What Is a Funnel?

Key Takeaways

• A machine that automatically converts visitors into customers
• Unlike a website, a funnel uses clear calls to action to guide customers toward a goal
• It leads customers up the value ladder

You've probably heard of the "sales funnel," and you likely already have a sense of what it is — a step-by-step nurturing process that leads customers to buy a product or service. Exactly! That's the funnel's core function: using an established SOP (Standard Operating Procedure) to guide prospects, continuously delivering value, with a CTA (Call to Action) at every step to move visitors to the next stage. The goal is crystal clear, with no stray links to distract them or let them wander off from the intended destination. And once they become genuine customers, the funnel keeps guiding them toward higher-value purchases.

Sales Applications for Marketing Funnels

• Industries where a salesperson needs to explain the product
• Professional services that make first contact online before meeting in person at a physical store
• Higher-priced products
• Products where customers compare different suppliers before buying
• Course sales

In the situations above, if you have a sales team, you could spend more resources explaining things to customers and drive up revenue — but of course, that comes at a high cost.

Here's a Way to Achieve High Impact at Low Cost

Imagine this: you have an automated sales process run entirely by a system. The system can guide different customers down different paths based on their actions, deliver useful information at exactly the right moment, and even digitally track each customer's behavior for remarketing. What would the results look like?

The data tells us that when you push value to customers at the right time and place — so they come to love your brand and become your fans — they'll gradually make purchases with a higher RFM value (Recency — recent or short-term, Frequency — high frequency, Monetary — high value), letting you achieve high impact at low cost.

Put simply, the definition of a funnel is this: first get prospects to become aware, then to approve, and finally to give the customer who's still weighing the decision that last nudge to commit.

Sometimes a customer feels your product or service is right for them, yet they still hesitate — maybe over price, maybe because they're comparing features, maybe because they don't have an immediate need. A funnel can serve up exactly the right information to answer the doubts on their mind. By seeing your latest updates, in-depth comparisons, and analysis, plus an attractive offer, their cooling purchase desire gets reignited. Pair that with a limited-time deal and you instantly lift the heavy burden of deliberation off their shoulders — turning that "big decision" into an "opportunity too good to miss," where NOT buying would mean letting a great chance slip away!

How Does a Funnel Actually Convert Customers?

A funnel can be broken down into 4 stages:

Attention: The customer sees your ad or media, or learns about your product from a friend.

Interest: They believe you can solve their problem, so they want to learn more.

Desire: They do some research and start thinking about buying.

Action: They take action — buying your product, booking a demo, or following through on whatever step you've planned for them.

As mentioned above, this is a nurturing process of awareness, approval, and purchase.

Why Are Funnels So Important?

In the article "Why 90% of Startups Don't Survive 2 Years," we cited some statistics: once you have exposure, only 3% of visitors have an immediate need for your product (and of that 3%, perhaps only 30% will make an immediate purchase). In other words, fewer than 1% of people will order right after seeing your ad for the first time. Other data shows that among completed orders, 80% come after the brand has had 5 or more touchpoints with the customer — that's engagement. A funnel is an automated tool that helps you interact with customers strategically.

Ever Run an Ad and Gotten No Response?

Here are a few key points to make your landing page more compelling:

1. Is the message you're conveying crystal clear?
2. Is the offer attractive?
3. Is it a conversion path with a clear goal?

Imagine walking into two upscale restaurants. One gives you a choice of 3 set menus; the other has a 20-item à la carte menu. Which one gets you to order faster? Clearly, fewer distractions lead to faster decisions. That's why a key concept of the funnel is that each landing page should set just one goal (ONE THING AT A TIME). If you must offer options, the fewer the better — ideally down to a single, obvious conversion call to action. That's how you achieve the guiding effect.

A funnel differs from a traditional website in that it's conversion-oriented, so the ordering process is streamlined. We cover the main differences in the article "Landing Pages — How They Differ from Websites and Shopping Carts."

In short, the simpler the better. Of course, a single page often isn't enough to win a customer's order. That depends on your strategy for achieving conversion, and calls for planning different guidance paths — which may involve multiple pages, offer upgrades, and other calls to action. See "4 Elements for Leading Customers Up the Value Ladder."