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The Ultimate Sales Funnel Guide for 2023

A sales funnel is a path that potential customers follow to purchase your product. It sounds simple. But, it is a long journey that involves multiple stages and strategies. In this guide, we will help you understand how you can build an effective sales funnel for capturing leads and increasing your sales.

Praveen S
Abhinash Jami
Reviewed By
Abhinash Jami

Published: April 13, 2023

Why Should You Have This Guide?

Selling is a science. Hence, understanding it before you approach your customers helps you create a good brand identity and retain customers beyond a single sale. And, a sales funnel is a tool to make this happen.

How to Take the Best Out of the Sales Funnel Guide?

Learn about different sales funnel stages to understand customers' needs better

Learn how to create sales strategy for different stages

Learn to increase your website visitors

Learn to generate quality leads and improve revenue.

What will you get from the Sales Funnel Guide?

Step-by-step guide to build sales funnel

List of sales funnel metrics you should track


A sales funnel is a path that potential customers follow to purchase your product. It sounds simple. However, it is a long journey that involves multiple stages and strategies. In today’s competitive markets, having a pre-defined sales funnel helps an organization grow, become streamlined in its processes, and find better business opportunities. 

A sales funnel helps you unlock the success that lies in understanding customers’ buying journeys and developing strategies according to their needs. 

In this sales funnel guide, we will explain the sales funnel, its stages, the steps to build one, and everything that can help you understand it well. 

Let’s dive in!

What is a Sales Funnel?

A sales funnel is a visual representation of a customer's journey, from prospects to paying customers to product evangelists. It is a part of the marketing strategy that helps you filter out high-value customers.

In a broader way, the sales funnel is divided into top, middle, and bottom parts. The target audience who is unaware of the product or service travels through these steps to make purchase decisions. Each step demands a different approach composed of landing pages, blogs, offers, ads, and demos to pass prospects to the next step.

The top-of-funnel strategy aims at making the audience aware of the product and collecting emails from interested prospects, whereas the bottom-of-the-funnel strategy only focuses on converting prospects into customers.

Why is the Sales Funnel Important?

Now that we understand what the sales funnel is, let's understand why it's crucial for businesses today.

Aids in building effective marketing strategies

As per a survey, 79% of leads fail to get converted into customers. One of the main reasons for this failure is not having an effective marketing strategy.

A sales funnel is a great tool for sales leaders to understand the entire sales cycle. It further helps in understanding their customers' mindset and getting quick insights into the sales process. Using these insights and analysis, you can keep optimizing your marketing strategy to ultimately create an effective marketing strategy for your business.

Helps in staying relevant to customers

Customers travel through different sales funnel stages during their entire buying journey. In each stage, they will have different needs. Understanding those needs and changing your approach accordingly to stay relevant, helps to lead new prospects to the next stage of the sales funnel and close to buying decisions.

To do this, marketing and sales teams develop different types of well-directed content that suits customers' needs and answers their queries about the product or service.

Offers advantage over competitors

A survey says, 68% of businesses don't use sales funnels as a part of their sales strategy. This also means 32% of business owners are using the sales funnel as part of their sales marketing strategies and driving more sales.

The sales funnel helps you develop a detailed list of marketing activities for each stage to entice prospective customers. On the other hand, some businesses that do not have a lead generation funnel in place miss on opportunities despite having better products or services.

Target right leads

Sales funnels give insights about prospects and help you identify qualified leads. This saves your time and resources and allows you to focus on potential customers.

When you spend time building a great sales funnel for your business, you get a chance to understand your prospective customers' thought process deeply. Passing through each step, you get a better insight to filter out the leads.

Hence, the sales funnel helps you filter out quality leads and convert them into customers while managing your resources correctly.

AIDA - The Traditional Sales Funnel

AIDA stands for Awareness, Interest, Desire, and Action.

The first and most important element here is getting prospect's attention. Then, sustaining this attention in customers' minds long enough to convert it into genuine interest; then, convincing them to believe it and take action.

AIDA sales funnel stages

AIDA helps you understand how the sales funnel works. It divides the customer’s buying journey into four stages. Here is the brief about each of these stages:

AIDA Sales Funnel Stages

Awareness stage

Building awareness about your product among customers as a reliable solution to their problem is the first stage of the sales funnel. It starts with understanding where your customers are, who they are, how your product can solve their problems and then finding a way to reach them.

