What Is a Sales Funnel? An Ultimate Guide

A sales funnel is the journey a customer or prospect follows from the time they become aware of who you are to buying your product or service. This journey can be represented by a graphical image that breaks the lead’s development out into a series of steps designed to increase engagement and trust.

How a Sales Funnel Works

A sales funnel illustrates your customer’s journey and works by increasing the level of engagement and trust in each interaction with your prospects. It typically contains six stages, starting with awareness and ending with loyal customers, with each stage more intentional than the last. While not all prospects will reach the end of the funnel, those who do are actively engaged and therefore more serious about buying your product or service.

Depending on your business and industry, you could have 1,000 prospects at the top of your funnel. However, towards the end of your funnel, you may have 25 qualified leads. While these 25 prospects are more likely to convert than the ones at the top of the sales funnel, at the very end, there may only be five customers who make a purchase and only two that go on to become repeat customers.

A sales funnel serves as a roadmap for how you create your prospects’ experience with your company. Sales, marketing, and business professionals use sales funnels to strategically plan the activities they will take to help increase a customer’s trust in the company or product, which will in turn help move a prospect closer to a buying decision.

For example, at the beginning of your funnel, prospect interaction is low and the number of prospects is high. This is the Awareness stage, where you do advertising or another form of low-cost, low-touch, broad outreach. The next stages have fewer people in them and require activities that take more time and attention. This is where you’d send emails, make phone calls, or invite qualified interested prospects to a webinar to learn more about your offerings.

In addition to using your sales funnel for strategic planning, you can use CRM software to save time and focus on moving more customers to the end of your funnel with customizable pipelines and email integration features. For example, customizable pipelines allow you to engage with customers in a way that fits your business. Email integration lets you send communications without leaving the CRM.

Pro tip: The most effective sales funnels are illustrated with step-by-step corresponding sales and marketing activities. CRM tools like Salesforce Essentials can help you create visual funnels that align with your pipelines while helping you manage activities needed to convince your prospects to buy from you.Try Salesforce’s features with a free 14-day trial today.

Salesforce Essentials pipeline stages

Which CRM Software is Right for You?

Sales Funnel Template

To help you get started, we’ve created a sales funnel template you can use to create something that works for your business. It’s a PowerPoint document with prompts that you can customize based on the specific stages you feel are the best fit for your customers. This template will help you think of each stage in your customer’s journey and what should happen in each stage. It will also help you map out your own sales funnel stages unique to your business.

FREE Sales Funnel Template

Sales Funnel Stages

Sales funnel stages are the steps in the funnel that represent what the prospect is experiencing and how close they are to becoming a customer. There are six stages in a sales funnel, and they correspond to the eight pipeline stages that every sales team should have. They can also be customized for your business.

The six sales funnel stages are:

1. Awareness

In the Awareness stage, you are making prospects aware of your company, products, and brand. This is the introductory phase where they are learning who you are, what you do, and how you are unique. This stage corresponds to the prospecting and lead generation stage of your pipeline stages.

2. Discovery

The Discovery stage is where your prospect’s interest is piqued. They are curious about your company and products and want to learn more. In this stage, you are sharing valuable educational content related to your prospect’s problem or need. This stage occurs while you are qualifying your prospect, conducting initial meetings, and defining their needs.

3. Evaluation

At this stage, your prospect is evaluating you, your company, and your products and services. They are taking a closer look at what you have to offer than they were in the discovery phase. They are also looking at other options to see how you compare to them. At this point, you have probably sent them an initial quote or proposal and are answering any detailed questions they have.

4. Intent

In the Intent stage, your prospect has made a decision to buy from you, but the deal hasn’t closed yet. They plan to buy but want to make sure your quote or proposal encompass everything they need at a price they are willing to pay. Here, you are negotiating terms or finalizing your proposal. Objections around price and other key terms usually surface here.

5. Purchase

At this stage, the deal is closed and your prospect is now your new customer. This is the honeymoon phase and presents the best opportunity to ask for referrals. The corresponding pipeline stage is closing the deal.

6. Loyalty

If your product or service is delivered over time, you have an opportunity to identify other needs that your products can meet and make additional sales. If your product is more of a one-time purchase, you can create a strategy to continue building relationships with your new customer so they keep you top of mind and buy from you in the future.

