The Most Honest Guide on How to Build a Conversion Funnel

We know so little about how people make decisions. Take Red Bull as a drink, for example. When Red Bull was first launched, the company asked a firm specializing in market testing for new beverages to evaluate the drink. The results for Red Bull were surprisingly different from other drinks.

This was the first time in the history of the testing company that people openly hated the taste of a drink. Typically, responses for other soft drinks might include remarks such as, “This taste is more for kids.” However, in Red Bull’s case, the feedback was strikingly harsh, with comments like, “I wouldn’t drink that piss even if you paid me.”

Ironically, Red Bull is now the second most profitable soft drink on the market, trailing only Coca-Cola. It has even managed to sponsor its own Formula 1 team.

So, what do we know about how people make their buying decisions? Very little.

But the good news is that these decisions generally follow a similar pattern. As a business owner or manager, you can benefit from this knowledge and incorporate it into your CRM strategy.

Why You Should Read This Article

First off, this article isn’t for everyone. I must admit, as a B2B expert, my theoretical knowledge aligns with that of B2C experts, but I lack their breadth of experience and hands-on case studies.

This article is primarily for those engaged in B2B business. That’s not to say the principles discussed here couldn’t be applied to B2C; I just know for certain that they work in B2B contexts.

Furthermore, I was invited to teach a Sales Management course at a university on this topic, which required me to consolidate my knowledge into a structured series of lectures. I’ve compiled all that knowledge here for this article.

However, you are the judge. Please let me know via the contact form if you disagree with anything on this page or think something isn’t worth trying, and explain why.

Now, back to business…

What Is a Conversion Funnel?

You can describe it in the conventional, somewhat dull way: A Conversion Funnel is a set of pre-defined stages that a decision-maker (or consumer) follows before making a purchase.

I prefer a more dynamic definition. Think of a Conversion Funnel as a collection of tools and techniques that support your most successful sales scenario, organized by stages to help you scale.

Traditional methodology stops at the point where a decision-maker decides to buy, leaving the rest to the customer support team. I find this approach limited.

In practical terms, businesses need more than just converting new leads into customers; they need returning buyers and recurring revenue. Thus, I advocate for a more complex, systemic approach to the funnel. I’m a proponent of Customer Journeys that begin the moment a prospect first hears about your product and continue until they become an advocate of your brand or company.

But since we’re learning, let’s start with the basics first.

Types of Conversion Funnels

There are numerous types of conversion funnels, but they can generally be categorized into two groups:

• Online: These are digital conversion funnels that exist completely, or almost completely, in the virtual world. E-commerce stores are prime examples of such funnels.
• Offline: These are traditional conversion funnels that exist in the physical world. Consider clothing stores, for instance.

It’s important to note that, nowadays, almost all funnels are hybrid. I haven’t observed companies that operate solely offline or online—although online courses could be an exception.

Additionally, both types of funnels can be divided into:

• B2C: Funnels oriented towards selling directly to consumers.
• B2B: Funnels designed to sell to other businesses.

Stages of the Funnel

The organization and performance tracking of the funnel represent its most critical aspects.

As previously mentioned, funnels divide your sales process into multiple steps. Traditionally, there are two popular methods for splitting these steps. Let’s explore both.

AIDA Model

Ask any first-year marketing student about funnels and the stages of decision-making, and the first thing likely to come to mind is the AIDA model. This is an acronym that stands for:

• A – Awareness: The potential customer becomes aware of a product or service.
• I – Interest: They show interest in a group of products or services.
• D – Desire: The interest evolves into a desire for a specific product or service.
• A – Action: Finally, they take action by purchasing the product or service.

Personally, I find the AIDA model challenging to apply in practice. When I work on customer journeys with clients, distinguishing between the stages of Awareness and Interest, as well as between Desire and Action, often proves difficult. These distinctions can be subtle and sometimes blend together, making it hard to clearly identify and measure each stage effectively in real-world scenarios.

The Three Thirds Model (3/3 Model)

Also known as TOFU, MOFU, and BOFU, this model breaks down the sales funnel into three straightforward stages:

• TOFU – Top of the Funnel: This stage is about generating awareness. It’s where potential customers first come into contact with your brand or product. The focus here is on marketing funnel to attract a wide target audience through content marketing such as blogs, search engines, social media posts, and general advertisements.
• MOFU – Middle of the Funnel: Here, the focus shifts to engaging those who are now aware of your brand and turning their initial interest into a considered desire also known as a consideration stage. This is typically achieved through more targeted marketing efforts such as email marketing campaigns, detailed guides, and webinars that provide more in-depth information.
• BOFU – Bottom of the Funnel: This final stage is about conversion, where interested prospects are turned into customers. The content and actions here are highly specific, such as personalized offers, product demonstrations, or consultations that aim to seal the deal.

