It should go without saying that lead generation is one of the most vital functions of any business. For businesses looking to increase sales, increasing their lead generation should be their core focus. Of course, marketing and lead generation are tricky subjects. According to the Chartered Institute of Marketing, marketing is defined as the process of ‘identifying, and satisfying customer needs profitably‘. To identify the people interested in your offerings, you need a lead generation funnel.
But what is a lead generation funnel?
Just the way it sounds, your lead generation funnel is how you ‘funnel’ leads through your business and marketing to convert them into customers. These funnels can be as simple or complicated as you require.
Of course, many businesses forgo formalizing their lead generation funnel, choosing to just ‘take things as they come’. This is probably a mistake. Without a solid strategy for your marketing endeavours, you could end up spending hundreds, or even thousands of dollars, without any concrete results to show. A lead generation funnel allows you to quantify your marketing and see exactly how to convert leads to customers.
Setting up a lead generation funnel isn’t complicated once you understand how they work.
Your lead generation should be tailored to your business, but when you’re starting out, it’s fine to copy a funnel from somewhere else. Once you understand how they work and the results they bring, you can begin to create your own.
Everything Begins with Traffic
Without traffic, you have no way of getting leads into your funnel.
Traffic can come from three possible sources:
- Paid: advertising or PPC
- Owned: your website, social media, blog posts or other content marketing
- Earned: referrals, reviews or word of mouth
The first step of your funnel should be converting this traffic into a lead, or potential customer.
When we look at the sales process, and the sales funnel, you can see how the lead generation funnel is similar. When we make a purchase, we first become aware that we have a problem. Then we look for solutions, consider which one bests suits us, and finally take action.
“Your lead generation funnel should help move potential customers from attention to action.”
Essentially, you’re pouring traffic into the top of the funnel, and customers are coming out the bottom.
To understand exactly how the lead generation funnel works, let’s go over each stage in the buyer’s journey.
Stages of the Lead Generation Funnel
Stage 1: Awareness
Stage one of the lead generation funnel is awareness – when a potential customer first hears about your business. You can create awareness through SEO, paid advertising or social media.
Stage 2: Names
Stage two is when you have successfully captured a visitor’s details, though these cannot yet be considered leads. Once you have their contact information and permission to market to them further, they have the potential to become leads.
Stage 3: Engaged
Gathering names and contact information is only the first step in converting visitors to customers. You can move them through the lead generation funnel by enticing them to further engage with your content. This can include downloading an ebook, attending a webinar, or something similar.
This stage is important, as you don’t want to waste time on visitors who aren’t ready to engage with your business.
Stage 4: Target or Prospects
Once a visitor engages with your content or marketing, they move further down the funnel and you can implement lead scoring to determine if they are a viable lead. Those who fit the profile you are looking for become prospects, while those who don’t can be moved to a different funnel.
Leads can be scored on any number of factors, including industry, company size, age or job title.
Once visitors become prospects, you can begin nurturing them and moving them further down the funnel.
Stage 5: Marketing Qualified Lead
Once a prospect has been identified as being viable, they become qualified for further marketing. These leads should have demonstrated a definite interest in your products.
Stage 6: Recycled
Not all prospects become viable leads, but this doesn’t mean they should be forgotten or purged from your database. The prospects who have demonstrated interest in your product or service but aren’t yet ready to commit should be moved to a nurturing funnel. This way, they can be nurtured until they are ready to be moved along.
This nurturing process should include a steady stream of educational materials, keeping them informed of the benefits of your products and services.
Stage 7: Sales Qualified Lead
Once leads have demonstrated a keen interest in your products or services, and have engaged with your company, they can be analysed to identify whether they are ready to be handed over to sales. If they are, they become a Sales Qualified Lead. If they are not, they go back to the marketing team to receive further nurturing.
Stage 8: Opportunity
Once a lead has been handed over to sales, they become an Opportunity. This stage should be self-explanatory. Here, you have the opportunity to sell to them. If they make a purchase, they become a customer. If not, they can be handed back over to marketing for nurturing until they are ready to commit.
Stage 9: Customer
Another self-explanatory stage, this is when a lead becomes a customer and has completed a purchase.
Every company will have a slightly different sales process, and it is important to recognize which stages are applicable to your particular sales process.
While the funnel concept may seem simple, it is important to remember that, unlike any real funnel, the lead generation funnel has no sides, and prospects can leak out at any stage. You will only ever convert a fraction of the traffic you bring in.
The more you understand your customer needs, and the journey they will have to take, the better your funnel will perform. With that understanding, you can customize the lead generation funnel to maximize the number of visitors who eventually become customers.
The Three Pillars of a Strong Lead Generation Funnel
While real funnels don’t need support pillars, the lead generation funnel does. These three pillars make up the backbone of your funnel, and the stronger they are, the higher your conversion rates will be.
As we have previously discussed, your lead capture can have a huge impact on your marketing.
Not all visitors are viable or qualified to become leads. Scoring and qualification for leads is vital to ensure that no time or money is wasted selling to uninterested prospects.
Lead nurturing is the process which allows you to slowly entice and educated unqualified leads, growing them into viable prospects. More than 73% of “leads” are not actually ready to be sold to. Without good lead nurturing, any visitors who fall out of the funnel are lost for good, decreasing the overall efficacy of the funnel. With nurturing, you can increase the number of visitors who eventually convert.
According to Neil Patel, businesses who properly nurture their leads can see an increase of 450% in qualified prospects. Those who nurture and grow those customer relationships see 50% more sales at a 33% lower cost.
How To Create A Lead Generation Funnel
Now that you understand what a lead generation funnel is, and why they’re important, how do you go about setting up your own?
Map out the journey one your prospects must go through in order to become a customer.
How do they come into contact with your brand? What are the important conversion points? Of course, no two customers will have exactly the same journey.
One may see an ad on social media, fill in a form on the landing page and make a purchase immediately. Another may hear about the company from a friend, make a phone call and spend three months deliberating. The customer journey is almost never linear, and that’s okay.
Many people have written about mapping the customer journey.
From there, you can decide how each stage of your funnel should look.
- Traffic: How will you bring traffic to your website and create awareness? Social media, content marketing and paid advertising are all good ways to increase traffic.
- Lead Capture: How will you capture lead details? Will you use one landing page, or multiple? Will you use social media Lead Gen forms?
- Lead Nurturing: How will you nurture those leads who aren’t ready to convert? How will you nurture customers and create repeat buyers?
Your lead generation funnel will grow and improve with time, so don’t feel too pressured to create a perfectly leak-proof funnel immediately. Simply formalizing your funnel, and deciding on the marketing efforts which will be aimed at buyers from each stage will help you to improve your conversion rates and increase your marketing ROI