What Is a Sales Funnel?

When you’re selling a product—any product—it pays to understand who you’re trying to reach and how close they are to making a buying decision. With this in mind, a sales funnel is a model that helps marketers consider where customers are in the buying process. That way, they can tailor their messaging to reach the right customers, at the right time, and push them toward a positive buying decision.

Does that sound kind of vague? Don’t worry. It will all become clear when we go through a common, real-world example of a product you use every day: the smartphone.

Marketing an early-model smartphone 

Picture yourself on the product marketing team for a smartphone that’s trying to compete against the iPhone in 2010, just three years after its release. Some potential customers are actively seeking an Android device for whatever reason, while others don’t even know that an alternative to the iPhone exists. In fact, some potential buyers may be unsure of what smartphones in general have to offer at this stage, since remember—we’re using an example from the early smartphone era. 

Given that you’ve got a range of potential buyers with varying degrees of product awareness, you’ll need to craft different messaging for prospects at different stages of awareness. That’s why marketers dreamed up the concept of the sales funnel. 

Every prospective buyer enters the sales funnel at the Awareness stage, which is the moment they realize your product exists. As they learn more, some will drop off. Others will enter the Interest phase, where they start to consider what your product has to offer. At the Desire stage, more will drop off, but those who remain start actively investigating your product, often comparing it to competitors’ products. Finally, at the Action phase, you’ve whittled your audience down to those who are willing to pull out their wallets and make a purchase.

What marketing looks like at each stage

In order to understand the benefits of a sales funnel, let’s use the early smartphone example to see how messaging might differ at each stage.


Potential buyers at the Awareness stage have just learned about your product. As such, they may not know how your smartphone compares to an iPhone, or even that you’re in the same product category. At this stage, your efforts would focus on brand recognition and explaining product fundamentals (e.g., camera, web browsing, and texting capabilities).

Since most of these customers won’t rush into making a buying decision (after all, your product isn’t cheap), you’ll need to nurture these leads over time. In other words, if you have prospects’ email addresses, your email campaigns should focus on exposing them to the product, helping them become familiar with everything you have to offer, and increasing their level of comfort with both your brand and your product.

Interest phase

At the Interest phase, maybe they’ve clicked on a few of the links in your email campaigns. Perhaps they’ve played around with a friend’s phone and tried out some of the features. They’re inching closer to making a purchase, and your messaging should reflect that—providing them more detailed explanations of features and benefits.

If they’ve followed links to learn more about your product, you’ll know you can hit them with emails and advertising that goes beyond the basic features. It’s time to showcase more of the bells and whistles, getting them excited and pushing them toward the next phase.

Desire phase

At the Desire phase, shoppers are now interested in possibly purchasing your product, and they need to know why it’s superior to your competitors’ products. It’s also time to tempt them with special offers and really stress that “buy now” call-to-action. At this stage, you’ll be more likely to use pay-per-click advertising, pushing them to commit and close the deal. Whatever the case, you need to swoop in before someone else does, because they’re ready to buy. 

Action phase

This is where the rubber meets the road. Once customers have made the purchase, it’s up to you to ensure they get the most out of the product by providing easy-to-follow setup instructions along with helpful customer support to those who need it.

It may be tempting to neglect this phase, since they’re already paying customers, but that would be a huge mistake for two reasons.

  1. Satisfied customers become repeat customers in the years to come.
  2. Elated customers will endorse your product to friends, family, and colleagues, providing free advertising.

Applying the sales funnel to SaaS and other business models

The smartphone example works well because it’s a product we’re all familiar with, but the sales funnel approach can work well for any type of business model. Take, for example, a SaaS company. Say, for the point of illustration, one that sells Client Relationship Management (CRM) software. 

In order to drive monthly recurring revenue, CRM companies need a steady influx of leads coming in at the Awareness phase. That means producing content that makes potential costumers aware of the benefits of a CRM—often long before they’ll ever be in a position to make a purchase. What would that look like? Picture helpful video tutorials aimed at people just learning about CRM’s… everyone from the college intern to a 55-year old sales rep who is ready to give up his pen and paper system. These folks at the Awareness phase might not be in a position to influence an enterprise CRM purchase for some time, but when they become ready, they’ll be familiar with the CRM’s brand. In other words, the company is building its pipeline and ensuring a steady influx of future leads.

To demonstrate value in the Interest phase, the CRM company needs to showcase features that make them stand out in a crowded field. And to encourage a purchase at the Desire phase, they need to use plenty of calls-to-action, encouraging live product demos (assuming that’s part of their business model).

If the company fails at the top of the funnel, leads will drop off and their business will suffer. If they fail at the bottom on of the funnel, churn with go through the roof and again, the business will suffer. As such, successfully targeting prospects at different stages in the funnel means adapting your messaging in all your marketing channels, including:

  • Landing pages
  • Online ads
  • Email campaigns
  • Text messages
  • Videos
  • Any and every touchpoint with actual and prospective clients

In the end, it’s all about knowing your customers and what drives them at various stages. A sales funnel gives marketers a mental model for how to address each segment at key points in the sales cycle. And while different marketers may break up each stage in the funnel differently, what’s important is to recognize that how you market—what you say and the channels you use—must be tailored to the specific phases in the buyer’s journey.


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