What is a sales funnel? Strategies on how to create one (+ examples and templates)

A sales funnel is critical for understanding the path to purchase. Learn how it works and how to build one so you can increase conversions.

The concept of sales funnels can feel misleading. A real funnel is designed to catch and condense everything you put into it, but not every prospect that enters the top of your sales funnel will come out the other end a customer. There’s bound to be some spillage along the way.

However, that doesn’t mean you should settle for a slow drip of conversions. With the right approach, your business can generate more leads at the top of the funnel and more deals at the bottom.

In this comprehensive guide, you’ll learn what a sales funnel is, the process and theory behind sales funnels, and how you can build your own using examples. You’ll also get access to free, downloadable B2B and B2C sales funnel templates so you can start building your sales funnel today.

• Sales funnel template: Free download
• What is a sales funnel?
• Why is the sales funnel so important?
• What are the stages of a sales funnel?
• How to create an effective sales funnel for your business
• Sales funnel examples

A sales funnel mirrors the path your prospects take to become a customer. It describes discrete stages of the customer journey, from first touch to closed deal.

A sales funnel starts with a large number of potential buyers at the top. Based on certain criteria, this pool of potential buyers is reduced to a fewer number of prospects.

Towards the middle of the customer journey, the number of prospects reduces to a handful of opportunities — and after the decision-making stage, the sales process ends with a closed-won or closed-lost deal.

As each individual deal moves through each phase, the probability of closing the sale will change. The further along the sales funnel, the more information is exchanged and more apparent it becomes using the product will be advantageous to the customer.

At this point, there is a higher potential for that deal to be ultimately successful unless the deal is moved to closed-lost — in which case, the probability moves to zero.

During my sales career, I’ve seen the sales funnel solve several problems for sales leadership:

• It was a clearly defined process to model how to close more deals.
• It helped quantify the value of future sales.
• It allowed sales teams to build statistics around the size and the number of deals required to mathematically exceed quota.
• The sales funnel helped define a methodology to teach salespeople how to move customers through a logical sales process and into a closing sequence to maximize rep productivity and cost per lead.

With this definition of a sales funnel in mind, let’s walk through a few real-life sales funnel examples.

Keeping notes on customer engagement in each stage of the sales funnel can help your reps improve their tactics in future interactions. If you’d like to get a savvy head start on building a sales funnel, check out our free Google Sheets sales funnel template. The template can be fully customized for your organization’s needs.

What is a sales funnel?

Sales funnels are sales and marketing tools used to illustrate the steps of the customer journey. Think of a sales funnel as a visual roadmap that shows exactly where a prospect is in the buying process at any given time.

Why is the sales funnel so important?

A sales funnel is important because it allows you to understand what potential customers are feeling and thinking as they move along the path to purchase. Knowing where prospects are in their journey gives you the insight you need to identify the best marketing strategies. As a result, conversion rates and sales will increase over time.

Good sales funnels guide prospects toward a purchase by capturing their attention, nurturing their interest, and ultimately closing the deal. When all goes well, sales funnels also set you up for good reviews and repeat customers.

What are the stages of a sales funnel?

The sales process can be broken down into a general structure of top, middle, and bottom. The top of the funnel is where the customer journey begins, ideally before a buyer even thinks about becoming a customer. Creating brand awareness is always the first step in any typical sales funnel—this is why you need a sales plan for getting on a buyer’s radar.

Stage 1: Awareness

The awareness stage is the point where the buyer first starts to notice a brand. For businesses with full-funnel tracking, it’s also where the company starts to notice the buyer.

In this stage, the potential customer explores a company’s services, reads product descriptions, and does competitor research along the way. They aren’t interested in anything specific yet; they’re simply seeking out a solution.

Marketers can capture the attention of prospects through their lead generation process. There are several channels that companies can use for their sales funnel strategy, including:

• Blogs

Publishing blog posts that are relevant to your customer base is a great way to gain attention. Create content focused on the core topics you want your brand to embody, and optimize it to rank for related keywords. Make sure the articles are engaging and easy to share on social media, too. You should include a call to action (CTA) near the beginning and at the end of each article, as some visitors won’t read the entire post.

