You may have run into these two terms before, “marketing funnel” and “sales funnel.” If you haven’t yet, we’re so glad you’re reading about it here for the first time since the information out there is extremely confusing and, oftentimes, conflicting. However, these are two important types of funnels that you should definitely understand for your online business. But first, if you’re not familiar with what a funnel is and how to use one, check our previous blog with more details on that here.
Now, let’s clarify those two funnel types.
The Marketing Funnel
Before any buyer will be able to trust you and your brand, skills, or knowledge enough to give you their money, you need to nurture him/her. Prospects have to warm up to you and start getting comfortable to give you more and more of their information. These little steps forward are called micro conversions, and may include sharing your blog on their social media pages, signing up for your newsletter, liking your social media posts and/or commenting on them, asking a question in your group, downloading resources off your website, etc.
A marketing funnel is a funnel created specifically to encourage such small steps from your audience at every touch point in their journey. To achieve that, your messaging has to be appealing, conveniently placed and easy to reach (e.g. “in-the-moment suggestions”), easy to follow through with (“dummy-proof”), and include a little push or CTA (call to action). Keep in mind that they may want to go back to their initial touch point after completing one of these small conversions. So you should have a way for them to do so without much effort.
The final goal of your marketing funnel is to get your prospect to make that first purchase. However, in the process you should have built your brand image, some type of rapport with them, and gathered enough information to know how to best target them (aka, which target market segment they best fit into).
Here are a few examples of types of marketing funnels:
- Lead-generation Funnels – you would use these to pique attention and curiosity, as well as to qualify and screen prospects.
- List-building Funnels – these serve to gather some contact information from your prospects in order to keep in touch with them, usually by email.
- Registration Funnels – through such funnels you would give your audience a taste of what you can do (for example through a webinar, live Q&A session, free initial consultation, etc.), and at the end you would pitch your paid offer.
Marketing funnels are quite effective when selling high-ticket items, whether they be services, products, or events (e.g. retreats, bootcamps, etc.). Once your prospects have committed to making a more significant purchase from you, you can then move them onto the next type of funnel. Let’s see what that one is about!
The Sales Funnel
The bottom of a marketing funnel represents the start of a sales funnel. This would be the process of upselling, cross-selling, or down-selling your newly acquired client. The goal is to maximize his/her lifetime value (LTV) through different but relevant offers.
According to Bain & Company, a 5% increase in retention rates can lead to a 25% increase in profits. You definitely don’t want to forget about that customer right away. Not only that, but keeping an existing customer is less expensive and easier than acquiring new ones. Did you know that, on average, about 65% of a company’s revenue is based on return customers? In fact, return customers bring dozens of benefits to a company’s bottom line. So I would dare say a sales funnel is just as important as a marketing funnel.
But what would make an existing client to keep purchasing from you?
Using the principle of reciprocity, if we want to receive, we need to first give. People are likely to return favors, gestures of appreciation, or services. So, to apply that in the context of customer retention, the more special we can make our customers feel, the more likely it is they will continue purchasing from us.
One way we can incorporate this principle is by initiating Loyalty Programs, Points Systems, or VIP Memberships, where frequent buyers get small benefits over time. Airline miles are a good example of such programs. The cost of implementing them is much smaller than the potential benefits. Once signed up for such programs, it is easier to move them into a sales funnel.
What are some examples of the types of sales funnel you can implement? Here’s a quick list for you:
- Fishbowl Funnels – these are used for giveaways and prize drawings, where people would enter their information in hopes of winning something. These work best when used with an existing client base and not when trying to acquire new clients, as new clients may be interested in a free gift but may not continue purchasing from you afterward.
- “Don’t cancel yet” Funnels – such funnels will help you avoid losing a customer. If you offer a membership-based service, you can allow current clients to change their plan or pause their membership temporarily instead of completely cancelling. This is an example of down-selling and it gives you a chance to retarget those customers by offering them more incentives to come back to their initial plan.
- Upselling & Cross-selling Funnels – these are best used right before or right after the initial purchase. If you’ve ever seen the line “customers who bought this also liked…” then you know what this funnel is about. Another way to implement it is to offer bundle discounts for purchasing products or services together at a lower price than what it would cost if purchased separately.
Here are a few funnel types that include both marketing and sales.
- Self-liquidating Offer Funnel - this funnel is usually used to generate visibility and warm leads that have already purchased from you so that you can eventually sell them on additional, higher-priced offers. You would use paid ads for marketing and include a low-priced offer that generates enough sales so that the funnel pays for itself.
- Automated Webinar Funnel - this funnel is typically used for selling high-end products or services. The face time helps build the like, know, trust factor then leads to a discovery call or sales page.
There are so many types of marketing and sales funnels, so I only touched on the most popular ones. In the end, it’s important to use your goal as a deciding factor for choosing to use a particular funnel. Additionally, you may need some A/B or split-run testing (trying more than one model or design and comparing the results) before understanding what works best for your target market. Once you find that magic recipe, you will get more clients, sales, and growth in your business.