The sales funnel: what it is and how to create yours

Every sale is a story that reveals the critical moments when a prospect turned into a paying customer. Mapping out this journey—a process known as a sales funnel—is your key to understanding what drives people forward and where you lose them along the way.

Today, we’ll show you how to create your own sales funnel along with tips to improve each step, so you can take more people from prospect to paying customer.

What’s a sales funnel?

A sales funnel is a model for visualizing every stage in the customer journey, from the time prospective customers learn about a brand to the moment they make a purchase.

The top of the funnel represents ‘awareness’, when potential customers discover a brand, while the bottom of the funnel represents the 'decision', when prospects convert into actual customers. At each stage, the number of prospects narrows, with (usually) only a fraction converting in the end.

Why are sales funnels important?

An effective sales funnel allows companies to visualize each step that prospects take on the path to conversion. Each step is a micro-conversion that you can optimize to increase end-of-funnel conversions. If one of these steps shows a higher-than-expected drop-off rate, it can be analyzed to see what’s wrong and test out possible improvements.

Funnel tools like Google Analytics or our very own Contentsquare’s Funnels help you visualize your customer flow, spot pages with high drop-off rates, and show how many visitors move through—and exit—the funnel at each step.

A 4-step conversion funnel visualization in Contentsquare’s Funnels

How does a sales funnel work?

In a traditional sales funnel, the awareness stage is at the top. It’s the point of entry and is the widest part of the funnel. Prospective customers often start from there as a result of your lead generation efforts. 

Once prospects enter the funnel, they ideally take steps to continue down toward the bottom, but they can also exit at any point. A successful sales funnel is one that keeps drop-offs at a minimum.

Each step new leads take in the buying process is another stage of the funnel, leading them closer and closer to the narrowest point—the decision-making point—which you want to be a purchase decision.

Seeing the funnel from a customer's perspective

If you look at your funnel from the customer’s perspective—from the moment of awareness up until the moment of buying—they’re not traveling through a sales funnel: they’re simply shopping.

Rather than thinking about each stage in the sales funnel, prospective customers are experiencing each stage. When you learn how a sales funnel works from the customer’s perspective, you can better understand drop-off points and make improvements to each stage in the sales funnel to increase conversion rates.

Your job is to make each stage of the sales funnel as simple and painless as possible (maybe even enjoyable!) for your prospects, to motivate them to keep moving through the funnel to the point of decision.

The 6 stages of a sales funnel

Traditionally, a sales funnel is split into 3 parts. 

• Awareness, also referred to as ‘top of the funnel’: indicates when the prospective customer has discovered your business and is aware of your product in general terms

• Consideration, also referred to as ‘middle of the funnel’: indicates when the prospective customer has shown interest in your product by browsing your site and doing product research and comparisons

• Decision, also referred to as ‘bottom of the funnel’: indicates when the prospective customer reaches the point of conversion and decides to either exit the funnel or purchase your product

The magic happens when we break these 3 parts down into 6 different stages, to better identify potential drop-off points.

Stage 1: visit

At this stage, prospective customers are arriving on your landing page, and navigating to different pages of your website as a result of your marketing campaigns (SEO, organic or paid social media, cold or warm email campaigns, etc.). 

They’re at the widest point of the funnel. If they were in a brick-and-mortar shop and a salesperson approached them at this point, the customer would say, “I’m just looking.”

Stage 2: lead

When the customer sees something they like, they take a step downward in the funnel and become a ‘lead'.

The ‘lead stage’ is also referred to as the ‘interest stage’. At this point, leads have a clear interest in your product, and they may start doing product research and comparisons. 

This point of the funnel is still pretty wide—the customer has a problem and is aware of your proposed solution, but it’s still unclear whether or not your product will meet their needs.

Stage 3: marketing-qualified lead (MQL)

At this stage, your leads will realize 1 of 2 things: either your product has the potential to work for them, or it doesn't.

If you’ve done your homework, which includes running market research, your unique selling proposition (USP) is clear and you’ve tailored your sales funnel to attract ‘marketing-qualified leads’ (MQLs) based on user personas (semi-fictional characters based on demographic and psychographic data of your target audience).

Leads that are exiting the funnel at this point are most likely not your ideal customers or target audience.

Stage 4: sales-qualified lead (SQL)

When prospective customers convert from MQLs to sales-qualified leads (SQLs), they're nearing the end of the ‘consideration’ stage, and are now close to entering the ‘decision’ stage of the sales funnel and the sales pipeline.

SQLs have researched and compared products, and have determined that yes, your product does fit the bill and is a viable solution to their problem. The leads that are exiting the funnel at this point are a missed opportunity—they found another solution.

Stage 5: opportunity

This is where your USP and call to action (CTA) take the stage.

When an SQL has made it to this point in the funnel, they’re only one step away from converting (so close!). Your USP and CTA could make or break the opportunity stage of the sales funnel. Either your product is the one solution, or it’s not. Your job is to put the customer at ease: be ready to answer their questions and provide social proof (testimonials, product ratings, case studies, etc.).

Sometimes, even a good sales page isn't enough. If you employ sales reps (or are one yourself), this is the point where you might consider nudging those high-quality leads in the right direction before they drop off the buyer’s journey.

Stage 6: customer

This point of the funnel is the final stage—where conversion happens and prospects can now step out of the funnel as your newest official customers.

Your job doesn’t end here, though. Your new customer has chosen your product over a lot of other available options. Earn their trust and commitment by engaging with them at this point: for example, send them a follow-up email including resources and articles they may find useful, or share a post-purchase survey so they can tell you what worked (and didn’t) throughout the process, so you can improve it for future customers.

This final step presents an opportunity for you to motivate the customer to come back and browse more products—to become an advocate for your brand and enter the sales cycle rather than funnel.

