What is a sales funnel
I've created this blog article about sales funnels to give you a more indepth view of what a sales funnels is, how they work, and some of the key metrics you need to consider when setting up your own sales funnel for your business. By reading this you will gain insights into the types of sales funnels and how to make them successful to start generating 10x more customers every month.
If by the end of this article, you think you might need more help in setting up sales funnels for your own business, then please click one of the contact us buttons and send us a message. I hope you enjoy the article, if you do have any further questions please feel free to ask, Happy funneling.
The Concept of Sales Funnels
The concept of a sales funnel is often misunderstood and believed to be just a mechanism for lead generation, whereas in actuality a sales funnel is already present in every business and is represented by the process of taking a new prospect through to being a customer, educating and nurturing them along the way.
This is achieved through a series of specific steps that build trust and rapport and educate's the prospect on your product/service, as well as the benefits it can provide. By offering enough information to demonstrate you can reliably solve their current pressing problem or need, the confidence of the prospect will increase along with the likelihood of the interaction resulting in a purchase from your business.
This transactional ballet has been in practice for centuries, dating back to when people exchanged goods based on perceived value. Although we are no longer carrying a pig under our arm to market, the fundamental concept of value-based trading remains; only now it's both financial transactions and the exchange of value that form the foundation of capitalist societies.
So in its essence, this is a sales funnel, the journey from prospect to customer, via any movement/transaction of value from one person to another. When businesses think of sales funnels, they usually visualise landing pages, lead magnets and a request for an individual (whether business or consumer) contact details. Where some of these aspects are definitely true and do form part of what is considered to be a modern sales funnel, the reality is much more complex and uses very specific sequences of actions, steps, marketing psychology, automation and math……yes, math.
Types of Sales funnels
Most business sales funnels are based around models that have been tried and tested over time to maximise efficiency and effectiveness. However, each sales funnel must be tailored to the specific needs and target audience of the business, and it isn't a one-size-fits-all when deciding on the type of funnel you need, the steps in the process, the objectives and how each step encourages users to take the next action. They differ depending on the overall objective of the funnel, the product type, the price point and the industry.
Some of the more common types of funnels are:
High Ticket Sales Funnels
Mid-ticket or Webinar Funnels
Low-ticket products or self-liquidating funnels
Quiz Funnels
Local Funnel
Evergreen Funnels
In reality, most funnels are built from a singular variation or a combination of 3 core funnels, linked or stacked together; these are:
High Ticket
Mid Ticket
Low Ticket
Each of these funnels represents a specific product level or price and can be used to build sophisticated funnel sequences that can provide a reliable and consistent influx of leads into your business.
The High Ticket Sales Funnel
This type of funnel is focused on high-ticket sales, which are usually used with high-value products, services, and coaching programs priced around the £3k to £50k mark. This is a straightforward funnel with the core objective of getting someone on a call. Yes, you still have to speak to people.
For a high-ticket product, a prospect will require a certain level of confidence before they will part with their hard-earned cash for your product or service. This increased confidence is only really achievable after having a conversation with the prospect. That is, however, unless you're a famous face and your brand already carries significant weight in the marketplace; for most of us mere mortals, however, we need to speak to people so they can understand what we do and how we can help them solve their problems.
The high-ticket sales funnel usually consists of the following steps: starting with an ad or other traffic source. This is used to present the prospect an offer or opportunity. This offer needs to generate enough curiosity that the prospect clicks the link to the opt-in page, usually via a free download, access to specific content, or something of that nature. The prospect then downloads the lead magnet.
To create an effective lead magnet is in itself an art form . But to give you some quick insights, it needs to be able to solve a single problem and solve it fast so the prospect gets value straight away. This is the start to building trust with the person, who up until today may have never even known you existed on the planet. The lead magnet should be an element of your core service or product, and there should be a natural follow-on from this solution to your core product or service.
Once the prospect has solved that single issue, they naturally need your service to complete the solution to their wider problem, which is usually at the root of what they are searching for, whether they know it or not. The theory is each lead magnet should either reveal the next problem or you provide the context as to where in the wider solution this smaller fix sits. Then by using your service, they can alleviate the larger, more significant problem, whatever that may be.
