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Sales Funnel Explained – Stages of the funnel (part 1 of 3)

Business StartUp Tips, Processes & Productivity, Sales Funnels

Updated April 2021

This Sales Funnel Explained Series is for business owners who want to know how to increase their leads and customers. There is a method to increasing sales and the SALES FUNNEL provides a framework to achieving that goal. The series is in 3 parts:

  1. The Stages of the Funnel
  2. The Marketing Tools for each stage of the funnel
  3. The Marketing Messages for each stage of the funnel

So, let’s get started!

PART 1: The Stages of the Funnel

But first, what is a Sales Funnel?

A Sales Funnel is a series of steps designed to guide your customers towards a buying decision. This process is where your marketing efforts come in to play – through ads, emails, website, landing pages and more. The whole purpose of the funnel is to:

  1. build traffic
  2. create leads
  3. convert customers.

In turn you help your customers/visitors achieve their goals or desired outcomes and, at the same time, your business achieving its own (ultimately that will be SALES).

The 3 Stages of the Funnel

We will begin by outlining the 3 stages of a basic funnel. Sales Funnels can become complex, split into four, five, six or even seven stages. But for those just starting out, keeping it simple is the best place to start. So we start with 3 stages to a funnel:

  1. Top of Funnel: the first stage is about building traffic – your aim is to get as many people as possible entering in and becoming aware of your offer.
  2. Middle of Funnel: in the second stage the goal is to build leads – as potential customers become more aware of your offer and perhaps make small purchases with you.
  3. Bottom of Funnel: in the third stage you are converting leads into customers – they come out through the bottom making a purchase and becoming a customer.

Typically, not everyone makes it all the way through, some people may lose interest along the way or they choose a different provider and opt out – and that is fine. The goal is to guide your pool of traffic into becoming leads and potential customers and then converting them to being paying customers as they make their way through to the bottom of the funnel and purchase from you.

Let’s look at each of the stages in more detail…

TOP of FUNNEL: Getting People To Know About You

The Top of the Funnel is about building traffic. We call the people who enter in here a “cold audience”. They’ve probably never heard of you before and they haven’t done business with you. If we think of the sales funnel process as “strangers” becoming “friends”, this is where we meet strangers (the good kind).

At this point, the potential customers have probably never heard of your business, your products or the services you offer. They may not even be aware of the “problem” or “pain point” you or your offer solves. But in coming across your marketing and messaging at this stage they are now becoming slightly aware (because your content is teaching or pointing it out to them). They either already know or are now realising they have a “want” or “pain”, a need to be fulfilled, or something that they want to achieve. And YOU have the solution

MIDDLE of FUNNEL: Getting Contact Information of New Leads

The Middle of the Funnel is about turning traffic into leads. You are now working with a “warm audience”. Consider this stage as  guiding them from being a “stranger” and becoming an “acquaintance”. The potential customers who have entered your funnel have:

  • started to engage with you;
  • become aware of your business, product, service.
  • started warming up to you.

This is the time to make a small offer that connects their “problem/want” to your product/service. The purpose of this small offer is to get their contact information so you can continue to build a relationship with them in whichever format you prefer to do that (email, phone, mail).

A Lead Generation Campaign that uses lead magnets, landing pages and an email marketing platform is the typical digital marketing strategy used to get this contact information.


If you’re looking to accelerate your business growth online and get PERSONAL, HANDS-ON training to create your first (or next) online business or funnel…then register for the One Funnel Away Challenge straight away.

One Funnel Away Challenge

BOTTOM of FUNNEL: Getting New Leads to be New Customers

The Bottom of the Funnel is about converting leads into customers. Those people who have continued down into the bottom stage of your funnel are now “qualified prospects”. You are now connecting with a “hot audience”. Consider them as a “friend”, as ideally, they have chosen you over the competition and are ready to make a purchase.

That is really a basic outline of the stages of the funnel. In the following posts, we look at the marketing tools and marketing messages that are best used through each stage of the funnel.

The Last Word

Now that you have a basic understanding of what a Sales Funnel is and the different funnel stages, the next step is to discover which marketing tools are best used at each stage of the funnel.

>> Read about the marketing tools for each stage of the sales funnel

>> Read about the marketing messaging during the sales funnel stages here.

Do you have a Lead Generation Campaign in place?

A Lead Generation Campaign is a marketing strategy for attracting leads that is used in most funnels. Which type of magnet should you use? Don’t know? Get your copy of The Lead Magnet Playbook to find out which would be best for you…

sales funnel explained

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