A sales funnel is a model for visualizing every stage in the buyer’s journey, from the time prospective customers learn about a brand to the moment they make a purchase.
The top of the funnel represents ‘awareness,’ when potential customers discover a brand, while the bottom represents the 'decision,' when prospects convert into actual customers. At each stage the number of prospects narrow, with only a fraction converting in the end.
Sales funnels allow companies to visualize each step that prospects take on the path to conversion. Each step is a micro-conversion that can be optimized to increase conversions in the end; if one of these steps shows a higher-than-expected drop-off rate, it can be analyzed to see what’s wrong and test out possible improvements.
Funnel tools like Google Analytics or Hotjar funnels help you spot pages with high drop-off rates, displaying how many visitors drop off at each step.
One mistake beginners make is to try to convert everyone who enters their funnel.
Not only is this unrealistic—it’s also inefficient. A better way to increase conversions is to start at the bottom stages of your funnel (at or near the conversion stage) and work backward to improve the user experience for your ideal customers.
Your ideal customers are the ones who would benefit most from what you have to offer; when you build your funnel around their needs and drives, you can quickly boost conversions.
To find your ideal customers, start by building a user persona: a semi-fictional character based on demographic and psychographic data of the people who buy your products, which answers these three questions:
One way to get started is by adding on-page surveys to your website and ask your customers for feedback. Consider polling customers once they’ve converted, paying special attention to those who barely did: this will help you uncover objections that are keeping similar prospects from converting and get them to the next stage in the funnel.
Another way to collect this data is through customer interviews: speak with paying customers and ask them to tell you about the very first time they began searching for a solution to a problem your company was built to solve. Customer interviews won’t give you volumes of data like polling does, but they’ll help you understand and empathize with your ideal customers. Plus, they’ll often draw your attention to things that had not crossed your radar—from unique product use cases to struggles you never imagined.
Set up a funnel tool to start collecting traffic data. A typical e-commerce funnel might look like this:
homepage > category page > product page > cart > checkout > thank you page
As you collect the data, you'll be able to identify the high-traffic, high-exit pages where visitors are leaving your website.
After you've identified your problematic pages, it's time to dig deeper. Using a combination of behavior insight and user feedback tools lets you discover how your customers actually behave and what they think of their experience:
As useful as the funnel model might be, it's also a somewhat limited way of looking at things because the analysis stops at the point of conversion. But satisfied customers give you repeat business and sometimes even referral business, creating a growth loop where success compounds upon success, continually increasing profit.
If you're looking for an alternative definition, you may want to investigate Reforge's Growth Loops or HubSpot's flywheel—both of which encourage different teams within a business to think about how customer acquisition, retention, and revenue are always interconnected.