This model is appreciated for its simplicity and straightforwardness, making it an excellent tool for structuring your funnel content and actions. I prefer using this model as it provides clear direction on what to focus on at each stage of the customer journey.

Driving School Case Study: Credo Autoprieks (CA)

One of my favorite case studies, which I mention at every opportunity, involves Credo Autoprieks (CA), a leading regional driving school.

This example is particularly instructive due to its simple, straightforward conversion funnel and its one-time customer base.

Driving schools traditionally have limited opportunities for upselling or cross-selling. New drivers typically engage with the school, complete their training, and move on without further interaction.

This lack of repeat business underscores the importance of effective funnel management.

TOFU – Top of The Funnel

CA understands that its brand must be well-known and is actively working on local brand awareness. It employs a variety of mechanisms to ensure people associate the driving school with their brand:

• Ads on cars and public transport
• Posters in universities and higher-grade schools
• Sponsorships at various automotive events (e.g., drift shows, drag races)
• Blog posts on their website, along with third-party websites, citing statistics, to-dos, and anything even remotely related to driving.

At this point, the company knows that it doesn’t need to make people buy from them immediately. They are playing the long game here.

What the company aims to achieve is that when prospective customers decide to start studying for their driving lessons, their brand is the most recognizable.

MOFU – Middle of The Funnel

CA employs a variety of tools in the middle of the funnel. At this stage, the goal is to convert so-called “cold” traffic into leads.

By “cold” traffic, I mean individuals who are browsing the internet and looking for a driving school, possibly searching on Google, responding to related ads on Facebook, or visiting related websites.

The company uses its website as the primary mechanism of the conversion funnel to collect information from prospective customers and later move them to the bottom of the funnel:

• Website with lead forms
• Facebook ads with concrete CTAs (Calls-to-Action)
• Coupons distributed at various locations like universities and schools

At this point, the company heavily utilizes digital tracking tools such as the Salesforce CRM system, Google Analytics, Facebook conversion pixel, and more.

BOFU – Bottom of The Funnel

Finally, at the bottom of the funnel, CA employs a few very specific tools that ensure the success of the previous two steps.

At this stage, the company leverages its CRM system and sales representatives.

Whenever a lead enters their CRM, it is assigned to a sales rep. The assignment is semi-automatic; sales reps pull leads from the queue, and whoever accesses the lead first gets it. This process was designed to emphasize the importance of making the first call as soon after a student subscribes to the service.

An interesting side note involves the role of government regulations, which hinder the full automation of the sales process. In that region, there is a legal obligation for the school to collect a digital signature from the student, so automating the process completely was not possible.

By the way, this is where we assisted the company with implementing Salesforce. You can take a closer look here, at our case study section.

Recap

Now let’s quickly recap CA funnel with this image.

Beyond Traditional Conversion Funnels

Now that you’re familiar with the basics of conversion funnels, it’s time to delve deeper and discuss the concept of customer journeys.

Conversion funnels are an integral part of the overall customer journey. They account for the initial stage of a larger, two-sided funnel, where the prospect is first converted into a customer.

Subsequently, the company focuses on upselling and cross-selling to this customer.

This approach not only maximizes the potential revenue from each customer but also enhances the relationship between the company and its clientele.

While this article is not about customer journey and customer journey mapping, I feel there is a need to mention it in the context of conversion funnels.

Where to Start Building a Conversion Funnel?

Million dollar question indeed. Well, the answer is as obvious as it is ridiculous – start from the beginning. And the beginning of the funnel is at the bottom.

First, you must ensure that you are not losing customers at the bottom of the funnel, where customers are most ready to make a purchase or decision. You have to guarantee that this process is as smooth for the client as possible.

Existing vs New Customers

Often, when I work with my clients, I face a challenge – what to consider the bottom of the funnel. Should that be prioritizing new customers or existing ones?

Most businesses traditionally prioritize existing customers. It’s easier to work with them, you know what they purchase/order, and your sales reps are more comfortable working with the existing client base.

