What is a Sales Funnel Chart?
A sales funnel chart is an inverted pyramid chart used to illustrate the steps in a sales process, from lead generation to a completed sale. The top of the sales funnel is the widest, representing the largest possible universe of prospective buyers. The number of potential customers decreases at each step in the sales process and this is represented by a progressively narrower funnel.
A sales funnel chart is a good way to visualize the steps in a sales process. It shows what actions a prospect takes and what actions are directed at the prospect that ultimately lead to a decision to buy and become a customer.
Sales funnels can also be useful for diagnosing conversion problems in your sales process. Combine the steps in the funnel with data from your analytics tools and plot at what steps leads are lost. The chart can also illustrate where bottlenecks occur in the sales process.
During onboarding of new team members or when communicating with vendors, sales funnel charts can also help management to efficiently communicate the sales process.
How to Make a Sales Funnel Chart
Step 1: Define the first step of the sales process
The first step in most sales processes is usually some form of outreach to the target market: direct mail, advertising, cold-calling, etc.
Type a description of the first step in the first row of your sales funnel chart.
Step 2: What happens next?
Enter a description of the next step in the process in the second row of the chart. In our example the prospect who received an email clicks through to a website and requests more information.
Step 3: Repeat this for each step in the process.
Basic Steps for Making and Using a Sales Funnel Chart
- Describe your "lead generation" method. How do you generate initial leads? When trying to sell your product, what's the first thing you do in order to reach customers? Do you email them? Call them? Buy a radio ad spot? Put up a website? Write down your lead generation method(s) as the starting point for the sales process.
- Walk through the steps a customer takes through the sales process. Starting with your lead generation method, begin walking through the steps that a customer takes in your sales process-outline them in sequential order, all the way from lead generation to closing the sale.
- Review the steps in your sales process. Once you've outlined the steps in your sales process, review it and make sure you've captured all of them and that they are in the correct order.
- Build the sales funnel. Once you're sure of the order of the steps in your sales process, put them onto the sales funnel diagram.
- Establish measurable metrics for each section of the funnel. Once you've established your sales funnel, begin identifying metrics to measure just how many potential sales are lost at each section of the funnel. These metrics will help you identify which parts of the sales process need the most improvement in order to improve your lead conversion rate.
- Analyze the metrics. Once you capture sales process data, you can begin performing analysis on which stages of the sales funnel need to be improved.
- Refine your sales process. Based on your analysis, determine which sections of your sales process need the most improvement, determine methods of improving those sections, and then implement necessary improvements.
How to Use a Sales Funnel
Reaching your market usually involves some kind of lead generation, qualification, proposal and sale. Expressing this as a process, or sales funnel, makes it easier to focus on the best prospects, estimate sales revenues and measure success.
As customers pass through this process you can start to measure the success of each step: What percentage of emails sent result in a request for more information? How many inquiries lead to a quote? How many quotes lead to a sale? How much revenue is generated from each mailing?
This makes it easier to identify ways to improve your sales process. If too few inquiries are coming in, the problem exists in the early stages of the process-list selection or mail-piece design, perhaps. If too few quotes lead to a sale then pricing could be the problem.
Once you learn the average number of leads that result in a quote and the number of quotes that result in a sale you can forecast sales much more accurately.
Sales Funnel Chart Examples
The best way to understand sales funnel charts is to look at some examples of sales funnel charts.
Click on any of these sales funnel charts included in SmartDraw and edit them:
Browse SmartDraw's entire collection of sales funnel chart examples and templates