This stage demands creating a strategy to attract the customer’s attention by sending a relevant message through the right channel.

Since this is their first exposure to your business, it's essential to create a well-thought experience to keep them interested.

Interest stage

The goal of this stage is to keep prospects interested in your product without forcing it on them. At this stage, prospects have many questions to understand the product better. So, the interest stage strategy should focus on answering those questions through informative content without promoting the product and building a relationship with them.

Present yourself as a solution to their problem, not as a business that just wants to sell the product.

If you see your prospects clicking on your ads, or replying to your sales email to ask for more information about the product, your prospects are interested in your product and ready to go to the next stage.

Desire stage

This stage aims to generate the desire in prospective customers to have the product. This is done by showing them how your product will change their life for the better.

In the desire stage, prospects look for reassurance to validate their decision. So, focusing on creating ‘trust’ among potential customers about your product through content such as customer testimonials, case studies, and tutorials should be a priority.

Action/ Decision stage

Once your potential customers start trusting your product, they understand its value in making their life easier. With an attractive offer or discount, you can encourage your prospects to purchase the product.

But, it does not end here.

Your goal should be creating a successful buying experience for your customer by providing proper support and training if needed.

This is what AIDA is all about. It is a basic sales funnel that only helps you reach a stage till a first 'purchase' happens.

But, in recent times, a new funnel stage is added to the AIDA sales funnel - Retaining the customer.

Retain Your Customer

We know the sales process does not stop with a single sale. After selling the product, retaining them to up-sell, cross-sell or buy new products is the aim of the customer retention stage.

As per a survey, it is 5-7% cheaper to retain customers than to acquire new customers.

The focus of this stage is to keep customers happy with your product so that they repeatedly buy from you and do word-of-mouth publicity for your brand.

Sending emails about tips to get the best out of the product and offering constant support is a good customer retention strategy.

Quick Steps to Create a Sales Funnel

Step 1: Know Your Audience

To create a sales funnel, you need to know your audience first. Some of the questions you can start with are:

  • Who is your target audience?
  • What problems are they facing?
  • What are their interests?
  • What are their expectations?
  • Which social media channels are they available on?
  • How is your product a solution to their problem?

This research will help you understand your target audience deeply. Once you know them, you can start working on developing an effective approach to reach them.

  • Which marketing tools will be correct for reaching your potential customer?
  • How to position your brand?

Step 2: Create Buyer Personas

To understand your customer's personas, you need to find answers to the following questions:

  • Who are your customers?
  • How do they use your product?
  • What are their reasons behind purchasing your product?

Developing accurate buyer personas helps you segment your audience and personalize their experience with relevant marketing tactics to achieve the best results.

Step 3: Create a Strategy to Generate Traffic and Leads

Once you have a clear understanding of your customer's needs, you can start developing a marketing strategy to generate traffic on your website and make customers aware of your product.

Some of the digital marketing tactics to increase website visitors and generate leads are:

  • PPC campaigns such as Facebook ads, Google ads, Twitter ads, LinkedIn ads, etc.
  • Search Engine Optimization
  • Landing page creation and optimization
  • Influencer marketing through affiliate program
  • Social Media Marketing
  • Content Marketing

Step 4: Strategy to Engage the Audience

After awareness creation, your focus should be sustaining the interest through engagement strategies. The longer you can engage your customer, your chances to convert them increases.

Some of the engagement and lead nurturing strategies can be:

  • Developing relevant and useful blog posts
  • Creating informative videos and podcasts
  • Offer tutorials on your products
  • Use social media channels to promote your content
  • Use email marketing to directly reach your prospects with informative posts, newsletters and promotions.
  • Conduct a webinar if suitable for your product

Step 5: Lead Conversion

Once your potential customer developed enough interest in your product, you can start working on a conversion strategy.

You can start by sending promotional messages. For this, you can use strategies such as:

  • Sales call
  • Promotional emails
  • Social media promotion
  • Create urgency with limited offers

Simultaneously, develop the easiest ways to purchase your product to create a successful buying experience for your customer. You can make it happen through

  • Reducing steps to purchase a product
  • One-click signup and sign-in
  • Easy checkout process

Key Sales Funnels Metrics

Building an effective sales funnel asks for many revisions and optimization. Let’s find out what are the most useful sales funnel metrics that can help you find that crack in the present sales funnel and optimize it for better results.

