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Sales Funnel: Definition & Stages

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  • 0:02 What Is a Sales Funnel?
  • 0:53 Stages of a Sales Funnel
  • 4:02 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield
The sales funnel is a fundamental marketing process that sales organizations must understand. Learn how consumers move from learning about a product or service to making a purchase for the item.

What Is a Sales Funnel?

Depending on the type of product a company is selling, there are different methods and timelines for generating sales. If you are selling candy bars, the sales process is quite fast and little consideration and information is needed about the buyer to make the sale. However, if you are selling homes, you know that the timeline is much longer and the purchase requires more thought and decisions on the part of the buyer. The steps a buyer takes from learning about a product to making the purchase are called the buying process. At any time, the consumer may drop out of the buying process if they determine the item is not right for their needs.

A sales funnel is a marketing approach that allows an analysis of buyers as they go through each stage in the buying process. Knowing and understanding the stages that a buyer goes through can help companies 'funnel' potential buyers, or prospects, into customers.

Stages of a Sales Funnel

There are many stages in the buying process that can vary based on the complexity of the purchase. Let's take a look at each.

1.) Awareness - The consumer becomes aware of a product or service. They may see an advertisement for the new product that catches their attention. Awareness can also happen through word-of-mouth marketing from friends or family. Other times, consumers learn about an item through researching a problem and looking for a solution.

A consumer might not move past the awareness stage, depending on how well the item meets their needs. For instance, a vegetarian might learn about a new steak dinner at the local steakhouse. They become aware of the new product but will not likely move forward in the sales funnel because they have no interest in purchasing meat.

2.) Interest - The consumer considers whether the product or service is of use to them. In the interest stage, a consumer isn't making a commitment to purchase nor are they sure if the offer fits their needs or wants. They are collecting information, learning about an item, and considering how the product might be something they want.

Returning to the home sales example, you show the home to a potential buyer, who may then look at the layout, the features of the home, and the location to see if the home might work for them. They have moved to the second stage where they are aware of the home and are learning more about the house to see if it is a fit. They might continue to consider the home and think about how perfect the house is for them, or their interest may end if the house doesn't meet their needs.

3.) Desire/Decision - The consumer determines that the item is a good fit. They are definitely interested, but is the interest enough to cause them to take action? At this stage, the consumer is deciding if their desire for this product is greater than any other product at this point in time, since their purchasing this one item could affect their ability to purchase other items. They may imagine themselves with the product or service and grow in excitement in having it.

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