What Is a sales funnel? Definition, how to build one, and best practices

A sales funnel is a visual representation of the B2B sales process and is crucial to understanding the journey of a prospect to becoming a customer. The funnel consists of stages such as Awareness, Interest, Decision, and Action and provides visibility into the effectiveness of sales and marketing efforts. The article delves into different sales funnel models and best practices, and covers the differences between a sales funnel and a sales pipeline, as well as tips on how to build a sales funnel that is tailored to your target audience.

What Is a sales funnel?

A sales funnel visualizes the B2B sales process and shows the different stages prospects go through to become customers. It is fueled by sales and marketing activities that generate awareness, drive demand, educate potential buyers, build trust, and make a compelling case for a product or service.

The most common graphic used to represent a sales funnel is a segmented tube with a wide top and narrow bottom, much like an inverted pyramid. The top of the funnel shows a large number of potential B2B buyers while the bottom portion signifies the small fraction of engaged prospects who decide to make a purchase.

Meanwhile, the segments represent the stages of the funnel that sequentially screen out decision-makers who do not match your buyer personas or whose pain points currently do not correspond to your solutions. Through these stages, prospects also learn more about your product and get more interested about its benefits and shortcomings.

Why is it important?

A B2B sales funnel is important because it provides visibility into the effectiveness of your sales approaches and marketing efforts. Using the sales funnel as a framework, marketing and sales professionals can

1. Analyze and assess the fitness of a business model.
2. Identify problematic areas and bottlenecks in the sales process.
3. Develop the right B2B sales strategy and/or enhance sales enablement assets to improve conversion rates at each stage.
4. Fine-tune messaging, pricing, and other factors to match the pain points, sensibilities, or preferences of target B2B buyers.
5. Generate higher revenue by bringing more prospects into the funnel and turning them into happy customers.

Sales funnel stages

There are several ways of depicting the stages of a sales funnel. By far, the most common model is popularly known as AIDA, the acronym for a funnel consisting of four stages:

1. Awareness - a prospect knows that your product or service exists.
2. Interest - the prospect recognizes that your product might be relevant and wants to know more about it.
3. Decision - the prospect acknowledges the benefits your product offers but is still considering possible drawbacks to adoption and/or better alternatives or competitors.
4. Action - the prospect takes the final action in the B2B Sales Cycle (i.e., purchasing decision, postponement, or opt-out).

In the field of marketing and advertising, AIDA more commonly stands for Attention, Interest, Desire, and Action.

Other funnel models

1. Some businesses prefer a simpler, 3-tiered framework consisting of 1) Awareness, 2) Consideration, and 3) Decision.
2. RingDNA cites a 7-step funnel that builds upon the AIDA model to include Customer Success, retention, and up-selling opportunities: Awareness, Interest, Evaluation, Decision, Purchase, Reevaluation, Repurchase.
3. With customer happiness and brand advocacy becoming more central to business success, some companies prefer to use a slightly sunnier 4-phase funnel: Attract, Convert, Close, Delight.

Sales Funnel vs. Sales Pipeline

Sales funnels and sales pipelines sound remarkably similar and are often (mistakenly) used interchangeably though they are technically different.

A sales funnel focuses on leads (i.e., buyer behavior), adopts the prospects perspective, and shows the conversion rate at each stage of the process (i.e., how many leads out of the total transition to the next phase). The sales funnel also visualizes how the lead qualification process usually pans out: a large number of B2B sales leads enter the wide top of the funnel and a small fraction reaches the bottom as customers.

In contrast, the B2B sales pipeline focuses on revenue opportunities, adopts the sellers perspective, and shows the sales activities that need to be performed in order to meet quota or revenue targets. The sales pipeline shows the stages in your sales process (such as Prospecting, Needs Analysis, Proposal, Negotiation, and Closing) and how revenue opportunities are distributed in those stages.

Sales Funnel Best Practices

The process of converting a B2B sales lead into a happy customer and brand advocate varies from business to business. That means companies need to identify, build, or adopt specialized B2B sales strategies and approaches even while the funnel retains the same fundamental elements.

