Do you know where leads drop out of your sales funnel? What about your lead qualification efforts—are they questionable, at best? Do you know exactly what works at each stage in the customer journey?
An effective sales funnel helps you understand your leads and prospects. It shows where they are in the customer journey, what they think and need, and what actions they’re likely to take next.
These insights from your funnel can be used to optimize the sales experience, increase conversions, and boost long-term profitability. (Kind of important, right?)
You need to understand your sales funnel—what it is, which actions to take at each stage, how to track success, and how to optimize the entire process. We cover that (and a whole lot more) today.
What is a Sales Funnel?
A sales funnel is a visual representation of the stages leads pass through before they become customers. It tracks from the first touch through the closed deal, all from the perspective of your leads.
A well-managed sales funnel helps you understand how leads react and convert at each stage. This supports more relevant outreach and better sales forecasting—and, ultimately, helps your team attract and retain high-quality customers.
Sales Funnel vs. Sales Pipeline: What’s the Difference?
The sales funnel is built from the perspective of your leads, while the sales pipeline is built from the perspective of your sales reps. This is reflected in the following ways:
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There are a few more differences to keep in mind:
- Benefits: The funnel provides a framework to focus on customer needs, based on their perception of the sales process. The pipeline provides clear guidelines for sales reps to push leads through the stages.
- Stages: Funnel stages follow the leads’ journeys toward conversion, while pipeline stages follow the actions reps take throughout the sales process.
- Tracking and reporting: With sales funnels, you’ll need multiple metric-tracking tools—and most of your insight will come from website analytics and customer data. With pipelines, just look to your CRM (like Close).
- Roles that use them: Sales leaders use the funnel to understand where conversions are happening (and aren’t), and reps use it to understand customer perspectives. Meanwhile, everyone on your sales team interacts with and manages the sales pipeline.
You may not need both, either. But, if your team:
- Struggles to focus on and identify with customers
- Doesn’t know where conversions are happening
- Isn’t certain they’re effective with lead qualification
- Isn't sure what sales actions are working at which stage in the customer journey
Then, a well-defined sales funnel will serve you well.
Marketing Funnel vs. Sales Funnel: The Same or Different?
Think of marketing funnels and sales funnels like siblings; they’re closely related but not exactly the same. In general, marketing funnels track leads from first contact (say, reading a blog post) through when they are turned over to sales or converted in some (marketing-related) way.
Marketing funnels might also be used for a specific marketing campaign, for example a user who views a paid ad, clicks through to a landing page, and then signs up to an email list.
Sales funnels track all the way through to purchase, but may also start at the first time a lead is in contact with the company. The biggest difference between sales and marketing funnels? Who uses them.
Marketing funnels are used by (you guessed it!) marketing teams, while sales funnels are used by sales teams. That said, there is often a lot of overlap between the two.
Understanding Different Types of Sales Funnels
Sales funnels are like snowflakes—no two are the same. Every individual company will create their own to reflect their unique customer needs and journeys, sales strategies, and sales process. In some cases, you might have more than one sales funnel to track specific types of customers or specific campaigns. However, different types of sales funnels share a lot of features because they track the same goal – conversions.
We’ll cover the general (and adaptable) sales funnel in a moment, but let’s quickly review several business-type-specific funnels:
- B2B Sales Funnel: B2B sales cycles are long, the buyer journey complicated—and the funnel extensive. All in all, about six or seven stages. B2B may spend additional time in the interest stage, where sales teams provide value-based information and highlight how their solution solves the relevant pain points.
- B2C Sales Funnel: The B2C sales funnel is typically shorter. Awareness, interest, desire, decision. And many B2C sales funnels don’t require a salesperson to finalize the transaction.
- SaaS Sales Funnel: In addition to the regular six stages, SaaS sales funnels rely heavily on a seventh stage—advocacy. Actively working on turning customers into brand ambassadors requires special focus. Renewal is also a primary objective for service-based organizations.
- Small Business Sales Funnel: A small business sales funnel is the most fluid type of sales funnel. Depending on the business, it might include elements from B2B, B2C, or SaaS sales funnels. In general, small business sales funnels tend to be on the shorter side and rely more on word-of-mouth referrals.
Overwhelmed yet? Take a deep breath. 🧘 A lot goes into constructing your sales funnel, but these key stages will guide you through the process. These are the bare bones of your soon-to-be higher-converting sales funnel.
The Anatomy of a Sales Funnel: 6 Key Stages
At its core, every sales funnel is divided into three general sections: top, middle, and bottom.
- Top of the funnel (TOFU): The top of the funnel covers the beginning of the customer journey—leads become aware of their needs and discover your business while looking for answers.