The next page we use in our high-ticket funnels is an authority booster page; this is often overlooked but is one of the most important pages in the whole funnel. The authority booster page not only repeats the messaging around what they have downloaded and the problem it solves but also provides further training and instruction on how they can use the lead magnet in their business straight away to help them. This training is concluded with information about the next problem/the wider solution and your core service offer.
You then present a visual call to action, where the prospect can book a call, usually via a large, unmissable button.
The page design for these types of pages is relatively simple, and this is done for a reason, as the old saying goes, "A confused mind doesn't buy," so in the interest of user experience and conversion rate optimisation, we make the process of navigating these steps as simple as possible. That doesn't mean what's happening behind the scenes is any less thought out; it just means, on the face of it, there is less friction in the journey for a prospect who has shown curiosity about your business, downloaded something of value, and started to build enough confidence in your business or solution to initiate a call.
The third page in this sequence is the booking page; this is usually facilitated via a calendar booking form, either Calendly or Go High Level, as, to be honest, it's an amazing piece of kit that can do everything you need for your sales funnel and more. Anyhow, I digress. The booking page again is a simple design that allows a prospect to book a call directly in your calendar. The details should auto populate from the form they filled out to download your lead magnet, as nobody likes entering their details twice, and you should allow time in your calendar so people have options for when they want to book an appointment with you.
Do not set the advance booking time to more than 2 days in advance, however, as your show rates will dramatically reduce. The idea of this call is not a full-scale presentation; it is an opportunity to qualify the prospect and for them to qualify you. After all, you might not be a good fit for them, and they might not be a good fit for you. In my eyes, you're doing each other a disservice by wasting people's time with full-scale presentations if they are not a good fit in the first place. This introduction call is usually between 15 and 30 minutes long and is designed to qualify the prospect via a question-and-answer-based system (I will write more about the sales process in another blog). On the thank-you page after someone has booked the call with you, it's essential you get the prospect excited about the concept of meeting you and how you can help them solve their problem. So add more information outlining how amazing your product is and how it's going to help them achieve their goals, effectively; sell the solution once more. Also list out the types of questions (not the actual questions) and the exact process you are going to take them through on the call; this ensures both parties fully understand the objective of the call.
And that's it for the steps... wait, what if they don't move to the next step?
This is where the nurture sequence comes in; as long as the prospect takes the first steps and gives you their first name and email, then you can follow up with emails offering more value.
After all, they might not even be ready to have a conversation with you; they may want more information, case studies, more in-depth information on problems you solve, the context of the problem, common questions that are asked, and the list goes on. But the idea is to provide a continued stream of value, to the point at which the prospect decides, "You know what, I will book a call". In a weird sort of way, you don't actually want prospects to book a call straight away, as there is a missed opportunity to provide even more value and build rapport automatically, so that when they do get to the point of booking, they are already in a good place and more likely to buy your product or services.
The high-ticket funnel is always the advised starting place if you have a higher-priced product or service, as this is the easiest one to get right, as you have much more leeway with conversion metrics and still remain profitable.
Mid Ticket Sales Funnel
The mid-ticket sales funnel can be used for a variety of purposes, including intro product sales, webinars, and evergreen launch funnels. The whole basis is to take a prospect on a journey where they may give you their details up front, but in this model we are looking to make a sale directly or register for a webinar, rather than get the prospect to jump on a call. The mid-ticket sales funnel is usually to sell products and services around the £199 to £2999 mark and is a little more complex to implement and indeed to make successful and profitable as a standalone funnel than that of the high-ticket sales funnel.
As before, the journey starts with a traffic source, whether organic, email or paid ads. The traffic source sends prospects through to a landing page, and as before, to download a lead magnet.
We need to reduce the prospect's assumed level of risk in order to close the sale. This risk of wasting money, looking stupid, having to start over and redo again, and not being seen to have been cheated. These are difficult to overcome but necessary for the prospect to give you their money for your product or service.
The level of perceived risk increases with the higher the price point and is present on every sale.
