The Sales Funnel Explained: What is a Sales Funnel?

The Sales Funnel Explained: What is a Sales Funnel?

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What is a sales funnel? This is a simple question that deserves a long answer. A sales funnel is a term used in online marketing. In the physical word, it is called sales process.

Simply put, a sales funnel is a marketing strategy made up of steps that will lead a potential customer to make a purchase. There is no one single sales funnel that is effective for all, and there is no one sales funnel template that works for all.

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In this article, I will show you what it is, and help you understand how it works. You will also learn terminologies around sales funnel marketing, plus show you templates and examples.

Sales in the Physical World

Let us say that you are an insurance agent. What you want to do is to make a sale, and every time you succeed in doing so, you earn a commission. This commission could be one-time only, or a recurring one. It depends on the insurance company you are an agent for.

To be able to sell, you need clients. But before a person becomes a client, you need to convince this person to buy.

Anybody who is a potential customer is called a lead.

In the insurance industry, your lead could be your friends, your relatives, or friends of friends. Sometimes, you would be lucky to have a person come to your office, asking about the insurance policies you are selling. All these people are called leads.

So, what do you do? You talk to these people, understand their problems, and you provide a recommendation. Surely, the insurance company you are working for have several products to offer, right? It could be mutual funds, it could be a life insurance product, a body part insurance, auto-insurance, and more.

Typically, this lead will not make a buying decision right there and then. It is very likely that he wants to shop around. He will tell you that he has to think about it. So, what do you do? You take his phone number, or his email address.

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Then, you try to schedule another meeting. The lead may say no, or he may say yes. You send him emails about promotions, or you give him a call, and let him know that your insurance company has a new product with lower monthly payment requirements.

Whatever it is that you do, you want to make this person buy the insurance product. And if he does, you just succeeded in converting him from a lead to a client.

And this is why there is such a thing as a conversion rate. Conversion rate is your success percentage. If you have ten leads, and one person bought the product you are promoting, your conversion rate is one divided by ten equals 0.1 X 100 = 10%.

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The entire process—from the moment you met the lead to the moment the he bought the product—is a sales process. Online, it is called a sales funnel.

The Online Sales Funnel

But why is it called a funnel? And how is it similar to the sales process in the physical world?

Online, sales work a little bit differently. Here is the difference:

PHYSICAL WORLDONLINE WORLD
You look for leadsYou find a problem
you talk to the leadsYou provide a solution
You understand their problemYou look for leads
You provide a solutionyou talk to the leads
You nurture the leadYou nurture the lead
The lead makes a purchaseThe lead makes a purchase

Online, the first thing you have to do is to create a solution to a problem. You cannot put up a website to find content. You put content first, and then the leads will come to read your blog.

What you have to do is to find a problem. This is called a niche.

Examples of niches where you can solve problems:

  • Health and fitness
  • Education and career
  • Software
  • Sports
  • Self-esteem
  • Business and e-commerce

There are so many!

Next, find a solution, and then offer someone else’s product.

Then, you have to provide these solutions in different formats like blogging, advertising, or uploading your You Tube videos.

After you provide these solutions, the lead will find you online. They will watch you on YouTube because your video appeared on their search, or they can find your blog post on Google search. After they read your blog post or watched your video, they have to decide whether they will buy or not.

Most likely, they will not buy right away, like the insurance customer. So, what do you do? At the end of every video or blog, you ask this lead to subscribe. In You Tube, your subscribers will get notified everytime you have a new video. In a blog, you get their email address.

Now that you have a lead’s email address, you have to send them reminders about the product you are selling. After all, they found your blog and they are interested in what you had to say.

You send them emails until they make a purchase. And when they do, you earn a commission. If you own the product, then you make huge profits.

That whole process is the entire sales funnel. But why is it called a sales funnel?

A literal funnel is a triangular device. It has a big mouth that leads to a tube, which gradually becomes smaller. The end of the tube is what you insert inside a bottle’s mouth. You need to do this because you cannot pour liquid from one container to a bottle’s mouth directly, or you will spill it.

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Your pour the liquid in the big mouth, and then it flows down the tube, and finally, you successfully moved that liquid into the bottle that has a small mouth. 

An online sales funnel works in the same way. Take a look at the steps below:

  • The funnel starts with huge traffic, in a big mouth: say, 1,000 visitors per day, total of 30,000 a month.
  • Not all of them will buy what you sell, and not all of them will sign-up for an email subscription. If they bought a product, the sales process or funnel is over.
  • Some will subscribe to your email list. What this means is that they moved to the second step of the funnel; the liquid is now pouring in the tube
  • Now, you start sending them promotional materials, or materials that add value to their lives; you are nurturing these leads
  • Some will buy, some will not
  • These people who eventually buy are now converted customers.

From the original 30,000, let us say 100 people bought your product. In this case, your conversion is 100/0,000 X 100 = 0.33%.

Why Do You Need a Sales Funnel?

You need a sales funnel because it is the blueprint of your sales plan. It is your strategy. Without this, you will be attempting to make sales blindly. 

In the physical world—and we will take insurance again as an example—people go through extensive training to become successful agents. After this training, they are equipped with the right tools, materials, and knowledge to succeed.

The people who created the training modules for these insurance agents are the ones who build the plan. They are the ones who built the sales funnel.