Here are some best practices to consider:

1. Orchestrate and maintain full sales-marketing alignment.
2. Probe your funnel for leaks and fix as needed.
3. An omni-channel approach to customer engagement is ideal for most businesses.
4. Conduct regular audits of sales and marketing campaigns. Adopt an A/B testing culture to optimize campaign impact and effectiveness.
5. Optimize cost vs. benefits (ROI) of getting X number of leads into the funnel.
6. It’s okay to re-engage leads who have gone dark.
7. Being a market leader or a respected domain expert helps replenish the funnel by establishing trust in your brand.
8. Maintain funnel health with the right sales tools and technologies. Whenever possible, use automation to standardize your funnel.

How To Build Your Sales Funnel

Ideally, sales funnels reflect the buying behavior of customers. As such, any funnel build-out should be laser-focused on your target audience and geared towards providing the best customer experiences possible. Such a funnel ensures a larger ratio of leads making the complete journey from the top to the bottom of the funnel.

Here are some guidelines:

1. Categorize all current sales and marketing efforts into the appropriate funnel stage, filling in the gaps if there are any.

2. Achieve in-depth understanding of your customers needs, aspirations, and behavior.

• Create buyer personas and the ideal customer profile based on this understanding.
• Provide answers to customers’ most urgent questions.
• Develop sales activities, marketing assets, and customer experiences in such a way that they meet customer preferences.

3. Capture customers interest by enhancing end-to-end experience and content marketing. Provide valuable resources such as industry reports, market trends, and videos that will help customers achieve success.

4. Prioritize excellent Customer Service, Success, and incentives programs not just to drive repeat business and referrals, but to also convert customers into brand champions.

Note: Mention published an excellent article and infographic by Shane Barker that maps out the entire sales funnel development process.

How To Maintain Your Sales Funnel

Effective sales funnel management entails the use of tools, technologies, and techniques that minimize funnel leaks and maximize lead generation, as well as the ratio of leads making it to the final stage of the process.

Some of these sales funnel management tools and techniques involve the monitoring and accurate analyses of sales funnels. Others enable marketers and sales managers to determine lead behavior and quickly respond with the appropriate customer engagement assets or experiences.

Sales Funnel Tools & Technology

There are many sales and marketing technologies that are used to fill and optimize sales funnels, including:

• Lead generation software (e.g., DataFox, LeadFuze)
• Email marketing automation (e.g., GetResponse, Yesware)
• Business intelligence services (e.g., LinkedIn Sales Navigator, DiscoverOrg)
• Customer feedback solutions (e.g., Formstack, OpinionLab)
• Content management software (e.g., PandaDoc, Bigtincan)
• Sales engagement platforms (e.g., ClearSlide, Outreach)

Note that some platforms provide a wide range of capabilities for solving different sales funnel challenges. Outreach, for example, optimizes all customer-facing activities (from cold calling to emails) to improve process efficiencies and drive higher sales performance. In addition to making A/B tests easier to conduct, we also have a sales dialer, email manager, meeting scheduler, sequence manager, and other features.

If you don't know the difference between Sales Force Automation, Customer Relationship Management, and Sales Engagement Platform technologies, read our brief breakdown of these three kinds of sales tech.

Sales Funnel Troubleshooting

As with any sales process, there are a lot of factors that can negatively impact your sales funnel. Disjointed sales and marketing departments, mismatched sales tools, untrained sellers, and inappropriate sales process are just some of the factors that can erode the efficiency of a sales funnel and allow valuable leads to leak out. This article published by Sales Hacker cites common red flags that indicate a leaking sales funnel as well as the related areas where solutions might fix the leak. For example, low leads-to-closed-deal ratio may indicate neglected/under-serviced touch-points in the buyer journey. Meanwhile, stalled or slow-moving opportunities might indicate B2B sales cycle inefficiency, over-extended sales teams, or lead qualification issues.