Lead Funnel - What is a Lead Generation Funnel?

In this article, we discuss everything you need to know about lead funnels. We cover what a lead generation funnel is, all its different stages, and more!


What is a Lead Funnel?

A lead funnel is a figurative funnel that represents the journey a lead takes to become aware of your product or to become a paying customer.

A lead funnel is made up of different stages that a lead has to pass to get through the other end. At the beginning of the journey, the lead first becomes aware of your product and towards the end, the said lead turns into a paying customer.

Similar to this, lead generation is essentially a process to capture the interest of your potential customer/client. As the lead goes through the sales pipeline, companies nurture their specific needs till they are ready to buy the product.

The very 4 basic steps of a lead funnel are:

  1. Awareness - This is a stage where your lead becomes aware of your product or service.
  2. Interest - This is the stage where your lead becomes interested in purchasing your product
  3. Decision - This is the stage where further inquiries about your lead’s specific needs are met to decide which product is most suitable for your lead.
  4. Action - This is the stage where your lead finally decides to purchase your product to become a customer.
lead funnel

We discuss these stages in detail in the corresponding sections.

What is a Lead?

A lead is basically an individual, business, or organization that shows interest in your product. These are your potential customers, also known as prospects. The goal of any company is to identify these leads and make sure they become a paying customer.

The goal of the lead generation funnel is to move these interested customers or “leads” along the lead funnel.

Stages of a Lead Generation Funnel

The lead generation funnel is a very systematic structure. So naturally, it has a bunch of figurative stages.

Each stage is designed such that the lead moves forward in the journey within the funnel to the next stage. This is done by creating a personalized experience and specifically catering to your customer needs.

A lead funnel is primarily divided into three sections.

  • TOFU - Top of the funnel
  • MOFU - Middle of the funnel
  • BOFU - Bottom of the funnel

These sections basically describe what part of the funnel your lead is in.

But a typical lead funnel is split into specific stages. These stages are as follows.

1. Awareness - TOFU

This is the first stage of your lead funnel. The entire purpose of this stage is to create awareness about your product. So all activities that get people to notice your brand are part of this stage.

There are a number of different ways you can achieve this. The ultimate goal here is to create marketing initiatives that showcase your brand before your potential customers.

For this, you’ll have to create comprehensive indirect marketing activities such as search engine optimization, content marketing, social media marketing, and paid advertising.

The idea of using these inbound marketing techniques is simple. Companies during product development and market research identify their customer’s specific needs are. Now with these inbound marketing methods, you have to reach your customers with content and resources that directly cater to those needs. The idea is to create relevant content so your potential customers get invested in your brand.

2. Creating a Database

Now that you have a pool of audience interested in your product the next step is to create a detailed database containing all relevant information about the customer.

This is an important step in creating an effective lead funnel. All the information will help you design the corresponding parts of the journey.

lead funnel

Depending on your specific needs you get your potential customer to fill a form with all the basic details. These might include Name, email address, etc. Moreover, now that real users are willing to share this personal information with you, this sort of validates your product.

Coming back to the data, you’ll essentially have to create a database with all relevant information about your product. This will allow you to personalize the next steps for them.

You can collect this data by linking a landing page CTA to your ads, blog posts, social media posts, etc.

3. Targets and Prospects - BOFU

With your database, you can figure out where your leads have come from and what stage of your lead generation funnel they are in. For example, some leads might want to directly buy your product, whereas others might still be hesitant.

Your goal at this stage is to convert these potential leads into prospects who are willing to buy your product. The way to do this is by engaging with your leads to help them understand how your product can work for them.

However, it’s also important to make sure your resources are directed towards leads who can actually prove as possible converts. Basically, you have to make sure you optimize your processes to get better results with less time and resources spent.

4. Marketing Qualified Lead and Sales Qualified Lead - MOFU

Your leads can either be a marketing lead or a sales lead. Marketing leads are generated through marketing initiatives like social media, content marketing, advertising, etc. Whereas a sales lead might have come through a landing page or sign-up form.

This is the final role of a marketer in this lead generation process. Now that the team has tried to convert these leads into prospects, the next step is to make the actual sale. In case, when a lead has purchased the demo or opted for a free trial they become marketing qualified leads. Now the sales team can pitch a suitable model to the lead.

Now, not all marketing qualified leads might actually be relevant to the sales team. Now the sales team screens the leads to understand what their specific requirements are. If the requirements match with the product these leads are then sales qualified.

5. Recycled

Not all leads will immediately want to buy your product the first instance you interact with them. Many prospects are probably just passively engaging with you without any intention of purchasing your product. But that doesn’t mean they won’t be interested in the future either.

So cultivating these leads becomes important. You can do this by continuing to engage with them further - helping them with any information they need.

6. Opportunity

Now with the set of sales qualified leads, the real goal of the sales team is to make sure the lead makes a purchase. For this the team tries to utilize any opportunity they get to sell the product. Teams end up offering discounts, coupon codes, or other incentives so the prospects are prompted to buy.

7. Customers

Finally, this is a stage when the prospect turns into a customer - that is the lead decides to buy your product. This is usually the last stage of any lead funnel.

However, the journey doesn’t end here. Cultivating and engaging with your customers is important to retain them. So the goal after the final stage is to ensure the customer is happy and provide great customer service.

There you go! These are the stages of a lead generation funnel.

How to Optimize your Lead Funnel

Creating a functional lead funnel can be a difficult task. But here are a few ways you can optimize your lead funnel.

1. Create automation

Not all parts of the lead funnel can be monitored manually and as the system scales, it gets increasingly difficult to do that. So it’s a good idea to use automation anywhere possible. For example, you can have a chatbot that takes care of customer queries. Or you can automate email replies and any other processes.

2. Cultivate good relationships with your customers

Retaining existing customers is very much easier and cheaper than acquiring new leads and turning them into paying customers. So customer retention initiatives are definitely important. You will have to focus on increasing customer loyalty through incentives or customer loyalty programs. This will help retain your existing customers and make sure they spread the word about your product or service.

3. Create personalized messaging

Your customer, lead or prospect doesn’t want to hear about your product features that are not directly relevant to them. Here’s where your database about your customer comes in. You’ll have to make sure all your messages are personalized at all stages of your lead funnel.

4. Track metrics

It’s important to understand how your current lead funnel is working out. If a sizeable amount of leads are bouncing off at a certain stage of your lead funnel you’ll have to figure out the reason behind it and how you can fix it. But first, you’ll have to identify such cases. For this purpose, tracking your retention numbers and bounce rates becomes important.

5. Upsell and cross-sell

Finally, you can increase your sales by upselling and cross-selling. Upselling basically helps you sell increasing expensive versions of your product to your customer. Whereas, cross-selling refers to a strategy where you sell additional products to accompany the original purchase.

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