Definition
A sales funnel (also known as a purchase funnel) is a marketing model that illustrates the theoretical journey potential customers go through, from their first interaction with your brand to becoming a paying customer. The « funnel » metaphor is used because a large number of prospects enter at the top, but only a small fraction emerge at the bottom as customers. It helps businesses understand and optimize each stage of the customer’s decision-making process.
Examples of Funnel Stages
The classic sales funnel is often broken down into four key stages:
- Awareness (Top of the Funnel – TOFU): The prospect becomes aware of a problem and learns about your company for the first time through a blog post, social media update, or advertisement.
- Interest & Consideration (Middle of the Funnel – MOFU): The prospect actively researches solutions. They might download a whitepaper, attend a webinar, or compare your product with competitors. This is where MQLs are generated.
- Decision (Bottom of the Funnel – BOFU): The prospect is ready to buy and is evaluating their final options. They might request a product demo, look at case studies, or ask for a price quote. This is where SQLs are qualified.
- Action: The prospect makes a purchase and becomes a customer.
Advantages/Benefits
- Improved Conversion Rates: By understanding each stage, businesses can create targeted content and strategies to move prospects more effectively toward a purchase.
- Identifies Weak Points: Helps pinpoint where prospects are dropping out of the buying process, allowing you to address leaks in the funnel.
- Aligns Sales and Marketing: Provides a shared framework for both teams to understand their roles in guiding the customer journey.
- Predictable Lead Flow: Allows for better forecasting of how many leads are needed at the top of the funnel to achieve a specific revenue target at the bottom.
Related terms
- Sales Pipeline
- Customer Journey
- Conversion Rate
- TOFU/MOFU/BOFU
- MQL (Marketing Qualified Lead)
- Lead Nurturing
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