• Email

There are two types of email marketing campaigns: outbound and inbound. Outbound marketing involves sending emails to buyers who have not initiated contact with your brand. These unsolicited messages typically don’t perform well, but there are ways to increase open rates for prospecting emails, as well as free email templates you can follow.

Meanwhile, inbound email marketing involves sending messages to prospects who have shown some interest in your brand and voluntarily shared their email address. Perhaps they accessed gated content or signed up for a newsletter. These types of prospects tend to be more receptive and are often easier to target.

• Web

Don’t forget that your brand’s website also functions as a lead generation channel. Potential buyers are apt to look at pricing pages, product descriptions, customer testimonials, and other sections of your site. Make sure every page includes a simple and direct CTA, such as a “Sign up for a free trial,” “Book a meeting,” or “Talk to sales” button.

• Social media

No matter which channel you choose, it’s important to tailor the content to the buyer personas you’re hoping to convert. You don’t want to lose a prospect’s attention by sharing information they won’t find relevant. Studying the characteristics and habits of your customer base can help you define your ideal prospect. Then, once a consumer starts to show interest in what you have to offer, they turn into a pursuable lead.

Stage 2: Interest

When a lead is in the interest stage, they’re done looking around—they’re now looking into specifics. Though they’re not often set on a particular company by this point, they’ve started to focus on one or two products that can solve their problems. This is where sales teams will start using prospecting tools, sales prospecting, and lead scoring. They’ll look at which buyers they need to focus on and which ones they can leave on the back burner.

Once prospects show more interest, they go on to the next stage in the customer journey. Moving buyers from the top to the middle is a delicate and often lengthy process. Businesses need to repeatedly demonstrate their value just to earn a prospect’s consideration (let alone their business).

Stage 3: Decision

When a prospect enters the decision stage of the sales funnel, it means they’re ready to make a purchase. They may still be considering a few options, but they’re prepared to buy. In the decision stage, it’s crucial to distinguish your brand and give the potential customer compelling reasons to choose you.

See if you could offer one of the following:

• Free shipping
• Discount code
• Bonus product

These types of tangible benefits heavily influence buyers when choosing one company over another. It’s also important to emphasize what sets your product or service apart—and what makes your company special—in your marketing materials. Make sure you have an FAQ section on your website, too.

Seemingly small things can make all the difference as you guide prospects toward the bottom of the funnel. You’re approaching the moment when an interested buyer runs the risk of getting cold feet or going with another company—try to seal the deal at this stage.

Stage 4: Action

Even if a deal seems inevitable, sales reps must continue nudging a prospect through the final funnel stages. Easing up on a prospective customer toward the bottom can cost you a win that’s been the culmination of a lot of people’s hard work. Instead, usher your potential buyers across the finish line by using the ASK process:

• Align priorities. Show your prospect that you fully understand their pain points, and reiterate how you can solve them.
• Secure a commitment. Remind them of what they stand to gain, ask sales questions, and offer to address any lingering concerns.
• Keep the relationship alive. Even if the prospect ultimately says no, be sure to follow up with them at a future date. They may come around if their situation changes down the road. If not, they might offer valuable insight into how you can improve the customer experience for future clients.

If you actively engage your prospects, you increase the chances of conversion and the likelihood of establishing a fruitful, long-lasting relationship. In some cases, those relationships and the referrals that come from them can be even more profitable than the initial deal.

Choosing the right CTA is also crucial at this stage. Using information you’ve gleaned from your prospect, reiterate what your product has to offer, tell them how it can solve their problems, and give them a reason to make a purchase as soon as possible. This will remind them why they were interested in the first place and boost your conversion rate for this stage.

For many B2B, SaaS, and subscription-based businesses, the sales process doesn’t end with the purchase. Once a prospect becomes a customer, the sales rep turns their focus toward retention. Reps need to keep in touch with clients to make sure they’re still satisfied and to identify potential upsell opportunities.