- Middle of the funnel (MOFU): During this middle bit, prospects are well aware of their needs and are researching different solutions and solution types.
- Bottom of the funnel (BOFU): By the end of the sales funnel, potential customers are equipped with the information needed to make an educated purchase decision and choose the right solution for their needs.
Despite this general structure, the sales funnel is more fluid than it used to be. Rather than a straight shot through to the conversion, prospects may enter at any stage—or may only want to interact with your sales team during the purchase decision.
Technology and internet accessibility have changed the game. So, you’ll need to adapt the sales funnel (and your actions) to reflect how customers want to buy. Follow your KPIs and customer insights. They’ll lead you toward success.
To start, however, let’s consider the six key stages of the sales funnel—what they are and how to make the most of them.
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Stage 1: Awareness
What is awareness? The awareness stage is where potential customers become aware of their needs—and, in the search for a solution, come across your offering. Maybe they click on your blog. Maybe they find your social media ad. Maybe they overhear a colleague and think, “Hm, I need something like that.”
This is the widest point in the funnel—these people aren’t qualified and haven’t had any contact with your company. At this stage, they are still identifying and working to articulate their challenges. A variety of lead generation, sales, and marketing efforts can provide real educational value to these top-of-funnel folks.
(Note that marketing and sales may work together during these early stages, especially in smaller organizations.)
What you can do at this stage:
- Optimize your content (SEO): Are your website, blog, ads, and the rest of your digital footprint optimized for search engines? If your marketing content squarely hits their pain points, Google results will drive awareness.
- Cold call and email: Use outbound sales strategies to get in touch directly with potential customers who may not have heard of your company before.
- Grow your social media: Social media provides social proof. And if your ideal customers frequent such platforms, it’s a great opportunity to share valuable information and generate awareness.
Stage 2: Interest
What is interest? It’s the first touchpoint; the folks in your funnel are now leads. Woo!
During the interest stage, your potential customers have one primary concern: Collect the right information to eventually make an informed purchase decision.
So, your goal is this: Provide information that addresses their pain points and concerns. As they begin competitive research, hook these new leads via valuable lead magnets (get those contact details) and optimize your marketing automation.
What you can do at this stage:
- Release expert guides: In-depth guides on pain points, industry trends, or solution options capture interest and establish credibility. Include a CTA that pushes leads to the next stage!
- Share feature/testimonial/how-to videos: Videos get results. And they’re a great opportunity to share valuable information about your product and customer experiences.
- Create relevant podcasts: Our own CEO, Steli Efti, hosts Inner Work, a strictly no-business podcast created for startup hustlers and salespeople—the target audience of Close.
Stage 3: Consideration
What is consideration? Equipped with the information gathered earlier, prospects will now evaluate your business and offerings more thoroughly. They might contact sales and customer service with questions, or fill out a form requesting more details.
By now, your prospects have evaluated other solutions—and continue to do so. Your sales team needs to demonstrate the power of your solution to answer their unique pain points. You might even compare your product with competitors’. These tactics will push prospects through the funnel—and head off any sales objections that stand in the way.
At this stage, you will also want to get serious about lead qualification. Asking the right questions will help sales reps discover who fits the ideal customer profile—and thus, who they want to continue investing in. (And please, avoid the tire kickers.)
What you can do at this stage:
- Demo your product: Product demos show your prospect exactly how your solution will meet their needs—enhancing the relevance of your offer.
- Share case studies: Customer stories and case studies help prospects to identify with the pain points your solution has successfully solved.
- Offer free trials: Free trials (like the one offered by Close) allow prospects to explore product performance without the financial risk.
Stage 4: Intent
What is intent? Your prospect is almost ready to purchase. High-intent prospects are highly engaged—visiting your website, making regular contact with your sales team—and they fit your ideal customer profile.
Before the purchase, however, you must first negotiate the price and terms of purchase, and handle any outstanding sales objections.
This is where you highlight the value and the customer experience. They aren’t sold yet—and to get them there, you must continue to showcase the benefits and ROI of your solution.
What you can do at this stage:
- Negotiate to win-win: Sales is all about the exchange of value. When price objections arise, highlight your killer customer service, scalable features, or expected ROI. Your top priority is to keep them engaged.
- Make special offers: Now, we do not recommend discounts. But you could offer monthly payment plans, bundled packages, or a quid pro quo “discount” (new price if they buy five or more seats, for example).
- Re-run your demo: If you didn’t do a demo during the consideration stage, the demo is an excellent opportunity to overcome objections and emphasize your unique value.
Stage 5: Purchase
What is purchase? Everything has led to this point. The deal is now won or lost.
By this stage, prospects are well-informed about your solution. If they are satisfied with the price point and decide to become a paying customer, the cash changes hands.
