How to build Sales Funnel

The concept of “creating customers” may at first seem to be an odd one. Don’t you find customers, not make them? Well, yes and no. While it is extremely hard to turn someone into a customer if they have no interest in your product/service or don’t have the money to make the purchase, with a proper sales funnel, you can create fans out of people who never even knew you existed (or at least never realized how much they needed whatever you’re selling). A sales funnel can also turn an “on the fence” customer into a raving fan who refers even more people to you!

But what in the world is a sales funnel in the first place? And does it really matter, especially if you’ve been getting by so far without it? This blog is your ultimate guide to why you need a sales funnel, how to set one up, and how to constantly improve your funnel to make more money, no matter what your industry.

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Let’s start by going over the basics of what a sales funnel is before we start talking about why to use them and how to improve yours. There are basically three types of people you’ll interact with during the sales process:

  1. Leads
  2. Prospects
  3. Customers

lead is someone who becomes aware of your company or someone who you decide to pursue for a sale, even if they don’t know about your company yet. Typically, this includes everyone in one big group, but you could also break this down further to only look at qualified leads, which are leads that meet certain qualifications to becoming customers. For example, if you’re selling pet products, a qualified lead is someone who has a pet, versus someone who simply likes the cute animal pictures on your blog, but will never buy anything from you.

Prospect is a term that’s used differently based on the company. In many cases, it is used interchangeably with qualified lead, but usually, a prospect is someone who has had some kind of contact with your company and they are still interested. All prospects are leads, but not all leads are prospects.

We all know what customers are! These are people who have made a purchase. You can further separate out people who have made just one purchase and people who have made several purchases, or repeat customers.

All of these people fit into your sales funnel!

To image a sales funnel, think of an inverted pyramid, or the shape of a kitchen funnel (hence the name). At the very top of the funnel, you have leads. This is where you cast a wide net, trying to find as many leads as possible to bring into the sales funnel.

A small percentage of those leads will be prospects, people who are actually interested in your product or service and who are qualified to buy. It’s a numbers game; the more good leads you bring into the sales funnel; the more prospects you’ll have. And this is important because the more prospects you have, the more customers you have!

This is the last piece of our simple sales funnel: the customer. A small percentage of people who are interested will actually make a purchase and become a customer. You can (and should) know what percentage of people move down the sales funnel.

So, when working on your sales funnel, you want to have two goals:

  1. Find more good leads, to funnel a larger number of people into the process
  2. Increase the percentage of people who move one level to the next down the pipeline

Both are important if your goal is to sell more–and who wouldn’t love that! Now, this is a very simplified version of the sales funnel. In the next post we will take a look at the general sales process and how this fits into the sales funnel.


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