Lead Velocity Rate

The main purpose of the sales funnels is to generate leads. But, just calculating the volume of leads will not help you relocate your resources effectively. You must focus on calculating qualified leads. The qualified leads are one that is actually interested in buying your product. 

We use the lead velocity rate metric to measure these leads. 

Lead velocity rate is a percentage increase in the number of qualified leads as compared to last month. This metric helps you understand:

  • If your marketing and sales strategy for the top of the funnel working or not? The increase in lead velocity rate indicates the success of your marketing campaigns. However, if it is decreasing, you might have to optimize your marketing strategies.
  • If your sales team have enough leads to work

You can calculate it with the below formula:

Lead Velocity Rate = (Qualified leads of the current month - Qualified leads of the previous month) / Qualified leads of previous month  X 100

Overall Funnel Conversion Rate

The second important sales funnel metric is to understand how many qualified leads are getting converted into customers. You can measure it through the overall funnel conversion rate metric.

Conversion rates explain the effectiveness of the sales funnel. Lower conversation rates indicate either you need to work on your sales messages or your sales team needs the training to convert better. Either way, it helps in improving sales.

You can measure the conversion rate by dividing the number of conversions by the total number of leads. You can measure it weekly or monthly based on your need.

The formula to calculate the overall sales funnel conversion rate is:

Conversion Rate = Total conversion / Total  number of leads  X 100

Average Length of Sales Cycle

The next metric that helps in improving your sales funnel is the average length of the sales cycle. It measures the average time a lead takes to move to a final conclusion.

Long sales cycles indicate slow growth, but it does not mean that you can rush prospects. You can use this metric to know what makes your sales process slow and how much time your sales team takes to convert a prospect into a paying customer. It is also an indicator of your business having fewer sales reps. 

This metric helps you optimize your strategy and plan your budget accordingly. 

You can calculate it by taking the average number of days it takes for the lead to pass from the lead generated stage to the closed stage. 

The formula to calculate this metric is:

Average Sales Cycle Length = Number of days to close deal A+Deal B+Deal C / Total number of deals

Cost Per Acquisition

Cost per acquisition is the most common yet useful metric. It analyzes the amount of money to be spent to convert a lead to a customer. It simply means cost per conversion. 

If the cost of acquiring a customer is higher than the value your customer adds, you need to work on your sales funnel.

You can calculate cost per acquisition with the below formula:

Cost Per Acquisition = Total amount spent / Total attributed conversion

Lifetime Value of Customer

Lifetime value of customer metric helps you get the average revenue you expect from a customer in total lifespan. 

When your customer first-time gets converted and their order value can be less. But, once they become loyal to your brand, they choose you over other brands and buy from you multiple times. So measuring  LTC is more valuable.

The formula to calculate the lifetime value of a customer is:

LTV = Average order value x Purchase frequency x Average customer lifespan

Final Thoughts

A sales funnel describes different stages of the target customer journey that help businesses understand customers' needs in a better way. It further guides to the development of effective strategies for each stage to engage the prospects and convert them into paying customers. It also aids in creating a good brand image and using resources correctly.

But remember, every business has a unique sales funnel based on their customers' needs.

So, spend time developing a great sales funnel that is effective for your business. Choose your KPIs, collect your data, and analyze it to ensure the success of your efforts. Keep optimizing your sales funnel to achieve the best results.

You can collaborate with an advanced sales CRM tool like Salesken to help you measure your sales funnel results.

Download Guide

Optimize Your Sales Funnel

Streamline your sales process and increase conversions with our Sales Funnel guide.

Understanding the Sales Funnel

Learn about the different stages of the sales funnel and how to optimize each stage for maximum impact.

Sales Funnel Metrics

Discover the key metrics to track in your sales funnel to identify areas for improvement and measure success.


Frequently Asked Questions

What is a buyer persona?

A buyer persona is a semi-fictional representation of an ideal customer based on market research and data analysis. It helps businesses understand their customers' needs, behaviors, and preferences, and guides their sales and marketing strategies.

How can I bring in more leads with a sales funnel?

To bring in more leads with a sales funnel, create targeted content and optimize your website for lead generation with clear calls to action and forms.

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