What You Need to Know About Sales Funnels (With Insider Tips)
As an e-commerce business owner, your focus is to transform site browsers into buyers, and buyers, into committed customers. I think we can agree that this is easier said than done. But don’t stress, we are here to break it down! In the simplest terms, a sales funnel is a multi-step process for converting visitors into customers. In this post, we’re going to cover the basics from top to bottom when it comes to crafting a successful digital ad campaign that is built around your sales funnel, and at the end, we’ll share one of our favorite tools for visually crafting your own funnel!
Sales Funnels and Consumer Journey
While this post focuses primarily on the role of sales funnels in marketing strategies, it’s important for you to understand the difference between a sales funnel and customer journey and how they support each other. It’s not uncommon to hear these two terms used interchangeably in the realm of marketing; however, even though they are similar tools, they are not equivalent to each other, so let’s start with that!
The primary role of a sales funnel is to provide a model of your marketing and sales process that converts browsers into buyers. The funnel is a linear progression of how you intend a customer to move from awareness at the top of the funnel to the bottom stage of the funnel which is categorized as action. As customers move from awareness to action, they are converted from being ‘cold traffic’ browsers into buyers. A sales funnel gives a broader categorization of a customer’s path to purchase, rather than individual touchpoints. This is important because it helps you as a business owner to categorize your leads based on a consumer’s relationship with your product and helps you understand how to best communicate with them.
A customer journey, while closely linked to the sales funnel, is a more detailed map of the potential routes consumers may take from the first time they encounter your brand to the actual purchase they may make and their level of satisfaction and loyalty afterward. Rather than being linear and providing information on a consumer’s stage of interest, the customer journey is often more meandering and includes more individual touchpoints along the path.
Tracking this journey can be tricky because not all paths are the same and may contain retraced steps such as when a browser visits a site multiple times but doesn’t make a purchase decision. Even though the desired outcome is the same, it requires reliable information to figure out what path customers are taking from initial contact to final purchase. This is why customer data is so important, it enables you to analyze the customer’s route to purchase and what touchpoints along the way influenced their behavior. The customer journey is much more interaction-based and reveals how you can engage a consumer at specific touchpoints to strategically lead them through your sales funnel.
In essence, the sales funnel and customer journey should tell the same story. The marketing funnel serves to ensure that your strategies are effective along the path of the customer’s journey and provides insight into how leads are interacting with your business. For example, a consumer at the top of the funnel who is in the awareness stage may move along to the middle of the funnel after seeing Instagram and Facebook ads featuring your brand’s products. The customer journey map, on the other hand, helps you address questions such as:
How are they being introduced to your brand?
How are they researching and learning about your products?
What touchpoints along the path may be hindering their purchase decision?
The customer journey is much more detailed and can be used to enhance your communication with consumers based on where they are at in the sales funnel. The sales funnel in turn will help you know where to target your marketing materials and resources to generate traffic and set them on the consumer journey to make it to the bottom of the funnel on a user-friendly path to purchase.
Stages of the Sales Funnel
Now that you get the gist of the sales funnel and why it's strategic for converting browsers
into buyers, let's dive into the funnel itself. Imagine that your trusted friends set you up on a blind date and on that blind date, which is probably a little awkward (ok, let’s be honest, it's just plain awkward), the other person gets down on one knee and proposes to you. Shocking right?! You don’t know how to respond, and chances are, you are going to say no and try not to interact with them EVER again. I mean, for goodness sake, you don’t even really know this person except for their name and some general facts.
Well, the sales funnel is a lot like a relationship (bet ya didn’t see that coming). Let’s explain.
As a business owner trying to sell a product to a customer, you’re NOT going to ask your customer to purchase something right off the bat; just like you wouldn’t ask someone to marry you after the first date (unless you are a 100%, dead certain that they would say yes).
First, your customer has to become aware of your brand. At this point, you communicate and get to know each other. As the consumer warms up to you, you establish how your products benefit them and fulfill their needs. Ideally, you are building that relationship, gaining trust, and moving down the funnel until you get to the point that you are comfortable asking them to commit and make a purchase.
“This process is the sales funnel that converts browsers into buyers”
The sales funnel is categorized into three main sections that describe a consumer’s relationship with your brand.
Top of Funnel TOFU
Middle of Funnel MOFU
Bottom of Funnel BOFU
The top of the funnel is the awareness stage, the middle of the funnel is the interest stage, and the bottom of the funnel is the action stage. A consumer who moves from the top of the funnel to the bottom becomes a committed and loyal customer. As a business owner, effectively structuring your sales funnel is key to building your ad campaigns and reaching your sales goals.
Top of Funnel
The top of the funnel is what you would consider the initial conversation starter between your brand and the customer. This stage is about creating awareness in the target market and making consumers aware of how your products may solve their pain points. For this to be successful, your ads have to stand out and catch the attention of the customer. This can be accomplished through compelling calls to action (CTA).
CTA’s are something to consider in each phase, but particularly around the top of the funnel where you need to gain that initial awareness. A CTA is essentially evaluating what action you asking are the consumer to take when they view your ads.