Sales funnel template

If you’d like to get a savvy head start on building a sales funnel, check out our free Google Sheets sales funnel template. The template can be fully customized for your organization’s needs.

How to create an effective sales funnel for your business

Creating a sales funnel is an extensive process. It’s going to take research and effort to determine what methods will work best for your company, your sales reps, and your buyers. But by starting from the top and making your way to the bottom of the funnel, you can develop a seamless sales process that will allow you to retain more customers than you would without a comprehensive structure.

Here are good strategies to follow when building a sales funnel.

• Analyze
  To develop a smooth sales funnel, you need insights into consumer behavior. The more you know about your sales data and the clients who’ve historically purchased and used your products, the more successfully you can target your marketing and upper-funnel strategies. Sales reports can help you refine your buyer personas and create content that appeals to high-value prospects.
• Capture the customer’s attention
  The sales funnel begins before a potential customer is even aware they need your product or service. Writing informative blog posts, running targeted ads, and developing a significant social media presence are great ways to attract consumers. Using dynamic infographics, videos, and brand-specific language can help you stand out and draw customers in.
• Build a landing page
  Once a buyer is interested in your product or service, you need to make sure they reach a robust landing page with all the information they need to proceed down the funnel. This page should describe your product, explain who you are as a company, and highlight what sets you apart from your competitors. Include an engaging CTA that tells the consumer exactly what to do next.
  Your developers should also insert a simple online form where prospects can enter their personal information. Collecting email addresses allows you to stay in touch and make future offers that might compel prospects to buy later if they’re not ready just yet.
• Nurture
  Now that potential customers have found you and developed an interest in your product or service, it’s time to nurture that interest. Prospecting emails can be effective, especially if they include new offers or discounts. One to two emails a week is usually plenty to keep a customer on the hook but not irritated by too many messages. This will help you build a strong sales pipeline and improve sales velocity, too.
  You can also use cross-selling to create compelling offers for consumers. For instance, “If you buy these two products together, you’ll get a discount on both!” These types of incentives can help push a prospect to buy and encourage them to buy more than they initially planned. Coupling complementary products may even create a better user experience for the customer. It’s a win-win strategy.
• Stay in touch
  After you make a sale, don’t forget about the customer. Send regular follow-up emails and offers to improve retention and sales engagement. Loyal customers are important assets to a company. Not only do they keep revenue coming in, but they also generate positive discourse about your business online and/or by word of mouth.
• Use the correct software
  You can enhance every stage of your sales funnel process with sales technology and automated sales funnel tools. A sales engagement platform like Zendesk Sell, for example, enables you to automatically capture and score sales leads, schedule and personalize email campaigns, and document all prospect and customer interactions.
  Zendesk Sell also helps you guide and track potential buyers as they graduate from leads to paying customers. It even provides funnel reports and valuable pipeline metrics so you can measure and refine your process over time.

Sales funnel examples

Let’s review examples of B2B and B2C sales funnels for targeted ad campaigns.

B2B sales funnel example

Say there’s a SaaS business that sells a marketing automation platform. This company wants to attract and retain more customers through a streamlined sales pipeline process. It starts by displaying several Facebook ads to its target audience.

• Awareness stage: The targeted ads appear to potential customers who are interested in relevant subjects while they’re scrolling through their Facebook feed. The ad is designed to draw their attention—and it does. The prospect becomes aware of the company, and after seeing several ads in a short time frame, they finally click on one. Just like that, this prospect is in the funnel.
• Interest stage: After interacting with one of the ads, a prospect is redirected to a landing page with an option to sign up for an email list. If the prospect subscribes, they’ll receive free introductory guides on how they can use marketing automation for their own business. They download these guides and move further down the funnel.
• Decision stage: Once they’ve signed up for the email nurture flow and received a few free resources, the prospect is offered a free trial of the automation platform. Sales reps will reach out to the prospect in hopes of converting them into a paying customer.
• Action stage: The sales reps are successful, and the customer buys the solution. The sales reps also follow up to ensure a good customer experience, and the buyer makes repeat purchases. This is the bottom of the funnel.

