What is a Sales Funnel and Why do You Need One? (For Beginners!)

What is a Sales Funnel and Why do You Need One? (For Beginners!)

Do you ever wonder how businesses make consistent sales?

If you’ve ever tried to sell anything, then you know how hard it can be. You might make a sale, but getting to the point where you can generate regular revenue is tough.

Successful businesses don’t just make sales here and there. They make sales consistently and with high enough volume that they can comfortably hire full time employees. They know that despite having regular expenses, they are going to be profitable.

So how do they do it?

The key to making consistent sales is a sales funnels.

In this article, I’ll talk about what sales funnels are, the stages of a sales funnel and examples of how businesses use sales funnels to achieve consistent growth and predictable revenue.

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1. Sales Funnels Defined

So what exactly is a sales funnel?

A sales funnel is a step-by-step process that allows you to bring your potential customer one step closer to your offer and a buying decision through a series of marketing actions like automated emails, videos, articles and landing pages that will do the selling for you.

Think of sales funnels as a virtual salesperson that works 24/7, 365 days a year without complaining or asking for more money.

Sales funnels are everywhere, even if you don’t realize it. Let’s take a look at Starbucks, for example…

Source: Pixabay

The sales funnel for Starbucks might start when you see a piece of their marketing somewhere. You may be driving home one day and you see a Starbucks billboard. Seeing a company’s branding lets potential customers start getting familiar with the brand.

At home, when you are watching television in the evening, you might see a Starbucks commercial on TV. The commercial might show you how the coffee is made. It could also show people enjoying the coffee and being more productive at work.

The next morning, as you are going to work, you walk by a Starbucks and someone hands you a flyer advertising a “buy one, get one free coffee” special.

You decide to go inside and order Starbucks coffee for the first time. The person at the checkout counter asks you if you want a cookie with your order. Their cookies look tasty so you say “yes”.

They give you your cookie and two coffees. They put a sticker on the second coffee saying “for your favorite co-worker”.

While most ordinary folks might not realize it, they are purchasing products or services because of sales funnels. Sales funnels are used to sell everything including information products, services and physical products that you see every day.

2. Two options to grow your business

When deciding to grow a business, many people struggle with how to market their business. Most aspiring business owners have two options…

#1 – Continue to rely on “hope marketing”. Hope marketing means waiting around for referrals and word of mouth.

Or going to networking events and talking to random people in the hopes that you will meet a potential customer.

Basically, businesses that take this approach sit around and “hope” that business comes their way.

#2 – Take the time to actually build a system that attracts the right leads and turns them into paying customers.

Winning companies have figured out how to acquire customer at profit and scale. The best way to do that is through a sales funnel.

Businesses that take this approach identify their target customer. They figure out where and how to reach them.

These businesses also have a plan for cultivating these leads and turning them into paying customers.

They might also have a plan to get them to buy more products or services and to systematically refer even more leads.

Which of these approaches do you prefer?

Do you want to continue relying on external factors that are outside of your control and waiting around for business to come to you?

Or would you rather take control of your destiny by building a step-by-step system that attracts the right leads and converts them into paying customers.

If creating a step-by-step system sounds good to you, then let’s take a closer look at the makeup of a sales funnel.

3. Understanding the Phases of a Sales Funnel

To create a successful sales funnel, we need to start by understanding the four phases of a sales funnel. These four phases include the awareness stage, the relationship stage, the sales stage and the upsell stage.

Awareness Stage

In the Awareness Stage, your goal is to let people know that you exist. Ask yourself, “What can I do to make people aware of my business?”

There are many ways to reach your target customers and build brand awareness.

Content Marketing

Content marketing is one way to build an audience and create brand awareness. Writing articles can drive traffic to your website through SEO and social media while also allowing other people to see you as an expert in your field.

Video

Video is another tool that can help build awareness. Videos can allow people to see who you are as a person and form a deeper connection with you. Videos can also be used to demonstrate a product (or service) or share other ideas.

Paid Ads

Advertising can be a great way to reach your target audience quickly. Paid ads often allow you to target people by preferences or demographics.

Word of Mouth and Referrals

Word of mouth and referrals will start to generate awareness for your business if your products or services and content are good.

While getting customers through referrals is nice, don’t rely on it.  Instead, build a real marketing system that provides predictable revenue and results.