If they decide to walk away, you can create a follow-up email campaign designed to pull them back into the funnel (unless you get a hard "no," then leave them alone).
During the decision-making stage, you can reevaluate your conversion rate to understand the performance of your sales funnel—and apply the insight to your sales process.
What you can do at this stage:
- Maintain high-quality service: Don’t snatch the money and run. Create an easy and quick payment-to-onboarding transition from your sales to the customer success team.
- Review your conversion rate: For a healthy sales funnel, you need to track various KPIs throughout its stages. But the conversion rate during the purchase stage signals the ultimate viability of revenue targets. And if it’s broken, fix it.
Stage 6: Retention
What is retention? Retention is the final stage of the sales funnel (or at least, this sales funnel).
After the sale, your new customers are onboarding and adjusting to your solution. If they have a great experience, amazing! But if it sucks and they churn, you’ve just wasted a ton of time, money, and resources. Theirs and yours.
At this stage, customers may be seeking additional education about your product, different use cases for inspiration, and further communication and support from your team.
Customers are always evaluating their experience with your solution—so, you need to set a solid post-purchase first impression that manages expectations. And if you want customer loyalty—and the renewals, referrals, and repurchases that it ensures—you need to dig in with your sales and marketing teams to maximize retention.
What you can do at this stage:
- Upsell: Upselling (or cross-selling) opportunities provide a way to boost the value of your solution for the customer—and increase CLV.
- Follow up: Checking in throughout onboarding and beyond allows you to catch problems early and provide hands-on help that elevates the entire customer experience. Automate sales emails or follow-up email marketing campaigns in your CRM.
- Create your referral program: Word-of-mouth referrals drive quality leads to the mouth of your sales funnel. This will help maximize the long-term effectiveness of your funnel.
2 Real World High-Performing Sales Funnel Examples
So, by now, you understand sales funnels—at least in theory. Let’s dig into a couple of examples to bring these concepts to life.
Close: B2B SaaS Sales Funnel
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Close CRM was engineered for small and scaling sales teams, like those found at startups and in SMBs. Our sales funnel process partners heavily with marketing to convert high-quality leads into loyal customers.
Awareness + Interest
Awareness and interest typically build through our content juggernaut—or sales referrals. As you have personally experienced, the Close blog, in-depth sales guides, and other free resources get a lot of mileage thanks to SEO optimization and our email list. These materials answer important sales questions and create value for our ideal customers—grabbing contact info along the way.
CEO Steli Efti is also a well-known thought leader, podcast host, and startup founder in the sales sphere—which directs leads our way. And thanks to high customer satisfaction, we can count on the awareness generated by word-of-mouth and loyal customers. We have an inbound sales team at Close. So, rather than committing to hundreds of cold calls and emails, we wait for the lead (read: you) to come to us.
Consideration + Intent
Passing through to consideration and intent, we provide answers to prospects’ questions via sales calls, this product demo, and our famous 14-day no-credit-card-required free trial.
Our sales team is trained to handle common (and not-so-common) sales objections skillfully while negotiating contracts that create value for both parties. We rely heavily on our own CRM system (surprise, surprise) to manage and follow up with prospects throughout these critical stages.
Our pricing plans are straightforward—so, we spend most of our sales time simply selling our value.
Purchase
We are not the right CRM choice for everyone, and we know this. Our ideal customers are SMB and startup sales teams, looking for an agile yet robust CRM experience. And we don’t stray from it.
Our sales team makes sure to qualify prospects—understand their pain points and budget concerns, and fully inform them of our killer sales features and our weaker areas—so that by the bottom of the funnel, prospects can make a well-informed decision.
And our sales-to-customer success handoff is pretty much flawless (customers love our onboarding, too).
Retention
Retention, especially in SaaS, is key to long-term growth. Beyond providing amazing customer support that naturally generates retention, we have referral and follow-up sequences in place to elevate the experience of every paying customer. We also add new features regularly, like our newly launched Workflows and ChatGPT integration. This increases value to our current customers and keeps them coming back!
Sales Transformation Group: Service + Consulting Sales Funnel
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Sales Transformation Group (STG) provides coaching services to residential and commercial contractors to help improve their overall sales process and performance.
The nature of service-based businesses often requires a high-touch sales approach. You have to build relationships, and focus on referral sales. STG is a Close customer with a clear sales funnel strategy to bring in—and keep—their next customers.
Awareness + Interest
Near the mouth of the funnel, STG generates awareness and interest via live events, blog posts, podcast episodes, YouTube videos, courses, and more. Their website is filled with customer testimonials—which provide all-important social proof.
Consulting, agency, and other service-based businesses may struggle more with lead generation. Why? There is no actual product being sold—and no demo or free trial available. So, STG does an effective job of using content to build lead trust and sustain interest in their services.