B2C sales funnel example

Now, let’s map out a B2C sales example. Imagine a company that sells mountain bikes. It starts a campaign by purchasing ads targeting outdoorsy Facebook users.

• Awareness stage: The ads capture prospects’ attention and guide them to a landing page, where they become aware of the company and its products. On the landing page, there’s an offer for a 10 percent discount when a person signs up for the email list.
• Interest stage: The company sends prospects a nurture email. Perhaps it describes what sets the bikes apart, or it offers a deal on complementary products like water bottles or helmets.
• Decision stage: Customers are now incentivized to make a purchase.
• Action stage: Online orders are placed. The company follows up with a customer satisfaction survey, which makes buyers feel heard and valued (and likely to buy again).

As you can see, the process is very similar for both types of businesses—there’s no need to overcomplicate it. The biggest differences are in the length of the sales cycle and the level of sales rep involvement.

AIDA

All sales funnels are made up of a series of steps your prospective customers take as they “funnel” from the mass of all targeted customers to become a qualified lead, and eventually make an actual purchase. The most basic version of these steps was first imagined by advertising advocate Elias St. Elmo Lewis in 1898. Awareness/Attention, Interest, Desire/Decision and Action, or AIDA, describe the four stages that make up any sales funnel.

Awareness—also called attention—is the stage your targeted customers first learn about your product. Interest describes the moment a customer becomes interested in or aware of your product. When the customer demonstrates a preference or a desire to choose your product over others, you’ve reached the desire stage. Action follows when the customer either starts a trial or actually purchases the product.

Basic Structure of a Sales Funnel

The basic structure of any sales funnel includes three main levels: the top, middle and bottom. Each level is usually broken up into sublevels as well.

Top of the Funnel

All sales funnels will begin with awareness, the stage at which potential customers need to first become aware of your product or service. The top of the funnel is the widest section since it contains the huge mass of potential customers you target with advertising as you raise awareness about your product. At this stage, you begin by researching your prospective customers and then targeting them using online ads, content marketing, cold calls and emails to turn them into leads.

The top section will also include the next step, interest, which is beginning to pursue leads that may have had some type of contact with your brand, product or service but are not yet considering it as something they want. This can be done through product demonstrations, service proposals and through the nurturing of your leads by following up with phone calls and further targeted marketing.

Middle of the Funnel

You enter the decision stage with your prospective customer when you begin sending proposals or quotes and negotiating terms. At this point, your prospect has decided that they like your product or service, but needs to make the final decision if they want to actually purchase. Depending on your business, this could be a large or small section of the funnel. It may be a quick process from awareness to purchase, or you may have to further pursue leads for a larger sale.

Bottom of the Funnel 

Finally, you enter the action stage when you are “closing the deal” with your new customer. This is the decision-making stage for your prospective customers and is the time you need to prove your value and build trust in order to separate yourself from competitors. This can take many forms depending on how your product is delivered. Is it a single product or service, or are you bringing them into a subscription platform? Either way, onboarding and pay transactions take place at this stage.

Depending on your business, some funnels may have additional bottom of the funnel stages after purchase, designed to create customer loyalty and build repeat business. This stage is about maintaining customer satisfaction after purchase to generate a long-lasting loyal relationship with your customers.

Free Sales Funnel Template

Providing your team with a sales funnel that is unique to your specific process can be a great help in visualizing the steps each team member should take to close their deals. Download our free sales funnel template and customize it for your needs.

Download Free Sales Funnel Template

Benefits of a Sales Funnel

The average conversion rate across all industries is 3.9%, with B2B tech as low as just 1.7% and professional services averaging around 9.3%. An effective sales funnel helps you and your sales team strategize and focus on only those leads most likely to be converted. This increases productivity, makes forecasting and insights easier and improves customer relations.

High Productivity

A sales funnel can help you and your team increase productivity by helping you better understand your ideal customer and more efficiently meet their needs. This saves time that might be wasted chasing after unqualified leads.

