The business world is constantly evolving and with it your sales opportunities. In order to maintain an overview and at the same time keep the company’s sales competitive, every sales strategy needs a well-designed sales funnel. The sales funnel is a powerful tool for mapping, monitoring and, if necessary, optimizing the different phases of a sales process.
This article explains what the sales funnel is all about and which tools will take sales to the next level.
What is a sales funnel?
The easiest way to compare a sales funnel is with a funnel that gets narrower and narrower towards the bottom. The same applies to the number of customers to be acquired by a company.
Initially, there are a lot of interested parties who end up on the company’s website via advertisements or relevant blog posts. Some of these interested parties click through to the shopping cart or contact form. In the best case, contact details are left which enable the sales team to contact the potential customer. Of these so-called leads, only a handful of customers remain who buy the product at the end of the day. This means that only a few customers come out of the well-filled funnel at the top.
Sections of a sales funnel
In order to consciously build a sales funnel, it is necessary to deal with the most important terms and sections of a sales funnel.
- Top of Funnel (ToFu) : This top section of the funnel is particularly about addressing the largest possible audience of target customers. The aim is to generate an initial contact and to do this in the largest possible number. At this point, the sale of the product or the service is not yet in the foreground, but the understanding of the target customer is the top priority. Important key figures in this phase are above all the traffic and reach data that the website and social media channels produce.
Credo : “Creating awareness” with the aim of addressing a large audience.
- Middle of the Funnel (MoFu) : The MoFu is the section of the funnel that is in the middle. In this area, the possible buyers were sorted out, which in turn can lead to the first wastage. Here the marketing and sales teams are asked to accompany the existing leads into the last phase of the funnel. This is done by building a relationship of trust with the customer. The basis for this is the analysis of the previous funnel section and the behavior of the customer in this initial phase of the sales process.
Credo : “Increase interest” with the aim of turning the audience into interested parties.
- Bottom of the Funnel (BoFu) : Arriving at the lowest level of the funnel, it is now a matter of converting the leads, i.e. the interested parties, into paying customers. As a rule, high wastage is also recorded here, because not every prospective customer wants to be won over for the product. Therefore, the top priority here is to convince the potential customer of the product and ultimately to convert it into a satisfied customer.
Credo : “Sell” with the aim of turning prospects into customers.
- Customer service : The sales funnel does not actually end with the sale, because maintaining existing customers, who may become customers again in the future or should remain customers, is just as important as acquiring new customers. Therefore, this actual “bottom” of the funnel should not be neglected, as this section is missing in most sales funnel depictions.
Credo : “Care” The aim is to generate satisfied customers who come back, make recommendations or become regular customers.
Management of a sales funnel
At the operational level of the sales strategy, a well-running sales funnel also requires appropriate controlling that monitors every section of the funnel. It is particularly effective here if clear sales and traffic goals are set beforehand so that it can be checked at regular intervals whether the sales funnel is still working in a target-oriented manner.
It is often the case that even small changes in the preferences of target customers mean that individual sections of the sales funnel no longer fit and, in the worst case, many potential customers are lost.
For example, one of the most used controlling tools at the end of the funnel is to track the conversion rate. This rate indicates how successfully the audience has progressed through all stages of the funnel. Here, the higher the conversion rate, the better. The conversion rate is calculated as follows:
Conversion rate = (number of contacts converted/number of all contacts reached ) x 100
How to convert customers successfully depends on many factors and there are many methods to get a better understanding of the target customer. One of these methods, which is mainly used by marketers, is the AIDA formula. Here, the goal is to arouse attention, interest, and desire, ultimately leading to a successful conclusion.
A= Attention: generate attention
I= Interest: arouse interest
D= Desire: Trigger desire
A= Action: Include a call to action
Benefits of a clean sales funnel
Every sales funnel differs fundamentally, depending on the business orientation and product , but there are many advantages of developing and using a well-defined sales funnel, which apply to almost all business types:
- Clear orientation : First and foremost, you have to be aware of your own goals and business orientation towards the customer and map the existing sales processes in a visual way. The latter often helps to create a so-called “aha” effect, which in particular shows the bottlenecks and weaknesses of the existing process.
- Clear responsibilities : An unambiguous distribution of tasks and areas of responsibility helps to identify blind spots. As a rule, the first two phases, i.e. ToFu and MoFu, are taken over by the marketing department, since the main task here is lead generation. While the third section is clearly assigned to the sales team as they are responsible for preparing and negotiating the offer.
- Measurability : If all processes have been clearly defined beforehand, KPIs (Key Performance Indicators) can be defined, which help to make the objective of the funnel measurable. It is important here that each section has its own metrics so that the various sections can be adjusted and improved as needed. This makes it possible to quickly identify problems with customer acquisition before the company is really damaged because of a sudden lack of customers.
- Recognize potential for optimization : Finally, suitable measures are derived from the results of the controlling in order to increase the number of paying customers or to reduce the number of prospective customers who drop out.
Rule of thumb: the higher the conversion rate of a measure taken, the higher the ROI (return on investment) of this measure.
Sales funnel creation tools
If business founders and entrepreneurs want to operate a modern management of a sales funnel, they can no longer avoid digital tools, which make life much easier and at the same time bring sales and marketing results to the next level.
- ToFu : Here it makes sense to look at analysis tools for website and social media traffic data and ideally to use them. It is also advisable to learn the concept of the customer journey. Because the “journey” that a potential customer undertakes on the website until he becomes a lead provides a lot of information about why losses can occur in customer acquisition . There are already some powerful tools on the market to analyze this.
- MoFu : In order to convert the leads into paying customers, it is necessary to build a relationship with the customer. This is best done with marketing automations, such as email newsletter services, hosting sweepstakes, or target customer surveys. Customer acquisition works best here if you know your customer well and adapt the digital marketing to the target customer as individually as possible. In order to make this possible, it makes sense to create customer categories that differ in the target address, so that the newsletter automation can send the appropriate content as individually as possible. If the customer gets the feeling of being valued and understood, a lot has already been gained.
- BoFu : For successful sales, the sales team must know the customer better than the customer knows himself, so a customer management system (CRM) is the be-all and end-all for this section of the sales process. This system serves as a customer file that most important information about the potential customer. The CRM is filled with information throughout the funnel, so that the sales team can now start the sales process optimally prepared.