leverages its blog’s content and distributes it through social media accounts, which helps to drive more traffic to its site.
King Kong, one of Australia’s fastest-growing digital marketing agencies, leverages a mix of blog content with videos to generate awareness and build its audience.
Even if your audience is small, if you’re working to drive traffic to your site and help people, you’re on the right track to having a successful sales funnel.
Middle of the Funnel (MOFU)
The middle of the funnel is the stage when your visitors become leads, something that happens when they hand you their name, email, and other personal information in exchange for something valuable you offer them.
Often a piece of content, this offer must be gated—that means, it’s behind some type of form that requires them to give you their personal information. The product you offer might be an ebook, a webinar, an email course, or something else.
At this stage in the funnel, you continue engaging and educating your leads further, helping them with their problems and needs. The piece of content you offer them, however, must be related to what you offer as a paid solution to their problems.
At Foundr, we use our masterclasses to educate our visitors and help them launch their ecommerce stores, consulting businesses, and more.
While the masterclass on its own can help entrepreneurs launch and grow their online businesses, the course that is tied to the masterclass can help even further.
On the other hand, a company like Hubspot offers a wide range of free content, including ebooks, webinars, quizzes, and much more:
Agencies can use the same mix of varied content to convert their visitors into leads. Single Grain, a digital marketing agency, uses a mix of ebooks with tools and webinars to help their visitors:
Marketers also use automated email campaigns to continue communicating with those people who still don’t convert based on the offer made at the end of the content piece. Some of these people will need a final nudge which will come in the next step of the funnel.
Ecommerce stores often take a different approach. Instead of offering ebooks and webinars, one of the most popular tactics ecommerce store owners use in the middle of the funnel is product reviews—their own or third party.
Tactics, a skateboard store, has created dozens of videos showcasing its products on YouTube and its own site. This type of content helps visitors understand more about its products and see how they look and work in real life.
Gretta van Riel, founder of several multimillion-dollar ecommerce stores and instructor of our course Start & Scale, on the other hand, famously leveraged the use of influencers to promote her products, as you can see in the video below.
Influencer marketing works because people trust other consumers more than marketers. By partnering with influencers—people who have large social media followings or high engagement around relevant niches (fitness, travel, etc.)—ecommerce marketers can communicate to potential customers their products’ effectiveness.
The middle of the funnel is the bridge between your visitors learning about solutions to their problems and becoming customers. Your job is to continue building trust and goodwill so those who’re getting ready to purchase will end up doing so in the next and final step of the funnel.
Bottom of the Funnel (BOFU)
By the time a lead reaches the bottom of your sales funnel, you’ve helped them learn more about their problems, understand the potential solutions, and how your company could be a potential partner in those solutions.
The bottom of the funnel content is tailored to helping your leads make the leap and become customers. They’re on the verge of making a purchase, so you need to help them overcome any objections.
Your content should specifically address their pain points and concerns, helping to motivate them to go over the threshold of making a purchase.
The types of content that you can use in the bottom of the funnel include:
- Case studies and testimonials
- Product tours and demos
- Trials, free consultations, and samples
- Live chat (this isn’t content per se, but it does help with conversions)
As you can see, most of these content types focus on closing the potential objections the lead might have about your offer. Your goal is to reassure them that their purchase decision will be the right one.
Most software companies offer demos and trials, so their leads can try their products for themselves and see how they work.
Agencies use a mix of free consultations, case studies, and guarantees to help lower the objections their leads have.
King Kong has used all of these tactics to close its leads. Its most famous tactic for SEO service, however, is a guarantee of rankings—a hard task to achieve, but one that has shown to be incredibly effective as attested by Sabri, the agency’s owner.
Ecommerce stores, in contrast, use a mix of free return guarantees, testimonials, and security badges in their checkout pages to reduce the number of doubts customers may have.
Remember that at this stage, the lead is almost ready to buy; all you have to do is answer their objections and motivate the lead to convert into a customer.
Embrace the Sales Funnel!
The sales funnel is a powerful tool that pretty much all marketers use to unlock business growth. They’re hidden behind a wide range of marketing tactics, but they’re there, bringing people to their sites and helping them generate sales.
Now that you know what sales funnels are, it’s time to get started.
Think about the sales funnel in terms of your own business, using the examples you see here.
How are you driving traffic to your site? And how are you communicating with the people who don’t convert right away? And what about those who are almost ready to buy but haven’t crossed the finish line?
Where does your own sales funnel need work? How can we help you improve it? Let us know in the comments.