Basic Concepts: What is a Sales Funnel?


Learn what a Sales Funnel is, how to apply it to your business strategy in order to get higher conversion rates and how to measure your success using sales funnel metrics.

When managing any kind of business, online or offline, it’s paramount to understand the importance of managing a sales funnel and, therefore, actually funneling your targeted and actual customers through this checklist.

It’s a lot easier for you to capture the attention of people who may need your products/services and consequently, it also makes it simpler to actually take them from just being interested individuals to a converting customer who may even come back time and time again, recommending you to their acquaintances for the quality of what you offer.

Like anything else in the universe of business and sales, though, sales funnels need to be created in a thorough and precise manner to ensure that they work and actually end up converting. With the right kind of sales funnel management, though, you can make that kind of pipeline needed to start drawing more revenue to yourself as soon as possible. You’ll be able to have a clear pathway for each and every customer that you work with to ensure that you can give yourself a better chance of actually breaking into the revenue brackets that you wanted to.

Concept of a Sales Funnel

In essence, then, a sales funnel is a set of parameters that you will work to with more or less every client. It creates an easily understood – usually visual – representation of how you will sell your products/services.

Typically, a sales funnel will not just be some ideological change; it will detail things like the amount of potential prospects you have in various stages of your sales funnel as well as detail the conversion rate of each part of the funnel as time goes on.

Managing this properly and giving yourself the best chance of success is always the main thing that you need to have on your mind, so having a range of metrics that you can test the sales funnel out with is going to be a big part of how successful your sales funnel is.

Very rarely will a sales funnel be perfect at the first attempt of developing it, they are typically perfected through many hours of hard work, dedication, testing and researching customer databases and behaviors.

However, you need to know how to go about testing and researching in the first place because these steps are going to play a vital part in your overall success with the sales funnel itself.

How should I measure my success with a Sales Funnel?

There’s a few simple criteria that need to be observed in every part of the funnel in order to determine how successful the results your current obtaining are at the moment:

  • How many opportunities are reaching each part of the funnel –  How often does someone from the Initial Contact end up going all the way to the end, or even reaching the Closing phase of the sales pipeline?
  • The average value of every deal that you undertake – How many sales are you finalizing daily vs how much are they spending (how much is your average sales ticket)?
  • The average time it takes someone from start to finish in your sales funnel – Is it a snap decision, or are they taking their time more often than not?
  • The conversion rate of the funnel – How many of your team members can get someone to successfully go through the entire process with a sale at the end?

The ideal expected outcome, then, is making sure that your sales funnel is capable of consistently producing;

  • A higher volume of concrete deals.
  • Higher average sales ticket.
  • Higher and more regular conversions at a quicker pace.

In turn, these results altogether, in a medium to long term view, will help you get higher profit and overall performance levels in return.

Who enters a Sales Funnel?

The most important thing to know about your sales funnel, though, is who is coming in and out of it. Who are you dealing with on a daily basis? You will typically find that the people who enter your sales funnel can be broken down into four categories:

  • Those who have never dealt with you in the past
  • Those who deal with you on a regular basis
  • Those who made a purchase in the past
  • Those who are “aware” of you but not certain about what you bring to the table (know the brand/product but never made a purchase)

It is your job, then, to use your sales funnel properly to show them what you bring to the table. It takes a bit of time and a bit of planning to get it right, of course, but it’s a vital part of being able to sell yourself as a legitimate option to people these days.

Given the dynamic nature of how people find out about businesses today, you also need to factor in the various ways that people will even come to your funnel to begin with. In the past, we had recommendations and work of mouth from friends and family – today, we have something far more diverse. It could be advertising, from a website, a forum, social media, our phones, an app, even chat rooms.

There are plenty of ways for people to enter a sales funnel now and this means that you need to always have a plan for making your sales funnel as inclusive as it possibly can be.

So, what should you do? You need to research, and you need to learn about the accompanying tools that come with a sales funnel. Not every sale is managed face-to-face anymore so you need to take this into account, and make sure that the sales funnel attracts people both to your physical stores and to your online pages. Then, the sales funnel has to help you convert.

To do this, you need to work with the right mentality at all times; your sales funnel has to be developed to not only fit with the main demographics that you work with, but also with the changing ways that people can find you today. it has to fit in with online and offline at the same time, whilst also preparing a sales funnel that fits with the philosophy of your industry as a whole.

Free Sales Pipeline Template!

Try Pipefy’s Sales Pipeline Template, a step-by-step, easy to work with workflow developed to enhance your team’s focus and productivity.

This template will guide your team through all the steps of the sale, from prospecting, to properly qualifying leads to close the deal, helping them keep track of the opportunities and always staying on top of their game.

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