Relationship Stage

Once people become aware of your brand, you want to continue to build a relationship with them in the Relationship Stage. In this stage, ask yourself how you can build trust and authority so that people will feel comfortable buying from you.

If you do a good job of building relationships, then you might start getting emails like this:

Think about what communication channels will allow you to communicate with your audience most effectively.

Email marketing is a popular choice for online marketers because it is relatively inexpensive. Once someone joins your email list, you can keep communicating with them by sending emails.

You can even use re-targeting to show ads to people who visited your site before so that you can continue to build brand familiarity with those prospects.

Some other channels might include social media, webinars or even sponsored videos.

During the Relationship Stage, you also need to decide on what buying beliefs you need to install before your customer will buy. For example, a vegan bodybuilder might need to believe that a vegan protein powder comes from 100% plant ingredients and is an effective source of protein before buying it.

A belief system consists of the beliefs and biases a person might have regarding your product or service.

Here is an example of a belief system target towards a vegan consumer:

Decide what buying beliefs are necessary. Then incorporate them into your sales funnel during the Relationship Stage. Educate your prospects so that they will be ready to buy once they reach the Sales Stage.

Sales Stage

After your prospects have been through the Relationship Stage, send them to the Sales Stage so that you can close the sale. In this stage, ask yourself what is the best way to get people to pay.

If your Relationship Stage is well designed, then selling should be easy. Your customer will already want to buy your products or services.

However, you can still improve your results by having a strong Sales Stage.

For a high end conference, the Sales Stage might consist of a landing page with a video and a list of featured speakers. It could also list other benefits of attending, like being able to network with other successful individuals.

Another way to improve sales results is to use urgency or scarcity to get people to buy. Scarcity is optional if you did a good job of building trust and authority in the Relationship Stage or use a Relationship Funnel instead of a sales funnel for your business.

Avoid using fake scarcity to get people to buy. Customers can sense it and it prevents them from trusting you.

Upsell Stage

Finally, the Upsell Stage is where businesses can make more money by selling additional related products or services to their customers. McDonalds grew into a multi-billion dollar company by simply asking their customers “Would you like fries with that?” after they purchased a burger.

Asides from generating more revenue for your business, upselling can also improve the customer experience. Some people purchasing a ticket to your live conference might be willing and even wanting to pay more to consult with you directly.

When designing your upsells, think about what other products or services that your customers might want. Can you upsell a more expensive product or service that can help them even more? Or can you cross sell them a similar product or service that they might be interested in?

Sales Funnels Are All About Relationships

Ultimately, a well designed sales funnel focuses on building relationships. Building a strong relationship is the key to success.

Having a relationship building mindset will allow you to provide more value for your customers and therefore drive more growth to your business over the long term.

At Wild Audience, we use what I call a Relationship Funnel that improves upon the sales funnel process by focusing on building the relationship and providing value to our audience.

Building relationships through Relationship Funnels is our super strength and it is what we are known for. We offer a Relationship Funnel course and also have an RF Accelerator program for high ticket businesses who are serious about scaling their business.

If you want to learn more about Relationship Funnels, feel free to download our free case study of how a real business achieves 7-figures in sales by clicking the image below:

4. The Top, Middle and Bottom of the Funnel

A lot of marketing people might also describe a sales funnel as having a top, bottom and middle. These categories relate to the four stages previously mentioned.

Now let me explain what I mean..

Top of the Funnel (TOFU)

The top of the funnel (TOFU) corresponds to the Awareness Stage of a sales funnel. People at the top of the funnel are not ready to buy, but instead are looking for information to help them solve their problem.

In this stage, we focus on talking about their problem and sharing information that might help our audience move towards a solution. We talk about the problem that our product or service is solving to get the attention of our reader.

We also want to build brand awareness in this stage and let our audience become familiar with our business and what we do. Our goal at this stage might be simply to get new visitors to opt into our email list so that we can keep in touch with them.

At Wild Audience, we even segment our list so that we can send customized content to readers based on interests. Our opt-in form starts with a quick survey that pops up, as shown in the image below:

When marketing to top of the funnel prospects, the long term goal is to educate them with content and move them towards the bottom of the funnel. These prospects might not be ready to buy now, but with the proper nurturing, they may become great prospects later.

Once a prospect opts in to your email list, they move into the middle of the funnel.