Consideration + Intent
Service-based companies can’t always provide a demo or free trial. But they can provide free consultations, like STG does. A free 30-minute consultation invites prospects to discover the Sales Transformation approach and how it can help them reach their goals.
Featured prominently on their homepage, as well as via a small pop-up following you around the website, their sales team offers the opportunity to chat with an agent right now. Or, you can book a meeting or discovery call with a consultant.
Purchase
Every landing page at STG includes a prominent call to action. Maybe that’s to book a meeting or chat. For other, deeper pages, the CTA is a survey/application that qualifies prospects for each consulting program they offer. These stand alongside case studies, FAQs, and extremely in-depth information on their offerings—which lead prospects further down the funnel.
Retention
Sales Transformation Group employs various retention and value-sustaining strategies—that’s why they continue to grow and close more clients. In fact, they are trusted by more than 650 contractors and industry partners.
They have built up a reputation that now speaks for itself—through word-of-mouth referrals, customer testimonials, and Google reviews.
Know Your Numbers: Sales Funnel Analysis & Key Metrics to Track
Measuring the success (or failure) of your sales funnel is key to driving revenue. When you can identify problem areas, support sales-marketing collaboration, and improve sales forecasting—you’re on the right track.
So, which metrics matter most when analyzing the sales funnel? These ones:
- Conversion rate: How successfully are you converting prospects to customers? This metric can help determine which outreach channels and sales approaches generate results—and how to optimize for future sales.
- Customer acquisition cost: CAC tracks the costs involved with acquiring new customers—and guides you toward resource investment with high ROI.
- Lead scoring: The funnel is all about getting more high-quality leads to the bottom. With lead scoring, you assign values to leads based on their behavior in the funnel—which helps you find the right audience and approach at the right time.
- Sales performance: What are your total sales? What’s your month-over-month revenue? Tracking sales performance provides a high-level view of the health of your sales funnel.
- Retention rate: Loyalty metrics, like your retention rate or CLV, come post-funnel—but they indicate whether your leads will enter the funnel again. Plus, they identify sales-disrupting issues like churn.
Marketing may keep an eye on additional metrics, like brand awareness or brand consideration, that reflect their own activity in the funnel.
Overall, funnel metrics point out the sales strategies that work—and the ones that need some adjustment. You may need multiple metric-tracking tools. Some of your insights will come from website analytics, others from customer data.
But all this data needs to be coordinated if it’s going to be actionable.
You can choose from a variety of sales analytics tools, but if you’re looking for an all-in-one CRM with robust reporting designed specifically for startup and SMB sales teams—look no further than Close.
For example, our Sales Opportunity Funnel Report tracks your sales velocity, total win rate, and time-to-sale metrics to help you quickly find (and fix) leaks in your funnel. Plus, get granular with conversion rates as you weigh results at each stage.
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The Close reporting suite works out of the box, so you won’t have to integrate with other tools. And it’s available on all plans, no upgrades or add-ons necessary.
Check out Close Reporting with a 14-day free trial (no credit card required, either).
Effective Sales Funnel Management: 5 Tips for Funnel Optimization
Optimizing your sales funnel is the proactive approach to preventing leaks that let leads get away—and waste valuable resources.
Leaky sales funnels are caused by a variety of factors, including poor value propositions, inconsistent marketing efforts, conversion funnel bottlenecks, and a lack of solid CTAs.
So, to properly manage your sales funnel, be sure to:
- A/B test: Landing pages, email campaigns, CTAs, Instagram ads, and more—A/B testing will help you pinpoint your most effective messages and messaging channels. And once you know what works, be sure to incorporate the results.
- Reevaluate your value proposition: Does it align with your business goals and customer needs? Do you successfully communicate it via sales pitches and marketing messaging in a way that differentiates you from competitors? If not, rework.
- Streamline the follow-up: Consistent, well-targeted follow-ups frequently push leads over the edge to conversion. Use automation (like Close Workflows) to enroll leads in a follow-up outreach campaign that does the work for you.
- Improve onboarding: Once prospects sign up for your free trial, you want them to convert. To reach that point, however, you need proper (and attentive) onboarding support—and consistent sales engagement.
- Choose the proper tools: Your tech stack can make or break the effectiveness of your funnel. The right tools and CRM (like Close) will help optimize every part of the funnel, with robust reporting features that support long-term growth. And remember: Well-organized customer data is central to proper funnel management.
To increase your revenue (without boosting operating costs), take time to consistently review your sales funnel—and experiment with optimizations for it, every quarter.
Ready to start your 14-day free trial of Close? Track important metrics, unify your sales outreach, and manage customer relationships with ease—at any stage in the funnel.
