What Is a Sales Funnel and
Why Do You Need One?


As a small business, it’s easy to want to contact each new potential client immediately in an effort to make a sale. Unfortunately, that’s a great way to scare them away since people don’t tend to like to be sold. It’s much better to allow them time to become familiar with your brand and product so they can choose to initiate contact as they’re ready to seriously consider buying.

But, how are you supposed to keep track of all these leads while improving your sales and marketing efforts along the entire buyers’ journey? That’s where a sales funnel comes in.

Sales funnels explained

A sales funnel is a visual representation of the complete journey your potential customers take from the time they are attracted to your brand to the time that they make a purchase. Incorporating all actions taken by both marketing and sales along the prospect’s path, it is shaped like an actual funnel. The top is wide, representing the large volume of leads entering and the bottom is narrow, depicting the number of ideal buyers who actually become customers.

Although sales funnels vary depending on industry and length of the sales cycle, the most common stages that leads pass through on their way to becoming customers include:

  • Awareness
  • Interest
  • Decision (a.k.a. Desire)
  • Action

As a potential buyer advances from one stage to the next, prospects who don’t meet your ideal customer profile, also known as a buyer persona, are filtered out. The result is that only the leads with the challenges and needs met by your product arrive at the final stage – “Action” – where they make a purchase.

Why do you need a sales funnel?

All businesses, regardless of their size or product type, as well as whether they’re selling direct to consumers (B2C) or to other businesses (B2B), benefit from having a sales funnel. Although each one will be unique to your specific business, there are several reasons to have a sales funnel in place, and these include:

Simplifying marketing efforts

Marketing becomes easier when you have a sales funnel because it helps you identify what tactics and sources are producing the highest quality leads that are actually converting to customers. These insights increase the ROI of your marketing spend by enabling you to adjust lead acquisition efforts for optimum results. This gives you the greatest number of the right leads without wasting valuable funds on poor quality ones.

Increasing sales forecast accuracy

A sales funnel facilitates forecasting activities by revealing close rates, making it easier to predict future sales revenue for the month, the quarter or even the year. Improved cash flow and budgeting is an additional benefit of more accurate forecasting.

Improving conversion rates

The insights from a sales funnel not only simplify marketing efforts, they improve conversion rates for a couple of key reasons:

  • You’re attracting more high-quality leads by leveraging only the marketing tactics that are most effective for your business.
  • Your sales team has a complete view of the funnel, enabling them to determine the length of time it takes for a lead to convert to a customer. Plus, they know what prospects experience before working with sales, such as downloading a white paper or signing up for your newsletter, so they can further personalise and refine their sales pitch. And that is what potential customers want today – an individualised experience.

Creates accountability

When you have a sales funnel in place, every single activity along the lead’s journey is tracked. This helps you easily identify which processes are functioning properly as well as those that require adjustment. It also shows you who your top sales performers are and allows you to determine training requirements for your sales team. These insights simplify the improvement of the entire journey from start to finish, so it runs smoother.

Boosts your bottom line

All of these benefits add up to increased revenue and a better bottom line for your organisation. And who doesn’t want their business to thrive in this way?

As you can see, there are many reasons you need to have a sales funnel for your business. With all these benefits, it’s time to create a sales funnel for your organisation.
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