However, this approach is sub-optimal. It means you should reconsider how you manage your bottom of the funnel. If you are not concentrating on acquiring new customers, your competitors will. They will outgrow you and end up with more resources.

When Existing Customers are a Priority

Every rule has its exceptions, though. In 2016, when I started my previous job position, I stumbled across a HORECA (Hotel, Restaurant, Catering) supplier. The company supplies everything you could ever imagine for this industry, from food to cutlery, to design projects for restaurants and hotels. The company holds almost 100% of the market in most categories it represents.

For them, the biggest challenge was not attracting new customers, but making their customers so loyal that it would be unreasonable for them to even consider the competition.

They developed a super-app for their sales representatives that allowed them to offer every service and product they have. This built a very seamless end-to-end customer experience that was impossible to match at the time.

GEMOSS website

Split Your Sales Process into Stages

When you start working on the bottom of your company’s conversion funnel, you will still encounter the necessity to split the process into… a funnel. Yes, even though you are working on one, small part of your bigger conversion funnel, you still need to consider the decision-making stages your customer goes through.

Typically, sales funnel stages look something like this (I’m using Salesforce out-of-the-box Opportunity stages):

1. Prospecting
2. Qualification
3. Needs Analysis
4. Value Proposition
5. Identify Decision Makers
6. Perception Analysis
7. Proposal/Price Quote
8. Negotiation/Review
9. Closed Won/Closed Lost

That’s a pretty long sales process, usually used for software sales to corporate customers. Keep the 3/3 model in mind and think about how your customer, almost ready to purchase, progresses through the funnel.

I almost always cut down this series of steps to no more than five or six (excluding the Closed Won/Lost stages).

To make your process easier, here is a simple technique to define steps:

1. List every single mandatory action in the process of decision-making. For example, make a demo, prepare a quote, sign a contract, receive a prepayment.
2. Consider which of these actions are always, without exception, present in your process. Initially, you may think that your process is not strictly linear, but that’s not true — remember, every sales process can be simplified to a strict, linear stage.
3. Then put those processes in order and voila — you are good to go.

Low Effort Principle

When designing your sales funnel stages, it’s crucial to adhere to the low effort principle. Each subsequent stage should gradually increase in the decision-making difficulty.

Ideally, you should identify the maximum low-effort decision that a customer can make at each given sales stage.

The key to a successful website conversion funnel is to remove friction points that could deter potential customers. For instance, if you visit the website of a company you’ve never interacted with before, the most effort you might be willing to expend could be clicking on a banner or reading an article.

Once you become more familiar with the company, you might be ready to subscribe to their email list, albeit anonymously. After a couple of weeks, your familiarity might increase to the point where you are ready to initiate a conversation.

See the progression? Keep the process gradually increasing in complexity. Don’t confine this split of complexity to just the web.

Start with an online meeting, progress to an in-person meeting, then provide a quote, followed by a small offer.

Ideally, try to secure a small sale first, exceed expectations, and then target your bigger sale. This topic could fill an entire article with its nuances and strategic implementations.

The Little Prince

When designing your sales funnel, what you want to avoid is creating a funnel that resembles the snake that ate an elephant from “The Little Prince” by Antoine de Saint-Exupéry.

This metaphor illustrates a scenario where parts of your funnel might cause customers (or prospects) to “accumulate,” resembling the bulge in the snake.

A common bottleneck is often found in the “Negotiation” stage, which can stall progress. To prevent customers from getting stuck at this point, consider how you can further subdivide this stage. Breaking it down into smaller, more manageable steps can facilitate smoother progress and reduce congestion.

This approach is crucial for maintaining a healthy funnel and for designing an effective next-best-action strategy, which we will discuss shortly.

Next Best Action Strategy

Once you have redesigned your funnel, it’s critically important to develop a next-best-action strategy. This strategy isn’t fixed; rather, it serves as a guiding star for your marketing and sales teams and helps you evaluate the quality of your customer service during the sales process.

Here’s a great example from when we were selling consultancy services. Over the years, we learned that the success of a project required a significant amount of involvement from the client.

As a result, we included several steps in our sales process that required the customer to provide significant input. We call this step “Disco.”

“Disco” has nothing to do with music—it’s short for “Discovery.” Essentially, it’s a three-hour workshop during which we talk to the customer, extract requirements for future projects, start building a relationship, and qualify if this prospect fits our customer profile.