We start to mitigate this risk via a few mechanisms. Building confidence through conversation, content, case studies, testimonials, accreditations, and guarantees are all things that make the process of buying your product or service a more trustworthy transaction. These can be presented in different formats, on web pages, email, presentations, videos, or whichever medium you're using in your funnels.
Naturally, the lower the cost of the product, the less risk, so in the mid-ticket funnel system, in some cases we can remove the need for a call and use content, webinars, and video sales letters to present the social proof and sufficient information to encourage the sale.
Once the prospect has downloaded the lead magnet and watched the training with the upsell, rather than a button to arrange a call, they are presented with either a registration form or product that addresses the next issues. It's important that the product you're selling isn't just a slightly better version of the lead magnet, as this will undermine your customer and lose trust. The upsell needs to be a related product or about the bigger solution/service.
Once the user has signed up for the webinar or purchased the product, then they should be presented with an upsell, often known as a one-time offer. The idea of these types of pages is to increase either the average cart value of your funnel or provide a mechanism that offsets some, if not all, of your ad costs.
So, for example, if I have a lead magnet for, say, the "top tips to catch more trout when you're fly fishing rivers," a prospect downloads the lead magnet. This could follow on to a webinar in which you're pitching your membership to a fly fishing website or association, and then the one-time offer could be a discount on a fly fishing reel, rods, equipment, etc.
For these types of offers, it's important to build in a lot of value. So given this example, you may put together a bundle offer for something along the lines of a fly fishing reel, the top 5 fishing flies that have produced 20 lb. plus fish, a secret guide to the best fishing spots around the UK, and a 1-month free membership to your membership site (you see what I did there, wink, wink). Then all of a sudden you're not just buying a fishing reel, which you can get from any good fishing shop; you're buying a solution that holds inherently more value than the standalone product.
This funnel is again supported via email sequences to encourage non-converters, similar to the high-ticket sales, but as well as providing value over time, you may want to look at more e-commerce-associated offers, such as time-limited discounts, bundle offers, and even downsells. The idea is you are trying to capture back some of your ad spend as well as open a conversation (whether automated or in person) to upsell your intro product (intro as you can use this product or service to upsell to your high ticket offer).
The mid-ticket funnel is an excellent way to introduce slightly higher-priced products while providing a suitable platform to upsell to your high-ticket offer when the time comes.
Low Ticket Sales Funnel - Only For The Brave
Its a bizarre thing to say, but the cheaper a product is, the more difficult it is to sell. What I mean by this is that if you want to scale your business sales by using ads (which is by far the quickest, most reliable and, in my opinion, the best way to scale, unless you have plenty of time to create content, of course). Then you have to ensure your funnel is profitable. Much like the mid-ticket sales funnel, you have to build in enough financial value in your complete sales funnel. You can do this by either making it actually profitable on its own and selling in volume, or using low-priced product sales to offset against ad costs, or using your funnel as a linked funnel to a mid-ticket or high-ticket offer.
This type of funnel is a more complex funnel and is difficult to get right, as the more moving parts in anything (including my car), the more things can go wrong with it and the more difficult it is to identify leakage and the touchpoints that need to be fixed or optimised.
The metrics on how to make a funnel like this profitable and how to link to other funnels is a more advanced strategy and wouldn't be covered here as we would be here for a very long time haha. However, I can briefly outline the concepts.
So for a low-ticket sales funnel, the price range is usually between free and £97. I know it's a strange number, but it's the psychology of numbers at play. For some reason, people inherently feel it's much cheaper with a 7 on the end as opposed to 9, which was commonplace 10 - 15 years ago, hence why we still have product prices at £1.99. Again, this may change in the future but for now at least provides a good rule of thumb, always end in a 7.
Low ticket funnel sequence
So going back to the low-ticket funnel, the sequence of this type of funnel can vary and, as mentioned, can be quite complex. The main steps usually implemented are
Traffic source Paid Ads or Other
Landing page that has the product offer on it (this is a more involved page design-wise and needs to follow a specific layout and content to help the sale)
This is followed by an immediate bonus or upsell offer (again, this needs to be a related product, not a slightly better version, or people will get annoyed).
Upsell 2 - The one-time offer
Downsell: A cheaper one-time offer
A confirmation page, linking page to another funnel.
