Sales Funnel Basics: What They Are and Why Every Business Needs Them

Sales Funnel

With the arrival of modern technology, it has become easier than ever for businesses to reach new customers. Social media, email, and smartphones give businesses the ability to have a constant presence in peoples’ lives, driving interaction and sales. 

But with all this new technology, it can be easy for potential customers to slip through the cracks. For businesses to be successful in this new age, they need to make sure that they are consistently converting potential customers into actual sales. This is where a sales funnel comes in. 

In this article, we’ll go over the basics of sales funnels, how they work, and why businesses need them to be successful. 

Sales Funnel Basics

A sales funnel describes the process that turns a potential customer into a sale. This process includes everything from the potential customers very first interaction with your business to their decision to buy from your business.

The sales funnel has four main parts. Each part serves the purpose of getting the potential customer to the next step in the funnel and converting them into a sale.


In order to get someone to buy something from your business, they need to know your business exists in the first place. This is where the awareness section of the funnel comes into play. 

The awareness stage is where the customer becomes aware of your business or your product. This can involve the customer seeing a Facebook ad, seeing a commercial, seeing your business on the street, or hearing about it from a friend. 

You can make potential customers aware of your business in a bunch of different ways. But the most important piece here is that the customer becomes aware of the business and its products. 


This is the point where the potential customer becomes interested in your business. At this point in the funnel, the potential customer is reviewing similar products, comparison shopping, and doing general research about your product. 

This can include looking at product reviews, visiting your store location, or even just asking questions about a certain product. The point of this stage in the funnel is to capture the interest of the person and build their confidence in your business or product. 

At this stage in the funnel, businesses generally try to offer their expertise or viability as a vendor. Pushing deals or aggressively trying to sell the customer can drive them away. But serving as an informational resource or establishing yourself as a trusted vendor or business can help build the customer’s confidence and drive sales. 


At this point in the funnel, the customer is has gone from being interested in the product to actively wanting the product. They will start to get their final options together to help make a decision.

At this point in the funnel, businesses generally try to secure the sale by offering a discount or some sort of deal. This discount or deal is often the final straw that drives the customer to buy the product or service. For example, a business might offer 10% off for first-time customers, or offer free shipping on a product. 


This is the point in the funnel where the potential customer becomes a sale. They finalize their decision on the product they want and they take action by purchasing the product. 

While many people might consider this the end of the sales funnel, the work isn’t over yet. The key to a good sales funnel is taking these first-time buyers and turning them into repeat customers by returning them to the top of the funnel. 

This can be done by adding them to an email subscriber list, offering a discount on their next visit, or providing some other incentive to buy again. 

Sales Funnels: Why Businesses Need Them 

The main goal of a sales funnel is to drive sales and increase profits. But this isn’t the only purpose of a sales funnel. A sales funnel can also help you lower costs, increase customer engagement, and make your business more efficient. 

Lower Acquisition Cost

When it comes to making sales, each business has a customer acquisition cost. Essentially, this is the amount of money spent per customer to earn their business, usually taking the form of marketing costs. 

If a business is spending a lot of money on their marketing process and they aren’t converting potential customers into sales, their customer acquisition cost would be high. A sales funnel helps lower this cost by making the process of converting customers in sales more efficient, which means you won’t have to spend as much per customer to make the sale. 

This helps to save money and can also free up your budget to be spent on other areas of the business. 

Increase Customer Engagement and Exposure

With more avenues for communication than ever, there are tons of options when it comes to increasing engagement with customers. And whether it is through social media, email, or other mediums, a good sales funnel requires that businesses interact with their customers. 

This can help build the reputation of a business and can help them earn the trust and confidence of its customers. 

A good sales funnel also offers opportunities for increased exposure. Even if the customers who become aware of your business don’t buy, being exposed to your business or brand helps spread the word and increases the likelihood of a sale. 

Increase Efficiency of Marketing and Sales Process

The point of a sales funnel is to create a systematic way of converting customers to sales. This approach will help you recognize the areas of your sales funnel that need improving. For example, you notice that you are getting a ton of awareness, but not much interest. This means you should work on improving your ability to inspire interest. 

It can also help you recognize the areas of your marketing strategy that aren’t effective. If you notice that your email campaigns are bringing in a ton of repeat customers and your social media page isn’t getting much interaction, you can increase your investment in email campaigns to drive profits. 

Build Your Funnel, Increase Profits

Now that you know more about the sales funnel process and how it works, you can start building your own sales funnel to drive profits and grow your business. Make sure to do some more research on the parts of the sales funnel and how they apply to your business. 

If you have any questions about sales funnels or how to build one for your business, please visit our page.

Picture of Yogesh Saini

Yogesh Saini

I have been in the affiliate marketing industry for more than two years. I am an entrepreneur myself and know what it takes to be successful.
My goal is to show entrepreneurs how they can build a successful online business with my help, and teach them about the latest trends in digital marketing.

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