Fit Small Business sales funnel stages

The Difference Between a Sales Funnel & Pipeline Stages

A sales funnel reflects the prospect’s journey or path that takes them from awareness to becoming a customer. It encompasses actions you take to create this journey or experience. The sales pipeline, on the other hand, is the specific stages that a deal or opportunity moves through in your sales process from the salesperson’s perspective. See our article on the eight sales pipeline stages every sales team should have.

The biggest difference between these two concepts is that the sales funnel is designed to feed the right deals into your sales pipeline. An effective sales funnel will help you move your prospects from disinterested and unaware of your products value to a qualified lead that you can turn into a new customer.

For instance, in the Awareness phase of a sales funnel (the first stage), you’re focused on what your customer sees, hears, and feels as they are becoming aware of who you are. In the Prospecting phase, which is the first phase in pipeline stage, you’re focused on what the salesperson is doing to find qualified leads and to build awareness within their target markets.

Who Sales Funnels Are Right For

Sales funnels are right for businesses that rely on a high degree of prospect interaction and engagement to make sales or close deals. Their sales process may be long and complex or they may be selling a high-ticket item that requires a lot of consideration by the customer. Both business-to-business (B2B) and business-to-consumer (B2C) businesses use sales funnels.

Businesses and sales professionals who create and use sales funnels include:

• Sales managers and professionals: Individuals who manage sales teams or customer accounts create sales funnels to plan the sales activities that will move their prospects from the beginning to the end of the funnel.
• Marketing managers: Marketing managers use sales funnels to create a prospect experience that aligns with the company’s brand and builds solid relationships that lead to higher conversion rates.
• Business owners and managers: Similar to marketing managers, business owners and managers use sales funnels to build relationships with prospects so that they are likely to become customers.

How to Setup a Sales Funnel

After the stages of your sales funnel have been defined, you will need to set it up in order to make it a reality. Setting up and executing an effective funnel requires planning and use of technology. You need to plan your prospect’s experience ahead of time and use tools to facilitate actions that create the prospect experience.

We’ve created a sales funnel template so you don’t have to create one from scratch. Download the template to follow along and set up your own.

Download the Sales Funnel Template

There are four steps to setting up a sales funnel:

1. Map Out Your Prospect Experience

The first thing you need to do is to map out your prospect’s experience within each stage of your sales funnel. This is what your prospect will experience when they interact with you at each stage. You can use post-it notes or you can use Salesforce Essentials to create and visualize your sales funnel.

Here’s an example: To create your prospect experience in the Awareness stage, think about and articulate what you will do or say to your prospects when you first meet them. Then think about how your interaction will make them feel. Consider your prospect and their needs as you’re doing this. Then, document your actions and your prospect’s experience for this stage. Repeat this throughout the entire sales funnel.

2. Align Your Sales Funnel With Your Pipeline Stages

After you’ve mapped out your prospect’s experience, make sure they align with your team’s pipeline stages. You can do this on paper or in CRM software like Salesforce Essentials. Sales pipeline stages are stages in your sales process, while your sales funnel stages are the stages in your customer journey. Refer to our article on how to create an effective sales plan for more information about pipeline stages and how they relate to your sales strategy.

The relationship between the sales funnel and sales pipeline

3. Define Activities for Each Sales Funnel Stage

After you’ve aligned your sales funnel stages and your pipeline stages, list each sales activity you will engage in to create the prospect’s experience in each stage. For instance, if you plan to send white papers, articles, and videos to your prospect during the Discovery stage to create trust, document these activities.

4. Incorporate Sales Funnel Activities Into Your Sales Process

Once you have identified the activities that will help increase customer engagement or build trust, you will be able to incorporate your funnel activities and related tasks to your corresponding pipeline stages. Doing this will keep you focused on performing the right sales activities for each pipeline stage.

Setting up your sales funnel is the key to creating powerful prospect experiences. It is important that you map them out ahead of time to ensure your sales process is in alignment with the customer’s journey. CRM software set up to mirror your funnel activities can then help you manage and stay focused on the most important tasks during each stage in the process.

