Table of Contents
For the last fifty years, companies have relied on the strength of their sales funnel to determine their success or failure. The concept is simple – fill the top of the funnel with prospects and convert them into customers as they move through each stage. However, the sales landscape is constantly evolving, and the traditional sales funnel has not kept up with these changes. The buyer’s journey is no longer a straight path from awareness to consideration to purchase. People now take detours and engage with multiple touchpoints before making a decision.
As a result, sales leaders need to reinvent the sales funnel or find an alternative that aligns with the modern buyer’s behavior. In this article, we will explore the concept of the sales funnel, compare it to the flywheel model, and help you determine which approach is right for your business.
What is a Sales Funnel?
A sales funnel is a model that mirrors the path prospects take to become customers. It consists of discrete stages that represent the customer journey, starting from the first touchpoint to the closed deal.
The sales funnel begins with a large pool of potential buyers at the top, and as they progress through the funnel, the number of prospects reduces. Towards the middle of the funnel, only a handful of opportunities remain, and after the decision-making stage, the sales process concludes with a closed-won or closed-lost deal.
Each deal’s probability of closing changes as it moves through the funnel. The further along the funnel, the more information is exchanged, and the more apparent it becomes that using the product will be advantageous to the customer. This increases the potential for a successful deal, unless it is moved to closed-lost, where the probability becomes zero.
The sales funnel has solved several problems for sales leadership over the years:
- It provided a clearly defined process to model how to close more deals.
- It quantified the value of future sales.
- It allowed sales teams to build statistics around the size and number of deals required to achieve quotas.
- It helped define a methodology to teach salespeople how to move customers through a logical sales process and maximize productivity.
Now, let’s take a look at some real-life sales funnel examples to illustrate how it works in practice.
Sales Funnel Examples
Example 1: Audible
Audible, an Amazon-owned producer of audiobooks and spoken-word entertainment, uses a sales funnel to attract potential subscribers. They offer a free one-month trial for their service, which brings prospects into the top of the funnel. Users have 30 days to use the service before being automatically enrolled in a monthly subscription, converting them into paying customers.
Example 2: HoneyBook
HoneyBook, a business management software for creative entrepreneurs, utilizes a sales funnel to generate leads. They offer a business personality test as a lead magnet, where participants provide their email addresses to receive their results. Based on the quiz results, they are then added to an email nurturing campaign that provides tailored business advice for their personality type. Participants also have the option to begin a trial using HoneyBook, driving them further down the funnel towards becoming paying customers.
Now that we have seen some examples, let’s discuss how you can create your own sales funnel and determine if it is the right approach for your business.
How to Create a Sales Funnel
Creating a sales funnel involves several steps to guide your prospects through the customer journey and ultimately convert them into customers. Here’s a step-by-step process:
Define the problem you want to solve for your customers. To effectively position your products and create compelling offers, you need to understand your audience’s pain points, expectations, and interests.
Define your goals. Determine what you want to achieve at each stage of the funnel, whether it’s generating more leads, product demos, e-newsletter sign-ups, or purchases. Clear goals help you measure the effectiveness of your funnel.
Create a preliminary offer to generate leads. Attract prospects’ attention by offering something of value, such as a free trial, ebook, or webinar. In exchange, collect their contact information to move them further down the funnel.
Qualify leads to confirm interest in the product. Not all leads are a good fit for your company. Define what a qualified lead looks like based on your ideal customer profile. Follow up with those who meet your criteria and engage with them to confirm their interest in your product.
Nurture your qualified leads. Lead nurturing is crucial for keeping prospects engaged and moving them closer to a purchase decision. Utilize email campaigns, social media, and other channels to provide valuable content and offers that address their needs and pain points.
Close the deal. At this stage, the prospect has either become a customer or decided not to make a purchase. For customers, focus on retention and building loyalty. For non-converters, continue nurturing them and reach out periodically to stay top-of-mind and potentially convert them in the future.
Track the final results and analyze sales data. Regularly review your sales funnel to identify areas for improvement and optimize your process. Look for missed opportunities, blind spots, and ways to increase conversion rates. Use data and analytics to make data-driven decisions and continually refine your sales funnel.
By following these steps, you can create a sales funnel that guides your prospects through the customer journey and maximizes your chances of converting them into paying customers. HubSpot offers free pipeline management software that can help you track and optimize your sales funnel effectively.
Sales Funnel vs. Flywheel
The traditional sales funnel has become obsolete in the modern sales landscape. Customers now have more control over the buying process, and their behavior has changed significantly. They spend more time researching before engaging with a salesperson, making the sharing of information less valuable.
In response to these changes, some companies have adopted the flywheel model instead of the sales funnel. The flywheel is a concept introduced by HubSpot to illustrate the momentum gained when an organization aligns around delivering an exceptional customer experience.
How does the flywheel work?
To get your flywheel spinning, you need to invest in strategies that acquire and retain customers. Once you have acquired enough initial customers and ensured their success and satisfaction, they become a force for your flywheel. They either make repeat purchases or refer new customers to your business, keeping the flywheel spinning without relying solely on acquiring new customers.
The flywheel focuses on leveraging the power of happy customers to attract and engage new prospects, creating a community or ecosystem of customers who help other customers. This approach aligns with the modern buyer’s behavior and can lead to sustainable growth and customer loyalty.
How to Build a Flywheel
Building a flywheel involves the following steps:
Understand the power of your current customers. Your existing customers are a valuable source of influence. Prospects trust the stories and experiences of your satisfied customers. Collect use cases, testimonials, and references that showcase your product or service’s strengths.
Invest in strategies to acquire and retain customers. Develop marketing and sales tactics that attract new customers and ensure their success. Provide exceptional customer service and support to build long-term relationships.
Leverage happy customers for referrals and repeat sales. Encourage your satisfied customers to refer others to your business. Offer incentives or rewards for referrals and focus on delivering a remarkable customer experience that drives repeat sales.
Continuously optimize and improve. Regularly evaluate your flywheel strategy, identify areas for improvement, and make data-driven decisions. Use analytics and customer feedback to refine your approach and keep your flywheel spinning smoothly.
By building a flywheel, you can harness the power of your existing customers to attract new prospects and drive sustainable growth for your business.
In conclusion, the sales funnel is no longer sufficient to meet the needs of the modern buyer. The flywheel model offers a more customer-centric approach that leverages the influence of happy customers to attract and engage new prospects. Evaluate your business’s unique needs and buyer behavior to determine whether a sales funnel or a flywheel is the right approach for your organization.