Sales Funnel: A method (using software) to guide a prospective customer through a series of stages, ultimately converting them to a member, sponsor, customer, etc.
It’s described as a funnel because it’s large at the top, tapers through the middle, and narrows at the bottom.
The process begins with a broad pool of prospects. At each stage, the pool narrows. Prospects are filtered, and those somewhat likely to convert advance through the funnel. Eventually, the prospects with the highest likelihood of converting reach the end of the funnel, where they hopefully become a “customer” (a.k.a. member, sponsor, customer, etc.).
A sales funnel often works in tandem with a marketing automation system. Fully integrated automation enables users to create, manage, and track automated email communications within one system, streamlining productivity.
The sales funnel process is valuable because it:
- Enables tracking of successes and setbacks at any point
- Provides an understanding of the conversion rate at every stage
- Offers an analysis of final sales data
- Improves forecasting accuracy
- Allows for effective decision-making regarding cashflow, budgeting, etc.
- Helps estimate customer acquisition costs
- Identifies the most profitable customer acquisition methods
- Results in higher profit margins
The complexity of the funnel varies, but at its core, it consists of overarching phases comprised of various stages.
Sales Funnel Phases:
TOP OF FUNNEL (TOFU)
The beginning of the sales process, when the prospective audience is at its largest.
MIDDLE OF FUNNEL (MOFU)
Typically, the most extended phase, when the prospects who are more likely to convert, are further through the funnel. Those less likely to convert remain at their current stage or possibly removed from the funnel.
BOTTOM OF FUNNEL (BOFU)
Often shortest phase, when those most likely to convert have reached the final stages of the process. At its close, the opportunity is categorized as closed-won or closed-lost.
The number and intricacy of stages are ultimately determined by the user. But, in its simplest form, there are four fundamental stages in a sales funnel.
Sales Funnel Stages:
When you catch the attention of a prospective customer and create awareness of the solution you provide.
A prospect has recognized their problem or expressed an interest and wants to know more. This often includes evaluation of your solution while researching and comparing other options.
The prospect has expressed their intent to buy, considered their options, and shortlisted your solution.
A decision has been made, and the prospect commits to purchase, becoming a customer.
*Many sales funnels include a Post-Purchase/Loyalty stage. It focuses on current customers that may periodically re-evaluate, considering if other solutions better meet their needs.
Of prospects who enter the sales funnel, only a minority will convert. A well-structured sales funnel defines the actions your association needs to take to move as many prospects as possible through each stage.
Using robust association management software with a sales funnel management tool empowers associations to monetize and track sales opportunities such as memberships, sponsorships, and subscriptions; track by progress, probability, sales stage, and lead source.