What's next? Past this first conversion event, you’ll want to increase your new customer’s lifetime value (CLV). Some ways to increase CLV include upsells or offering such a delightful customer experience that they want to make another purchase in the future.

Sales funnel examples

You can use a sales funnel to visualize each step a prospective customer takes and discover drop-off or exit points in the journey. When you investigate drop-off points, you can then learn how to improve the user’s experience and ensure you’re reaching your ideal customer.

The below example tracks the steps prospective customers take to get from a product page to a checkout page. In this example, we’re focusing on the middle- to bottom-of-the-funnel only.

A hypothetical sales funnel example in Contentsquare’s Funnels showing the biggest page drop-offs 

The bar representing the start of the funnel is fully filled (100%) because that’s our base sample (all users who viewed the product page). 

These users are marketing-qualified leads (MQL). Their presence on a product page shows they’re deciding whether your product is right for them. 

In the second stage, we’re measuring how many of these users went ahead and added the product to their cart. Contentsquare’s Funnels shows that 17.6% made it to this stage. 

If we look at the fourth step (the last step) we can see how many actually proceeded to checkout. It turns out, only 1.93% of the initial sample reached this stage of the sales funnel.

Now that we know what’s happening, we can search for the reasons why. Funnels can help with this too. 

To understand why users aren’t converting, click on the ‘play’ button for the funnel step you want to dig into to watch session replays of people who left at this specific stage of the funnel.

The ‘play’ button, here on a different sales funnel example

Recordings let you watch what people were doing in the critical moments before they left your site. 

For example, you might notice that mobile users struggle to find the add-to-cart button, causing them to leave in frustration. Knowing this, you’d likely want to redesign your mobile product page to prominently feature buttons and CTAs. 

Tailor your sales or marketing funnel to your ideal customers in 3 steps

One mistake beginners make is to try to convert everyone who enters their funnel. 

Not only is this unrealistic—it’s also inefficient. A better way to increase conversions is to start at the bottom stages of your funnel (at or near the conversion stage) and work backward to improve the user experience for your ideal customers.

1. Build user personas

Your ideal customers are the ones who would benefit most from what you have to offer, and when you build your funnel around their needs, you can quickly boost conversions.

To find your ideal customers, start by building a user persona that answers these 3 questions:

1. Who are your customers?

2. What is their main goal?

3. What is preventing them from getting what they want?

One way to get started is by adding on-page surveys to your website to ask your customers for feedback. Consider polling customers once they’ve converted, paying special attention to those who barely did: this will help you uncover objections that are keeping similar prospects from converting and get them to the next stage in the funnel.

Another way to collect this data is through customer interviews. Speak with paying customers and ask them to tell you about the very first time they began searching for a solution to a problem your company was built to solve. 

Customer interviews won’t give you volumes of data like surveys do, but they’ll help you understand and empathize with your ideal customers. Plus, they’ll often draw your attention to things that haven’t crossed your radar—from unique product use cases to struggles you never imagined.

2. Spot the problem pages

Set up a funnel tool to start collecting traffic data. Here are some funnel examples to get you started:

• Ecommerce sites: product pages > cart > checkout > thank you page

• Blog: homepage > article pages > subscribe page > success page

• SaaS: trial signup page > clicking on sign-up button > sign-up event occurred

• Lead generation: landing page with form > clicking on ‘submit form’ button > thank you page

As you collect the data, you'll be able to perform funnel analysis and identify the high-traffic, high-exit pages where visitors are leaving your website. 

3. Understand the issues that need fixing

After you've identified your problematic pages, it's time to dig deeper. Using a combination of behavioral insight and user feedback tools, you’ll discover how your customers actually behave and what they think of their experience.  

Heatmaps

Heatmaps show you where most of your users click, scroll, and hover their mouse pointers. By placing heatmaps on your most problematic pages, you’ll get a good sense of how people interact with them.

Contentsquare’s Heatmaps show you where customers click, move, and scroll on your pages.

💡Pro tip: if your funnel shows a drop-off where users are supposed to click on a CTA that’s lower on the page, use a scroll map (a map showing how far users scroll on a page) to check whether they scroll down enough to see the button. If not, you’ll need to revisit your page structure to make it more compelling for visitors to scroll and/or place your CTA button higher up on the page.

Voice of Customer tools

Voice of Customer capabilities, like on-page surveys, feedback widgets, user tests, and user interviews help you gather user feedback so you can ask them straightforward questions about any issues they're encountering. Some helpful open-ended questions include:

1. What’s missing from this page?

2. What’s stopping you from continuing?

3. What were you looking for?

4. How can we help?

Example of an on-page ecommerce survey combining closed- and open-ended questions

💡Pro tip: with the Contentsquare x Slack integration, your team is automatically notified when you receive a new survey response.

Session replays

Session recordings, also known as session replays, give you the opportunity to watch recordings of individual (anonymized) sessions. You can watch session recordings in the context of the feedback you receive. For example, if customer feedback indicates people aren’t converting because the product page is confusing, you can watch recordings of people interacting with the page to determine what the problem(s) might be.

💡Pro tip: noticed a particularly alarming drop between 2 funnel steps? There might be a bug on your site. Filter replays by ‘error’ in Contentsquare to watch sessions with errors to see if any bugs prevent users from moving to the next funnel stage.

Mapping your sales funnel

Building a sales funnel helps you chart the route people take to becoming paying customers.

But don’t stop there. Tools like Contentsquare’s Session Replay and Heatmaps let you dive into problem areas and reveal where users hesitate, what’s missing, and what’s not working. 

With all these useful insights, you can fine-tune your funnel and ensure more people move from top to bottom with ease.