This is a very basic representation of the low ticket sales funnel; there is a lot more to it in terms of the buyer psychology, and it is more akin to e-commerce and strategies used to make sales, rather than trying to sell a service directly.
This means things like conversion rate optimisation, a keen eye for metrics, design and copywriting skills, and video skills are required on top of the technical skills to build the funnel in the first place, as well as drive the traffic.
The complexity of this type of funnel is quite high and can be difficult to get it in a profitable place, but if done right can provide a great entry point to higher ticket priced services. This type of funnel is also known as self-liquidating, so if connected with a higher ticket style funnel (mid or high) then the revenue made from the cheaper product should cover most, if not all, of the ad cost to make the sale. If the lead is then passed on to the higher ticket funnels, then you have free leads for your higher offer, which is a very compelling approach.
Each of these types of funnels provides the backbone for the wide majority of sales funnels that businesses use to generate more customers. There are, of course, variations, as there are in everything in life.
As an example for the high-ticket funnel system, it's recommended to also use other communication platforms such as groups and communities to further nurture prospects, which work alongside nurture sequences to move prospects further down the marketing funnel. You can also use Messenger add-ons for the funnels, which create a more direct method of contact, as well as drip-fed video messaging and content strategies to drive more traffic into your funnel.
Whatever sales funnel, sequence of steps and methods of communication you use, you still need to have a solid product offer and specific messaging for any funnel to work and generate you new customers.
How To Measure Your Sales Funnel
One of the key aspects of any sales funnel is its performance. Yes, I know that sounds obvious but the reality is, most people don't know where to start. This includes both working out conversion rates at each step of their sales funnel, as well as how to make them profitable.
The first part is to ensure you have an adequate measurement system in place. Many funnel-building software programmes, such as Go High Level, which we use, have built-in analytics that do give you accurate data to work with. You can also use GA4 or a system like Piwik Pro. My personal preference is Piwik for an external system, just because it uses raw data, which gives more accurate results analysis.
Both third-party systems have the ability to do attribution modelling so you can measure drop-off rates and click rates for each step of your funnel. This does need to be set up manually, but it is a workable solution if you are building a funnel outside of a funnel building system.
You then need to decide how you are going to measure your funnel performance. This is usually based on LTV, or "lifetime value," of your customer. This is an average of how long a customer stays with you and how much they spend. This then gives you a customer revenue figure, so you can then work backward to calculate how much you are willing to pay to gain a customer.
An example might be:
Customer LTV: £10,000
Net Profit: 50%
That gives a value of £5,000.
You would usually aim for around 20% of the LTV as your target costs to gain a customer, so in this case, £1000 as your target cost per acquisition.
This may surprise you, but this is how you scale; as long as the metrics align, then this is scalable based on maintaining your profit margin.
When you apply this to the funnel metrics, for say a high-ticket funnel (as the LTV is over £3k), it might break down as follows:
Facebook Ad Spend (traffic method) = £2,000 per month
Cost Per Click (CPC) (how much it costs when someone clicks your ad) = £1.50
Click-Through Rate (CTR) (the rate at which people click your ads) = 1-3% (Ad Impressions → Clicks)
Opt-in Rate (the percentage of people who give their details) = 10-20% (Clicks → Leads)
Lead to Appointment Rate (percentage of people who book an appointment) = 10-30%
Appointment to Sale Rate (thee rate at which you convert prospects into sales) = 30-50%
Overall Sales Conversion (Traffic to Sales) = 1%
When running a high-ticket funnel (such as a high value product, coaching program, consulting service, or agency offer), it's important to understand how much you should spend on ads to acquire a customer profitably. There is a common rule of thumb for high-ticket funnels, and that's using the 1% rule. This is 1% of total traffic (people who see your ad) who will turn into paying customers.
Using this rule and your funnel conversion rates, we can calculate how much ad spend is needed and whether your marketing is profitable.
How To Calculate Your Funnel
Step 1: Determine How Many Clicks Your Ad Budget Can Buy
Before you can generate leads, appointments, or sales, you need people clicking on your ad.
Suppose you are spending £2,000 per month on Facebook Ads.
