Key takeaways
- A funnel is not a diagram, it is the sequence of what you do when somebody moves forward or stalls.
- The shape of the funnel is set by the sales cycle: days in an online shop, months in a sale to companies.
- The costliest leak is almost never at the top. It sits between enquiry and sale, where advertising cannot reach.
- Without connected measurement, a funnel is a handsome hypothesis nobody can correct.
What is a sales funnel?
A sales funnel is the route somebody travels from not knowing you exist to paying you. It is described step by step, with what you do at each one. It is called a funnel because a lot of people enter at the top and few come out at the bottom, and that loss is normal.
The proportion lost varies enormously by sector and price, so any benchmark figure you read is of little use. What matters is not how many you lose, but where you lose them and whether that can be corrected.
What it is not: a diagram for the slide deck. A funnel works when each step has two written answers. What moves that person forward, and what you do if they stall there.
The four phases, in plain language
They get different names depending on the textbook, but they are always the same four.
- They do not know you. You have to appear in front of people who are not looking for you, or show up when they search for what you sell.
- They are comparing you. They know you exist and are checking whether you fit, usually alongside two or three alternatives.
- They decide. One push is missing: a trial, a clear quote, or a doubt resolved.
- They are customers. Here sits the money almost nobody works: repeat, expand and refer.
The fourth phase leaves the most margin and gets the least budget. Winning a new customer always costs more than selling again to somebody who already trusted you.
Two things worth separating, because they get confused. A phase is the state the person is in. A step is what you do when they reach it. A badly built funnel usually has the phases drawn and the steps unassigned, so nobody does anything concrete when somebody moves.
The test for whether yours is properly built is simple. Take a contact from last week and ask who did what and when. If the answer is slow in coming, or rests on somebody's memory, the funnel exists on paper rather than in the company.
Why copying somebody else's funnel does not work
Because the shape is set by the sales cycle, and the cycle is set by the price and the risk of the purchase. A haircut is decided in seconds. Management software for fifty employees takes months and is approved by three different people.
Two practical consequences follow. In short cycles, speed of response is almost everything. In long cycles, what decides is the consistency of follow-up, and having material your contact can show internally to whoever signs.
That is why the three examples below are not variations on one scheme. They are three different funnels, with different channels, timings and tasks.
Example 1: a local business
The cycle runs in hours or days, and distance rules. Somebody searches for the service on a phone, looks at three map cards and decides almost on the spot.
That changes the priorities entirely. Nobody needs educating and no trust has to be built over months: you need to be visible at the exact moment and to answer fast. A local business that replies in five minutes beats a better-rated one that replies the next day.
The funnel we build has five steps. They find you on Google Maps and land on the service page. Those who do not book see your ads for thirty days. An email reminds them of the appointment, and after the visit the review is requested. That last step is not a courtesy: it feeds the map position the next customer will come from. We lay it out in full in how we win customers, and the underlying work is in local SEO.
The typical leak here is not acquisition. It is the phone nobody answers, or a form replied to two days later. One step almost nobody builds costs nearly nothing: alerting the owner by message when a form arrives. It is not advanced technology, and it turns a lost enquiry into a callback within ten minutes.
Example 2: a company selling to companies
The cycle runs in months, several people decide, and the purchase has to be justified in writing to somebody. Here the funnel does not start with attracting. It starts with choosing.
First the list of companies that fit gets built, with explicit criteria on size, sector and buying signal. Then they are shown ads on LinkedIn, and a form is offered to whoever watched the video. The salesperson writes to the companies that engaged, and follow-up runs about fourteen days to the meeting.
The consequence is that the top-of-funnel metric stops mattering. A thousand visits are worthless if none come from a company that fits. Reaching two hundred of the right companies beats reaching twenty thousand individuals, and that changes both the budget and the way you measure.
What distinguishes this funnel is that advertising closes nothing. It prepares a conversation. If the salesperson does not step in, there is no sale however large the budget. The target account approach is detailed in LinkedIn Ads account lists.
Example 3: an online shop
The cycle runs in days, the product is seen and compared on screen, and the abandoned cart is the most predictable leak of all.
Here the funnel chains five pieces. Discovery ads on Instagram and TikTok. Presence on Google when they search the product. Recovery of the undecided on YouTube and Meta during the first week. Three abandoned-cart emails at four, twenty-four and seventy-two hours. And a post-purchase sequence for the review and the second sale.
Those email timings are a reasonable starting point rather than a law. On higher-priced products the window stretches, because the decision takes longer.
There is a fourth phase shops rarely work. Somebody who bought once is far likelier to return than a stranger is to buy a first time. A repurchase sequence at thirty or sixty days, depending on how long the product lasts, is often the most profitable campaign in the whole account.
Where the money is actually lost
When we review a funnel that is not working, the fault sits in the same place almost every time, and it is not where people expect. It is not that too few people enter at the top: it is between enquiry and sale.
Three failures repeat. Nobody replies within an hour to the enquiry that arrives. Nobody knows where each sale came from, because measurement never reaches the CRM. And nothing is prepared for the person who said «not now». That last group is usually the largest and the cheapest to recover.
None of the three is fixed with more advertising. They are fixed by connecting measurement to the sales system, which is what we do in GTM Engineering.
How do you know your funnel works?
Four numbers, and only four, are enough to start deciding with judgement.
- How many people enter through each channel per month.
- What share leave their details or buy.
- What each enquiry and each customer costs.
- How much margin a customer leaves, repeat business included.
With those four the bottleneck becomes obvious. Without them any change to the funnel is a hunch, and the work in analytics and CRO consists precisely of putting them on the table.
Building it needs less than the software industry sells. Three things, none of them expensive: somewhere each contact is recorded with its phase and date, measurement connected so you know the channel without asking, and a named owner for each step. The tool gets chosen later, once volume justifies it. Buying an expensive CRM before having a process produces an expensive, empty CRM.
Where to start
Draw on paper the steps your last customer took, from meeting you to paying, with the real dates. A step you had not planned usually appears, along with a wait nobody was watching.
Repeat the exercise with somebody who asked for a quote and did not buy. That second route is less comfortable to look at and more profitable to fix, because it tends to point at the same spot over and over. That gap is your first repair, and it costs less than any new campaign.
Frequently asked questions
How many phases should a funnel have?
Four cover almost any business: they do not know you, they compare you, they decide, they are customers. More phases usually complicate tracking without improving decisions.
Does the same funnel work for every business?
No. The sales cycle changes the shape: days in an online shop, months selling to companies. Copying a funnel from another sector is the most common mistake.
Where are most people lost?
Between enquiry and sale, not at the entrance. The usual causes are slow replies, measurement that never reaches the CRM, and nothing prepared for people who postpone.
Do I need expensive software to build one?
Not to start. You need four properly measured numbers and somewhere to record which phase each contact is in. The tool comes later, once volume justifies it.
