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What is a Sales Funnel and Why is it Needed




[ BLOG ]

Table of contents of the article

A clear understanding of how a potential customer becomes a buyer aids in increasing sales. Marketers visualize the customer's journey through the sales funnel and then analyze metrics at each stage.

In this article, we will explore the stages of the sales funnel, why it's important to visualize it, and which indicators to improve upon.

Sales Funnel

The sales funnel is a marketing model that outlines the customer's journey from being introduced to the product to making a purchase. The sales funnel consists of several stages, where potential customers are filtered out.

The number of stages in the funnel depends on the business specifics, but the classic AIDA model remains the foundation:
  • Attention: The potential customer learns about the product's existence.
  • Interest: The potential customer starts showing interest in the product, asking questions, and researching information.
  • Desire: The potential customer decides to make a purchase.
  • Action: The potential customer becomes an actual one by making a purchase.

Let's examine a specific funnel example:
A potential customer saw an advertisement for a language school on social media (attention) → to find out how the training is conducted, they signed up for a free half-hour lesson (interest) → submitted an application for a paid course (desire) → paid for the training (action).
Analyzing the sales funnel helps to understand at which stage something went wrong and, by reducing losses at each subsequent step, increase the company's profit. The funnel highlights whether and how effectively the company sells to customers and serves as a tool for solving business problems.

Marketing metrics can be tracked using services like Google Analytics, and customer interaction data is usually collected in a CRM system.
After analyzing the indicators, the marketer sees the following:
The language school's advertisement was seen by 10,000 people on social media. Of these, only 250 people signed up for a free lesson. After the free lesson, 50 people applied for the paid course, and 25 paid and started the training.
example of a facebook text

Why It's Important to Work with a Sales Funnel

Identifying Ineffective Communication Channels
Is advertising language courses on a news Telegram channel really a good idea? What is the best method of communication with a client at the stage of signing up for a free lesson—through messengers or a phone conversation?
Sales funnel analysis can provide well-founded answers to these questions. Data is essential for adjusting the consumer's journey to not just lead 25 people to start training, but to multiply that number by X.

Accurately Assessing Results
Is receiving 25 payments from 10,000 people who saw the advertisement a lot or a little? At every stage of the marketing funnel, each business has its own benchmarks for success. Metrics reveal which stage is the most effective and how to allocate the marketing and sales department's resources to enhance outcomes.

Outpacing Competitors
If there were only one language school in the market, there would be no problem. However, in reality, some competitors offer not just a half-hour lesson for free but an entire trial week, while others boast classes taught exclusively by British instructors.
At each stage of the funnel, certain metrics stand out as the primary focus. These metrics make it easier to propose hypotheses for improving performance and selecting the most competitive options.

Adapting to Customer Preferences
Yesterday, everyone wanted a trial lesson online, but today they prefer in-person meetings. The sales funnel aids marketers in understanding whether customer needs have changed, swiftly adapting to new conditions, and enhancing the product.

Conclusion

On the path to making a purchase, a customer goes through four stages: becoming aware of the product, showing interest in it, desiring to buy it, and making the purchase. This is referred to as the sales funnel.

Marketers visualize the sales funnel to increase the number of potential customers who progress through each stage and ultimately make a purchase. The model helps identify weak links and improve the user journey.

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