Since potential customers may not know who you are or what you do, you need to give them a clear next step.
You can target these new potential customers by using lookalike audiences and interest targeting, which drives consumers to specific product pages to create a positive first touchpoint with the brand. At the top of the funnel, potential customers are considered “cold traffic” until they enter the second stage of the sales funnel and begin to warm up to your brand.
Top of funnel campaigns are typically the lowest converting campaigns; however, they need the most budget. This is because top of funnel campaigns feed the funnel as visitors progress through the stages of interest towards a final purchase point. The goal is to generate progression down the funnel from these TOFU campaigns.
We generally recommend spending 70% of your daily budget on ads at the top, to ensure that traffic is moving through the funnel. Once viewers become aware of your brand, they gain interest and move into the middle of the funnel.
Middle of Funnel
The middle of the funnel is made up of consumers that have an interest in learning more about your products. This is a “warm” audience that has visited your website or engaged with your Instagram and Facebook accounts during a specific time frame.
Touchpoints in the middle of the funnel could include visiting product pages, commenting on an ad, engaging with a post, etc. As a general rule, your website conversion rate should be no lower than 2%. With that being said, it is critical that your website is prepared to host traffic and provides site visitors with the information they are looking for when they come to your site during the middle of the funnel phase. This is because they are evaluating your products. Ads used to retarget customers that are in the interest stage should have:
Attention-grabbing visuals
Strong headlines
Clear and direct call to action
Customer Reviews/Social Proof
All content created for the middle of the funnel campaigns should be about building trust and educating the customer. At this stage in the funnel, you should be focused on sparking interest with the objective of conversions in mind. Then when the consumer feels comfortable with your brand, they may ad products to the cart. But then what happens when they leave the site without following through with the purchase?!
Step 1. Don’t panic!
Bottom of Funnel
If a browser puts an item in the cart, that means that they are in the action stage of the funnel. So, what does happen if they put it in the cart and then walk away?
You may feel defeated (and rejected at this point in your customer relationship), but this happens more than you may realize and it’s just part of the process. On average it takes about eight touchpoints, or interactions with your brand, to get consumers to this point.
When consumers get to the bottom stage in the funnel, they are considered a “hot” audience. The potential customer is at your fingertip, and now is your time to shine and wow them! The value you provide needs to be the tipping point for users to convert and make the final purchase. This is where dynamic product ad campaigns come into play!
Consumers who have visited your site, viewed products, or put items in the cart can be encouraged to come back to the site and complete their purchase by featuring relevant offers and social proof through retargeting campaigns. The average abandoned cart is right around 68%; that’s a lot of potential sales left on the table so it’s critical to leverage retargeting ads.
Retargeting ad campaigns are a powerful way to utilize data to place products that the consumer may have viewed or placed in the cart, right back in front of them in order to remind them of their need and how the product solves their pain point. These digital ads direct them back to the point of purchase to help them complete the sale; you can even include a relevant discount or offer to sweeten the deal. In fact, testing shows that 70% of customers are more likely to convert when they are retargeted. In this case, persistency is key.
Wrapping it Up
Remember, it’s all about the relationship you are building with browsers to turn them into buyers. This ensures that at the bottom of the funnel, you can ask the big question, “Will you make a purchase?” without it being awkward.
With a solid sales funnel framework, you can track the position of potential customers within the funnel and understand how to keep their interest, answer their questions, and address their concerns in order to build the trust that will lead to a sale. Each phase of the sales funnel is essential to building that customer relationship we talked about earlier, and as with any good relationship, it takes time.
The sales funnel is important to your e-commerce business for a number of reasons but here is an overview of the top five:
A funnel can help you pick an effective marketing strategy and where to focus your campaign efforts to maximize return
The sales funnel helps you relate to your customers based on their current relationship with your brand and communicate with them depending on where they are at in the funnel.
It helps provide you with a direction and improve certain areas of your customer journey for a seamless customer experience as they navigate to the BOFU
The sales funnel provides valuable insight and data into your customers' behavior so you can better fulfill their needs
And last but not least, it helps you generate sales by systematically guiding customers towards your desired outcome
When you understand the relationship your customers have with your brand you can begin to refine the stages of the funnel. Obviously, there is not a one-size-fits-all approach to e-commerce sale funnels however, there are blueprints of how to design your digital ad campaigns around the sale funnel. Using this framework, you can then customize the funnel to what works best for your brand as you become a more advanced marketer.
One of our favorite tools to use for visually outlining your sales funnel is Lucidchart. Lucidchart also has a free subscription with a limited number of documents so that you can brainstorm funnel strategies of your own. If you are just getting started, this is a great place to begin.
As an agency that specializes in digital advertising, we are here to help you refine your sales funnel in order to create the most effective ad campaigns. From identifying the ideal customer, crafting content, to generating traffic, we are all about utilizing the power of digital advertising to help your business grow. The sales funnel is a great place to start, and if you’re ready to work with us be sure to book a FREE strategy, and let’s talk about your goals!