Middle of the Funnel (MOFU)

The middle of the funnel (MOFU) corresponds to the Relationship Stage of a sales funnel. In this stage, we nurture our prospects so that they will be ready to buy once they reach the bottom of the funnel.

The middle of the funnel has two main goals.

The first goal is to establish relationships by creating trust and positioning yourself as an authority. You can accomplish this task by sharing useful and relevant content with your followers.

The second goal is to install necessary buying beliefs.

To install buying beliefs, talk about your unique mechanism (a unique method or process that you and your customers used to solve their problem). Sharing your unique mechanism will eliminate competitors from your prospects’ minds as they start to see your method as the best way to solve their problem.

Talk about your solution and show your prospects why it is the best way to solve their problem. Cover all the features and explain why it works so well.

Use articles, videos, podcasts and other forms of content to educate your audience so that they view you as an expert on the topic. You can even showcase some case studies or testimonials as social proof to make your product or service offering even more compelling.

Bottom of the Funnel (BOFU)

The bottom of the funnel (BOFU) corresponds to the Sales and Upsell Stages of the sales funnel. The goal of this stage is to sell your product or service to the customer and maximize profits by upselling more products or services.

Anticipate any common objections that your customer may have and address them in your sales copy. Consider providing answers to frequently asked questions as well to streamline the buying process and reduce customer support time.

Throw in some examples of results that your other customers have achieved. Use detailed case studies, show testimonials and conduct customer interviews to build social proof.

Here’s an example of a great customer success story that we use at Wild Audience, where the customer achieved a 9.48% conversion rate:

Think about other products or services that you can upsell and cross sell during this stage to increase profits and provide a better customer experience.

Now let’s talk about why we need a sales funnel and the benefits.

5. Why Do We Need a Sales Funnel

Sales funnels solve one of the biggest problems that companies have, which is creating a system to acquire profitable customers at scale.

Sales funnels have four main benefits:

1. Having processes in place to systematically generate new leads.

2. Being able to build relationships with leads automatically through processes and automation.

3. Turning prospects into paying customers.

4. Getting repeat business by selling more products or services to existing customers.

Here are a few additional benefits:

1. You can do as little or as much lead generation as you want.

Once you have your system established, you can scale your business by focusing on improving your products or services. You know that people will be systematically taken care of and converted into customers by your system automatically.

2. Your profits and revenue will be consistent and predictable once you’ve tested your funnel and have it working.

Like Mubaid, who increased his sales conversion rate to 9-10% using Relationship Funnels:

Or Landon who made over $6,400 in just six weeks:

3. You will be able to measure how your business is performing on a daily, weekly and monthly basis by analyzing your performance dashboard and analytics.

4. You will also be able to more effectively communicate with your team and make better decisions based on data.

Would you like to see a visual representation of the Relationship Funnel stages? Click the image below to download my free Relationship Funnel graphic.

Ok, are you ready to see how a sales funnel works in real life?

6. Sales Funnel Breakdown: Y Combinator

Let’s take a look at Y Combinator, one of the most successful small business accelerators. Y Combinator invests in early stage startups and profits when those companies are successful.

They’ve invested into successful companies like Dropbox, AirBnB and Reddit. Y Combinator’s portfolio of successful companies has a market valuation of over $80 billion.

I chose Y Combinator as an example, because it’s also how I learned about sales funnels.

I lived in a startup house with 17 other people and did sales and marketing for a company called Close.io, a Y Combinator (YC) company in Palo Alto, California. I was amazed at how Y Combinator invested in so many successful companies like Stripe, Zapier and Mixpanel.

I became curious about how they were able to develop such a strong brand and invest in successful companies that have a combined valuation of over $100 billion.

I studied everything they put out. I went to YC demo days, talked to YC founders and even snuck into YC alumni meetings.

Ultimately, I discovered that YC used sales funnels to build brand awareness. Here’s a breakdown of how they do it.

1) Awareness Stage – For YC to attract business founders, it needs to drive awareness for its brand. YC uses several tactics to build this awareness including:

  • Success stories from their invested startups

Investing into successful companies also helps spread the YC name. As invested startups become successful and well known, people begin talking about YC through association.

