A sales funnel is a marketing strategy to convert strangers into leads, leads into prospects, and prospects into sales. It has three sections: a top, a middle, and a bottom. The goal is to get prospects into the top of your funnel and out the bottom. This makes a completed sales process that results in a closed deal, which is exactly what you want for your small business.

The Anatomy of the Sales Funnel

What is a sales funnel, and how does it work? It’s a visual representation of how sales work. You have a business. Your business offers a product or service. A target market exists for your offerings. Within that target market are hundreds, thousands, perhaps tens of thousands of potential buyers.

The problem is, most of them don’t have a clue who you are. These people are at the top of your funnel, the widest part. Here you have the most potential buyers, but they are the furthest away from being closed sales.

The first thing you want to do, then, is reach out to these prospects and let them get to know you. In other words, put them into the top of your funnel.

Once in your funnel, these people are leads, no longer just prospects. You can then start working them from the top to the middle of the funnel. At the middle stage, you’re building rapport, establishing credibility, and giving them a reason to buy.

The last stage of the sales funnel is the bottom. If you’ve seen Glengarry Glen Ross , this is Alec Baldwin’s favourite part of the process. The close. You’ve identified a prospect. You’ve gotten them into the funnel by making your brand known to them. You’ve worked them through the middle stage by establishing rapport and building value. Now you get to ask for their business and close the deal.

Why use a funnel to depict the sales process? Because it represents the numbers-game dynamic of sales. Only a small percentage of your overall prospects turn into legitimate leads. And only a small percentage of those turn into sales. So a funnel shape makes sense: wide at the top, narrow at the bottom. The more you put into the top of the funnel, the more comes out the bottom.

The Top of the Funnel

Before you can work prospects through your funnel, you must get them into the funnel. That means they need to know who you are and what your business does. Brand awareness matters. How do successful companies get prospects into their funnels? They market, advertise, network, and talk to people. Here are some specific sales funnel strategies they use:

Search engine marketing: Companies do market research, figure out what their prospects are searching for, and bid on those keywords. Ever Google a product or service and see a Groupon ad pop up at the top of the page? That’s Groupon trying to get you into its funnel.

Social media marketing: Platforms such as Facebook and Twitter offer heaps of user data, letting companies laser-target their marketing. Consider Mixergy, which sells coaching services to aspiring entrepreneurs. It uses social media to locate and target people interested in starting a business.

Referrals: Current customers help companies pull other people, such as their friends and family, into their funnel. To get referrals, businesses can simply ask for them or, perhaps better, provide incentives.

Face-to-face marketing: Technology has opened infinite doors for marketers. But nothing can ever replace old-fashioned face-to-face marketing. Sometimes the best way to introduce your brand to people is to get out there and literally introduce your brand to people.

The Middle of the Funnel

Now you have people in your funnel. Rather than just a sea of prospects, you have leads. The middle of the sales funnel is where you turn these leads into customers who are ready to buy. But how? By building a relationship and demonstrating value.

Consider Groupon again. When you click on its ad, you end up on something called a landing page, also known as a lead capture page. You’re officially in the sales funnel. Now it’s time for Groupon to initiate a relationship and establish value. Groupon’s landing page prompts you for your email. That’s so Groupon can stay in touch (relationship). You also receive a $10 off coupon if you become a new member (value).

Then, once you’re on Mixergy’s website, you can find a host of deals and values. The company also has a risk-free guarantee that it makes sure new customers can see.

The Bottom of the Funnel

You’ve built a relationship. You’ve demonstrated value. The customer is ready to make a decision. This is where you get the customer through the bottom of your sales funnel and into the "closed" category.

How do you do it? It’s simple. Ask for their business. The number one common trait among highly successful salespeople is the total lack of fear of asking for the sale.

What if your sales funnel takes place online and not face-to-face? How do you ask for the sale there? You need a strong call to action, or CTA.

When you scroll through Groupon’s deals, you can see its closing strategy at work. Its CTAs are strong. The website highlights exactly how much money you can save by taking advantage of each deal.

Mixergy’s closing strategy is savvy and unique. It offers just enough free content to pique your interest. Then, when you try to click to get more, boom. You’re hit with the sign-up page, which always offers you a special deal.

Sales can be frustrating and seemingly hazy but actually follow a set process. Learning how to work the sales funnel helps you master that process and boost your business.