It often happens that after the disco, we may decide to decline collaboration because we identify markers indicating that a project may have a very high failure risk. This step helps us protect our reputation and guarantee the quality of our delivery.

Additionally, when a customer has spent three or so hours in a workshop with our company, it reduces the risk that they will want to spend this time with our competitors.

Consider incorporating similar stages in your sales process that require meaningful customer engagement, which can help solidify the relationship and filter out less suitable prospects effectively.

Standard Operating Procedures (SOP)

Once you’ve completed the design phase of your funnel, it’s crucial to think about execution. For your conversion funnel to be successful, you need to approach each sale in a consistent manner.

You must set certain quality standards and ensure that you are not missing any mission-critical steps that can drastically increase your chances of success, similar to the discovery sessions we conduct.

You will need to produce what are known as SOPs, or Standard Operating Procedures, for your sales process.

Tools to Support Your Conversion Funnel

The right tools can be game-changers in various aspects of your sales funnel. I categorize tools into the following areas:

1. Analytics: Tools can provide important insights into your performance and indicate areas for improvement.
2. SOP Implementation: They can help you standardize your sales process and ensure that the sales team doesn’t deviate from your best scenarios too much.
3. Convenience and Efficiency: Tools can help your team perform their tasks faster and sometimes even automatically.

To start, you will need at least the following tools:

• Google Analytics: To track your website and gather data on site visitors and user interactions.
• Salesforce: To support your SOPs and cover your team’s needs for anything related to daily work.

While I’m not insisting on using these specific tools, my recommendation comes from over a decade of experience. It’s generally cheaper and more efficient to keep your toolbox lean and clean.

Principles of Building Funnels

Here are some fundamental principles of building effective sales funnels that I’d like to share based on my experience:

Trial & Error

Conversion funnels are designed to replicate your most successful sales scenarios. This means you first need to identify what works best. Remember, the landscape is always changing, so continually search for and refine your best practices.

Don’t expect your sales funnel to be set in stone. You may find a preferred method of selling your product and see fewer changes over time, but significant adjustments will be necessary along the way. Be prepared to start from scratch repeatedly as you fine-tune your process.

Speed & Agility

One of the most important yet least acknowledged aspects of conversion funnels is how you manage change.

Build your funnel and teams—including those who execute the funnel and those who design it—in such a way that you can implement changes swiftly.

Conversion funnel optimization is crucial for streamlining the customer journey from initial interest to final purchase. If you discover a new improvement, you should ideally be able to implement changes overnight. This can be challenging if you’ve experienced a “hardcoded” implementation of your CRM system.

Opt for low-coding tools and prefer out-of-the-box features. Even if you must pay as much for configuration, the time savings will be beneficial.

Keep It Lean

I consistently emphasize this point to my clients, especially those coming from larger consultancy firms: Do not over-invest in your hypotheses.

Accept that you don’t know everything. Embrace your lack of knowledge and use it as a learning opportunity.

Once you find something that works well, then consider making a significant investment to enhance it, making it work better, faster, and more efficiently. Keep your approach lean to remain flexible and responsive to new insights and changes in the market.

Benefits of Building a Conversion Funnel

Another topic I wouldn’t want to miss the opportunity to discuss is why you may want to start building your conversion funnel immediately.

Sales Forecasting

By splitting your customer decision-making process into multiple stages, you will inevitably begin analyzing conversions at each stage. This enables you to gather detailed knowledge about which customers are likely to convert into sales at which stage and with what probability.

This analysis will result in a very accurate sales forecasting report. According to Salesforce, 50% of sales forecasts are within a 10% accuracy range, meaning that roughly half of the forecasts are quite precise.

More Sales

If you “do it right,” you will end up selling more. Although it may sound strange, building a funnel will become a goal in itself, but as a by-product, it will drive more sales.

Invaluable Product Knowledge

Through this process, you will learn more about your product and how your customers purchase it than you could in a lifetime. The depth of insight gained here cannot be undervalued.

Final Words

Conversion funnels or sales funnels are fundamental parts of any business. You have one, whether you know about it or not. Remember, you can build your funnels both online and offline—on your website, in your emails, using messages, through running ads. Moreover, you can create a funnel experience in your offline stores, in 1-on-1 meetings, sales calls, and more.

If you need a helping hand implementing your funnel and conversion process, talk to me. Talk to my team. The first consultation is always free, so don’t hesitate to use that leverage. At the end of the day, any tools that can help you grow your business should be utilized.

Cheers,

J.