  • Free startup school at startupschool.org – YC doesn’t just stop with investing into startups. They also provide educational content to help entrepreneurs start their own business, including Startup School which offers a free course to learn how to launch a startup
  • Content for startup entrepreneurs
    They also provide other free content to attract startup entrepreneurs. YC co-founder Paul Graham creates a range of content including articles and startup ideas.
  • Free online course
    They also provide a free online course on how to start your own startup with multiple videos.
  • YC YouTube channel
    YC also has a YouTube channel with video content that has attracted over 147,000 followers.
  • YC blog
    YC also blogs regularly to share updates and insights from other YC companies.

These are some of the tactics that YC uses to build an audience and generate brand awareness.

Once YC builds awareness, they need to continue to build relationships with their target audience.

2) Relationship Stage – The Relationship Stage consists of all their free content and also live events where people can meet and interact with other business owners and experts. The free content helps entrepreneurs get educated on startup businesses and even get inspired to start their own business.

3) Sales Stage – When people are ready to get funding for their business, they can apply to the YC program. Founders can also apply to present their business during Demo Day (after a 3 month incubator).

4) Upsell Stage – Y Combinator also has a program called Y Combinator Continuity, which is an investment fund that helps companies scale their companies. Companies in a growth phase can apply for this program.

I hope you liked the Y Combinator example. Now let’s take a look at another successful sales funnel… Tony Robbin’s high ticket service based agency.

7. Sales Funnel Breakdown: Tony Robbins

Tony Robbins is a world renowned motivational speaker, entrepreneur and #1 NY Times Bestselling author. He is the founder of multiple companies that earn around $6 billion in sales annually.

Tony’s coaching business teaches his students how to find happiness and get motivated to make positive change in their lives. Here’s a closer look at his sales funnel:

1) Awareness stage – In the Awareness Stage, Tony Robbins uses content and lead magnets like podcasts, articles and videos to attract his target audience.

Asides publishing the podcast on his website, he also syndicates his podcast to ITunes, Stitcher and other podcast channels to maximize his reach.

Tony publishes articles on his blog, which allows him to engage his audience and to attract inbound search engine traffic.

Creating videos and uploading them to places like YouTube and Facebook also allow Tony to expand his reach. Some of his videos have also been re-published on high profile sites like Inc and NY Times.

All of this content creates brand awareness and drives visitors to his website where they can opt into his email list and enter the Relationship Stage of his funnel.

Tony also segments his email list by using Life Assessment Quizzes to divide people into buckets. He can then send customized information to each bucket targeted towards their interests.

Here’s a screenshot of one of his quizzes:

2) Relationship Stage – In the Relationship Stage, Tony builds a relationship with his audience by sending them content periodically.

He also offers the Ultimate Edge Program for $249 as his front end program for audience members that are ready to buy immediately.

Email autoresponders automate his relationship building processes by dripping out content including podcasts, YouTube videos and articles.

Tony even uses bots to automate his process even further. Tony’s Facebook messenger bot, for example, will automatically reply to people and answer their questions.

Content is also shared on social media for people following those channels.

3) Sales stage – During the sales stage, Tony sells his core product for $3k which is the “Unleash the Power Within” live event. He gets people to join a sales call with one of his team members to sell tickets to this event.

4) Upsell stage – To maximize profits, Tony also offers other products or services to his customers. His offerings include more live events, one on one mentoring and other online courses.

Tony offers multiple live events and the tickets can range from $4,000 – $9,000. The events can range from 1 – 5 days and are held at different locations.

Tony also offers one-on-one coaching services with one of his trained coaches. The price of coaching ranges from $4,500 – $6,000 for 6 months of coaching.

8. Want Results? Here’s What to Do Next..

Do you want to get results in your business and acquire customers at profit and scale?

Then ask yourself these questions…

#1 – Is my website a sales funnel?

Make sure your website actually has an automated system in place to attract leads and convert them into sales.

#2 – Do I know how much it costs me to acquire a customer?

You will need to know this information if you want to grow faster and generate more profits for your company.

If you want to supercharge your website sales, then you might want to check out what a Relationship Funnel is right now. It’s a sales funnel on steroids that can help you acquire customers at profit and scale.

If you are a fast mover, you can buy our super affordable mini online course that walks you through the exact sales funnel that multi-million dollar companies use.

Or join my 90-day Relationship Funnel Accelerator for high ticket businesses that want to grow from $10k to $100k per month. Just click the link above and take the quiz if you are ready to take your business to the next level.

Hope you enjoyed this article and happy automated and predictable selling!

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