Getting the most out of your sales funnel

What is a sales funnel?

A sales funnel is not a process or method on its own. Rather, it’s a way to visualize your company’s sales process, from initial lead generation through to quotes, negotiations and deals won (or lost). It’s called a “funnel” because, at each stage of the sales process, you’ll convert only a portion of the opportunities from the previous stage. That is, the number of people reaching the bottom of the funnel will be much smaller than the total who entered at the top.

By mapping out how many customers make it through each stage of your sales process, you can determine the average number of top-of-funnel leads needed to win a deal. This will help you more accurately forecast sales and revenue.

“No business will start with 100 leads and end up with 100 sales,” says BDC Senior Business Advisor Chris O’Shea. “But if you know that by starting with 100 leads you’ll land ‘X’ number of deals at the end of the month, you’ll have a much better understanding of what sales success actually looks like for your company.”

You can also use the sales funnel to evaluate your sales team’s performance. Specifically, it can help identify potential problem areas at various stages of the sales process. Maybe your sales reps aren’t following up with leads quickly enough. Perhaps too many people are exiting the funnel once they get a quote or proposal. Being able to identify and track issues like these is critical to boosting sales success.

What are the stages of the sales funnel? 

What your sales funnel looks like will depend on your business and the markets you serve. In general, a sales funnel will involve: 

• Top-of-funnel activities: This stage includes marketing tactics to identify prospects interested in having a discussion with your sales team. It also includes needs assessments to determine whether a prospect is the right fit for your products or services.
• Middle-of-funnel activities: At this stage you’ll have some early pricing discussions with the prospect by providing them with a quote or proposal. It also involves handling and resolving potential objections from the prospect (about budget or timelines, for example).
• Bottom-of-funnel activities: This stage focuses on converting the prospect into a sale. That includes making any final adjustments to project scope, products or pricing.

An inverted triangle represents the sales funnel. At the top of the funnel, which is the widest part, businesses use marketing tactics to generate awareness among many people. Further down is the middle of the funnel, which includes the interest and consideration stages. Businesses present prospects with proposals and pricing to move as many of them as possible through these stages of the funnel. At the bottom of the funnel, a few people decide to take action, resulting in sales conversion for the business.

That said, include whichever and however many stages make sense for your business and customers. For example, some businesses use a funnel with five or more stages: awareness, interest, evaluation, engagement and action.

“The important thing is that your sales team is working across every stage of your funnel to advise and guide prospects toward the next stage and, ultimately, a sale,” says O’Shea.

How does a sales funnel relate to the customer journey?

The customer journey must be foundational to your sales funnel. Don’t design your funnel so it reflects your needs as a vendor. You’ll close more deals if your funnel accurately reflects your customers’ requirements and the steps they must take to buy from you. In other words, map out your customers’ buying journey, then overlay your sales funnel on top of their journey to ensure you can give them their preferred experience along the way.

Consider two companies that sell the same product but have different sales processes. Company A provides its products’ prices directly on its website. Company B doesn’t provide any pricing information, instead telling people to call a sales rep to learn more. The latter approach could create friction with people who just want information and aren’t ready for a sales conversation.

“You don't want to make your customers do things they don't want to do,” says O’Shea. “Mapping your sales funnel to the customer journey will remove friction at each stage of the process, while also providing much better feedback on the buying experience from the customer’s perspective.”

Keep in mind that different types of sales involve different kinds of customer journeys. B2C sales is more straightforward in that you’re showcasing your products directly to prospects, usually in a retail setting. B2B sales is more complicated and drawn out, involving complex negotiations and more decision-makers. As such, a B2B sales funnel will likely look quite different from a B2C sales funnel.

How does a sales funnel differ from a marketing funnel?

A marketing funnel is similar to a sales funnel but focuses mostly on activities found at the top of the funnel. It’s a tool to visualize and track the success rates of your inbound marketing campaigns and provide supportive content to the sales process.

For example, the top of the marketing funnel might reflect the number of people who see one of your advertisements. The next stages would track how many of those people visited your website, then how many of those visited your “contact us” page, then how many of those actually submitted a contact form. Once a prospect is in the sales funnel, the marketing funnel can be used to insert valuable information and content that supports the sale and customers’ decision-making process.

Like with the sale funnel, the idea is to measure the percentage of people who move from one stage of the funnel to the next. This can help you evaluate your success at getting the right information in front of the right people to get them into your sales funnel.

How do I build a sales funnel for my business?

To create your sales funnel, you’ll need to reverse-engineer your customers’ buying journey. That means clearly understanding who your customers are and how they buy from you.

The easiest way to get that understanding is to ask. By using “voice of the customer” surveys, you can dig deep into your customers’ buying habits and what they look for when making a purchasing decision.

“With this kind of survey, it’s not about getting statistically significant data,” says O’Shea. “It’s about hearing stories from your customers so you can find out what will make them choose you as a vendor or service provider.”

He suggests asking questions such as:

• How do you prefer to buy our products and services?
• What makes you want to buy from us?
• What’s most important to you when making a buying decision? Is it price, quality, availability, delivery times, etc.? (The exact criteria you’ll ask about will vary based on your business and industry.)

O’Shea also stresses the importance of establishing key performance indicators (KPIs) so you can continuously evaluate your sales process. Measure and monitor the KPIs that make the most sense for your business. They might include big-picture sales and revenue numbers, or more finely tuned metrics such as the number of quotes or proposals that need to be revised during the sales process. Those kinds of details can help you determine if things are trending in the right direction.

Digital tools and platforms, such as a customer relationship management (CRM) system and the latest AI services, make it easier to manage and make sense of the data you collect. O’Shea says these technologies can do a lot of the heavy lifting when it comes to defining sales success and forecasting sales.

Are sales funnels becoming obsolete?

The sales funnel will always be a relevant tool for entrepreneurs. However, it must reflect the customer journey and how customers want to buy from you.

“The customer may not always be right, but they are definitely in charge,” says O’Shea. “Getting the sales funnel right can be the difference between a successful sales team and one that struggles to close deals. Knowing your customers as best as you can, then giving them the solutions they’re looking for, is the shortest path to success.”

Next step

Discover how to assess, optimize and digitize your sales process by downloading BDC’s free guide, Revving up Your Sales.