If your Cost Per Click (CPC) is £1.50, the total number of people clicking on your ad is:
Total Clicks = Ad Spend ÷ Cost Per Click
Total Clicks = £2,000 ÷ £1.50 = 1,333 clicks per month
This means your ads will drive 1,333 people to your landing page each month.
Step 2: Calculate How Many of Those Clicks Convert Into Leads
Not everyone who clicks your ad will give you their contact details. This is where the opt-in rate (conversion rate of visitors to leads) matters.
If your opt-in rate is 10%, then the number of leads is:
Leads = Total Clicks × Opt-in Rate
Leads = 1,333 × 10% = 133 leads
If your opt-in rate is 20%, then:
Leads = 1,333 × 20% = 267 leads
At this stage, we now know how many leads (potential customers) you’re generating per month based on how well your landing page converts.
Step 3: Calculate How Many Leads Book an Appointment
Once a lead enters your funnel, you need them to take the next step: booking a sales call or appointment.
If 10% of leads book an appointment, the number of appointments is:
Appointments = Leads × Lead to Appointment Rate
Appointments = 133 × 10% = 13 appointments
Appointments = 267 × 10% = 27 appointments
If 30% of leads book an appointment, then:
Appointments = 133 × 30% = 40 appointments
Appointments = 267 × 30% = 80 appointments
At this point, we now know how many sales opportunities you will have per month.
Step 4: Calculate How Many Appointments Convert Into Sales
Not everyone who books a call will buy. The next step is determining how many people actually become paying customers.
If 30% of your appointments turn into a sale, the number of sales is:
Sales = Appointments × Appointment to Sale Rate
Sales = 13 × 30% = 4 sales
Sales = 40 × 30% = 12 sales
If 50% of your appointments turn into a sale, then:
Sales = 13 × 50% = 7 sales
Sales = 40 × 50% = 20 sales
Now, we know how many customers you are getting per month based on your sales process and close rate.
Step 5: Calculate Your Cost Per Acquisition (CPA)
Your Cost Per Acquisition (CPA) tells you how much you are spending to get one paying customer.
CPA = Total Ad Spend ÷ Number of Sales
Using our sales numbers from Step 4:
Number of Sales CPA Calculation
4 sales £2,000 ÷ 4 = £500 CPA
7 sales £2,000 ÷ 7 = £285 CPA
12 sales £2,000 ÷ 12 = £166 CPA
20 sales £2,000 ÷ 20 = £100 CPA
Step 6: Compare Your CPA to Your Target CPA
A high-ticket funnel is only profitable if the cost to acquire a customer (CPA) is significantly lower than the customer’s lifetime value (LTV).
In this case, if your LTV is £5,000 per customer, your target CPA should be £1,000 or less for a strong margin.
The calculations show that your CPA ranges from £100 to £500, depending on conversion rates—which means your funnel is highly profitable.
What does this all mean?
The 1% rule means only 1 out of 100 visitors will buy—so each step in the funnel needs to convert well.
Your CPA is well below the £1,000 target, meaning the funnel is profitable.
Small improvements in conversion rates at each stage (opt-ins, appointments, and sales) can dramatically increase your profitability.
If conversion rates drop, CPA increases, meaning you’d need to spend more per sale.
As you can see, even on a relatively basic high-ticket funnel, the metrics can start to get complicated to ensure your funnel is profitable, so choose wisely.
Funnels do come in all shapes and sizes and can be fantastic tools to generate new customers. They often far outperform websites due to the nature and simplicity of the user journey and the focus on specific outcomes, achieving much higher conversion rates. It's my personal opinion that every business should have a sales funnel to convert cold traffic into paying customers and not rely solely on referrals and word of mouth to generate new business.
I hope this article has helped you understand what a sales funnel is and how it can be used to support your business in your lead generation efforts.
If you want to learn more about sales funnels or want us to build and install one in your business, then please reach out to us at [email protected] or book a call directly with me here
Alternatively, join our free community and share your challenges and wins with other like-minded professionals. Learn more about funnels and digital marketing techniques and strategies, helping each other grow, as well as tonnes of free stuff I post regularly too.
Hopefully speak soon, happy funnelling.
Jamie
Master Funnelsmith