Easier Forecasting and Insights

Using a sales funnel will allow you and your sales team to gain valuable insight about your prospective customer base as they move through each funnel stage. Recognizing what your prospects are looking for and what turns them into qualified leads will provide you with better insight into your product or service development and enable you to predict sales success.

Stronger Customer Relations

Sales funnels will also help you visualize leads that are not moving to the next funnel stage, thus allowing you better understand the needs of potential customers you’re missing out on.

5 Examples of Sales Funnel Templates

Brokerage Sales Funnel

A brokerage is a business representing multiple providers of products or services and “brokering” to customers. A brokerage sales funnel follows the relatively standard sales funnel by first raising brand awareness via marketing, then gauging interest by educating customers and nurturing prospects. The third stage of the funnel is key for brokerages, as this is where the funnel differs slightly from a basic structure. When customers request pricing, brokers can offer a sales quote with a presentation of the multiple options being offered. Finally, the customer makes a purchasing decision.

SaaS Sales Funnel

Software-as-a-service (SaaS) products are a bit more complicated than selling a physical item, but this business will also benefit from a sales funnel. As with most sales funnels, it begins with making prospective customers aware of your SaaS product via online ads, marketing, emails or cold calls. Next, sales reps should follow up with leads to nurture and qualify, delivering sales pitches or conducting product demos to lock in interest.

A proposal with pricing and service terms follows and the customers will consider the product, potentially asking questions or negotiating costs. Then, the deal is won or lost as the customer makes a purchasing decision. The key to SaaS products is often in the fifth funnel stage, which may come much later: the “renewal stage.” Current customers either renew existing plans, upgrade to a better plan or may cancel the service.

Enterprise Sales Funnel

Enterprise sales involve selling products to larger, enterprise-sized companies. The funnels for these types of businesses look only a bit different because the types of sales are so large that there is more relationship building with each prospective customer. Sales reps will first determine if leads are actually qualified to purchase the product or service, then will conduct a demo and offer a sales pitch. If the customer is on board, sales reps can continue with proposals or service trials before closing the deal.

B2B Consulting Sales Funnel

Business-to-business, or B2B, services often include consulting-type businesses such as IT management, law firms, accounting, marketing agencies and more. The B2B sales funnel is similar to most other funnels but includes a bit more focus in the interest stage with sales reps spending time educating prospective customers about how the service may best benefit their own business. Reps will then create a proposal, which the prospective customer may consider and negotiate before making a final purchasing decision.

Social Media and Email Marketing Sales Funnels

Though social media and email marketing sales are often much simpler than brokerage, B2B, SaaS and enterprise-level sales, a sales funnel can still benefit a business selling via the internet. This social media sales funnel strategizes drawing customers to a product through the same AIDA steps: Targeting social media posts generates awareness, emailing with subscribed prospects attracts interest, hosting an online event to help guide decisions and finally offering the customers your product to drive action.

Tips for the Best Sales Funnels

The key to creating the best sales funnel for your business comes from truly understanding your sales pipeline and how each step brings you closer to converting your leads into customers. Here are a few tips and tricks to consider while drawing out sales funnels:

Know Your Ideal Customer

One of the most important parts of structuring your sales funnel is knowing your ideal customers. Imagining the most ideal version of your customer will ensure you are building your sales funnel to move that type of prospect from lead to purchase by considering buying behaviors, what types of communication might be preferred and where to target to best find this customer.

Personalize Your Customer’s Journey

Once you have created a profile of your ideal customer, determine how you will personalize each step of each customer’s journey so they have the most positive experience possible with your brand. These steps will further inform the stages of your sales funnel.

Engage Your Customers

It can be easy to find a huge slew of possible leads, but nurturing those prospects into qualified leads and eventually converting them to customers can be much harder. The later stages of any sales funnel will be about engaging with your customers—whether you are creating interactive content, offering demos or trials or even just further engaging on social media or other marketing fronts, you want to nurture your leads. Customer relationship management (CRM) software can be a huge boon to this process.