In your case as an online entrepreneur, you have to build it on your own. Without a sales funnel, you will not have any idea what to do with your leads.

Your sales funnel is a masterplan that tells you the step by step process of how you intend to make a sale. This is also the same plan that will help you understand what tools you need to make your plans come to life.

Common Types of Sales Funnels

Now, I mentioned earlier that not all funnels are the same. There are many types of sales funnels, and most of them depend on the medium or format you are using to find traffic. Here, I will be showing some of the most commonly used sales funnel strategies.

YouTube Sales Funnel

In you Tube, the sales funnel is pretty much straightforward.

Here are the steps:

  • You create a video that solves a problem – it can be a how-to video, a tutorial, a product review, etc.
  • You ask your viewer to subscribe to your channel
  • You drop a link of your product below your YouTube video
  • The viewer clicks on this link, and makes a purchase
  • You receive a commission from this purchase
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Another version of the YouTube sales funnel is that you ask your viewers to visit your blog. From that blog, they can sign-up for your email list.

Blog Sales Funnel

In a blog, you write articles that provide help. It is similar to what you do in YouTube, but in written form. Here are the steps:

  • You write an article – could be a how-to, product review, step by step tutorial, product comparison, etc.
  • Somewhere in that blog, you post your affiliate links
  • Your reader may buy from that link right away or not
  • You ask your reader to subscribe to your email list; in exchange, you give something for free
  • You send emails to this reader
  • The reader finally buys the product you are promoting
  • You earn a commission
blog funnel 1

Now, people are likely to give you their email address if they get something in return. And this is why you see so many blogs offering free eBooks. I have written an in-depth article about why giving away eBooks is important if you are running a sales program.  

Landing Page Sales Funnel

What is a landing page?

If you have ever seen a webpage that has a long content, and most salesy, then that is a landing page. A landing page is a kind of page where the whole intention is to convince you to buy a product or a service.

Here are examples:

As you may have observed, all of these try to tell you how they can solve a problem. At the end of the landing age, these things can happen:

  • You buy the product
  • You subscribe to an email list in exchange of something, like an eBook
  • You completely ignore it

A landing page is the sales page of every product. It explains everything a person needs to know about it. It is written by copywriters who have the ability to:

  • Explain the problem
  • Explain how the product can solve that problem
  • Make the reader feel that need for the product
  • Convince the reader that the product is of high value and worth the money
  • Convince the reader to take action—subscribe to email list or buy the product now

People get to landing pages because of advertisements, paid traffic, or simply because the landing page appeared on Google search. Many owners of landing pages also promote the landing pages through their YouTube videos, their own blogs, or through paid advertising.

landing page 1

These funnels are basic funnels. Experts use more types of funnels than these three. They use free ads, forums, paid ads on Facebook, Instagram, Google, and others.  

The Tools You Need for Your Funnel

Now, a sales funnel cannot happen without tools. The tools you need depend on the types of funnels you are going to use. If you have no plans of creating a channel on YouTube, then you do not need YouTube.

For this tutorial, we will take a look at all three basic sales funnels and discuss what tools you need.

You Tube

If you will do YouTube, then you need a camera to record your videos. You can use your smartphone if you want, but a smartphone cannot record a tutorial if you are trying to teach your audience how to use something online.

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3d Animation Tool for Your You Tube Videos

What you need is a screen cast software. This the software people use to record what is happening on their screen while at the same time, they have a box that shows their face at the bottom of their screen. 

If you are not doing a recording, perhaps you want to do video animations for your videos. You can use video editors to do this, or use animation software tools like Viddyoze.

Email Capture, Auto-responder, and email marketing automation

For you to be able to send emails, you first need an email capture tool. Most websites today have a pop-up that encourages people to put their name and email address, and then in exchange, the reader will get a free eBook.

What happens behind the scenes is that the reader’s email address will be put on a list. The website owner has that list, and then he can send regular emails to these people to convince them to buy.

One such tool is GetResponse. It has the ability to capture people’s email address and put it in a list the tool also has the capability to automatically send the eBook to the subscriber.

And the best part about it is that you can program it to automatically send specific emails. You just have to write the emails, one time, and then they will be sent according to the schedule you sent.

I will be providing tutorials about GetResponse in this blog, so subscribe and watch out for it.   

eBook Writing tool

Yes, you need a tool like this. Your leads want lots of eBooks. You can write the eBooks on your own, or use a machine to do it for you. One such tool is called Sqribble. With this, you can create eBooks in minutes. It has a vast number of PLR books written in several niches.

With this tool, you can even build a course. You can send the course in a drip campaign, where each part of the course is sent on a weekly basis. Once you have prepared these eBooks, you can upload them in your GetResponse account, and GetResponse will send them via email to your subscribers according to the schedule you set.

Website

Finally, you need a website if you are not going to post videos on YouTube. On a basic sales funnel, you can either use YouTube or a website to generate traffic. This is how the sales funnel begins—you get traffic, and then you lead them down the funnel until they buy.

Summary

A sales funnel is an online sales process from start to finish. It all begins with finding traffic, providing solutions to them, and then finally convincing them to buy.

Once a person makes a purchase, then that is the end of the funnel. But many marketers have evolved. Sometimes the marketers start to upsell after a lead completes a purchase, thus, a new sales funnel begins when one has just ended.

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