For example, during the Awareness stage, you could sponsor a local event filled with your target audience and collect contact information from event attendees to get them into your sales funnel. Or you could create a social media ad with a lead magnet and link to a lead capture form to collect prospect contact details.

Once you get your prospect’s contact information at the event, you can invite them to an educational webinar. At the same time, you can further qualify them by asking qualifying questions during the webinar registration process.

Task management

How to Manage Prospects Through a Sales Funnel

Businesses that want to create the best possible experience should use a CRM for managing the customer’s journey through each stage of the process. This helps increase your number of sales, as CRMs provide tools to help you automate and scale your activities.

A CRM helps manage your prospects through your sales funnel using the following tools:

Task Management

Task management tools help you move prospects through the sales funnel quickly because they help you schedule and assign tasks that must be completed to move onto the next stage. Being able to quickly schedule important tasks like sending quotes or writing emails helps keep these tasks top of mind and reminds you that there’s an important deadline that you must meet to get closer to a sale.

A task management tool allows you to create and assign new tasks while you’re in the leads, opportunity, and accounts sections of the CRM. You can document task details and schedule the tasks to be completed by specific dates. You can also view tasks in list mode and on a Kanban board that lays out the status of all your tasks. These tools help you visually see where you are and what you need to do to move prospects through the sales funnel.

Salesforce Essentials task creation and assignment

Event Scheduling

Using event schedulers is another way to manage prospects through a sales funnel. Event schedulers allow you to schedule events like webinars or phone calls and incorporate them into your calendar. Doing this helps you focus on prospect engagement activities that are most likely to move prospects through the sales cycle.

An event scheduling tool allows you to schedule events like conference calls, lunches, and so on right from the CRM. These events become part of your calendar and serve as another way to help you move your prospects and customers down your sales funnel. You can associate contacts and deals to your events. You can also update information like dates and times from the calendar view.

Calendar view with tasks and events

Case Management Tools

Case management tools are especially helpful at the end of the sales funnel when the prospect becomes a customer and you want to handle and track support issues. Effectively managing support issues leads to increased customer loyalty and improves your chances of getting repeat business and referrals. Having case management in your CRM enables you to build customer loyalty because support issues will be top of mind until they are resolved.

For example, in CRM tools, you can create cases from the cases section or from the contacts and opportunity sections of the CRM. You can also create cases from the global actions menu. Cases can be assigned and the details can be made accessible to the people who need to know about it and those actively working to resolve it. These features allow you to quickly handle issues so your customers are satisfied with your service.

Case management dashboard

Why Sales Funnels Are Important

Sales funnels are important so that you stay focused on carrying out the right sales activities at the right time in the prospect relationship. If you’re in the Awareness phase, you are engaging in prospecting or lead generation activities. If you’re in the Evaluation phase, you are sending your customers quotes or proposals so they can evaluate their options and ultimately make a purchase. They serve as reminders of what needs to be done and when.

CRM software has features like event scheduling, case management, and task management that help you plan and execute activities that coincide with the stages of your sales funnel. This software makes it easier to implement your sales funnel by showcasing upcoming and overdue activities, which keeps you focused on the activities that matter throughout the entire sales process.

Frequently Asked Questions (FAQs)

Why are sales funnels important?

Sales funnels are important so that you stay focused on carrying out the right sales activities at the right time in the prospect relationship. They serve as reminders of what needs to be done and when. They also keep you focused on what’s important during each stage of the sales process.

What is sales funnel management?

This involves managing prospect interactions and activities from the first meeting until the deal is closed and through to repeat business. Lead management software facilitates these interactions. See our article on the Best Lead Management Software Options.

How do I know if my sales funnel is healthy?

Your sales funnel is healthy if you have enough prospects going through it. If you’re moving enough prospects through the funnel with the experiences and interactions you create, and if you are able to profitably convert enough prospects into paying customers, your sales funnel is healthy. See our article on Sales Metrics—17 Reports That Improve Your Sales Pipeline Performance to help measure your funnel’s health.

Bottom Line

Sales funnels are an important part of the sales process because prospects’ experiences with your company will determine whether or not they become customers. It is critical to think about and plan your prospect journey ahead of time rather than taking a reactive approach because well-thought-out strategies have better results.