What is a Leads Funnel and How Does it Work?

What is a leads funnel and how does it work


What is a Leads Funnel and How Does it Work?

A leads funnel is of the utmost importance for any online business. Even more so if you have an e-commerce site. When you own an online business, you most likely have certain goals. Those goals could go from just gathering up emails for your newsletter to selling your products or services. But regardless of which goals you have, you will certainly need a leads funnel. A leads funnel allows your customers to find you and, hopefully, buy from you.

Think about your funnel as an inverted pyramid. When it’s done right, you start with leads, who will turn into prospects, who will ultimately buy from you. So, when you build a lead generation funnel, you are paving the way to achieve the goals you set for your business.

Creating your leads funnel is crucial. It’s just one of those strategic marketing steps that you just can’t avoid or forget about. So, it does come as a surprise to learn that not many online business owners know what a lead generation funnel is or how to properly weave it into their marketing strategy. This is why we have put together a quick guide to help you understand what a leads funnel is, which steps are involved in the creation process and how to make it work for you. Stick to the end for a cool bonus!

let’s start by learning the basics – what is a leads funnel?

As we were saying before, a sales funnel is a series of steps that a lead needs to follow to convert into a customer. But to make it clearer, let us use an example.

Imagine that you are the owner of a coffee shop downtown and you want people to find your store, come in, sit down, and to have a coffee and taste one of your baked goodies. Now let’s picture the sales funnel as an inverted pyramid divided into sections.

The first section would be the widest, and in this section, you would have people discovering your store. Some of them will walk on by, and others will be interested and go inside. Once you have customers inside your shop, you have reached step two. You have their interest and attention. This is awesome, but we need more from them. If they start looking at your baked goods and asking about what kind of coffee you serve, you’re at step three.

But there’s one last step – conversion

So, if those customers who are interested in your coffee and pastries decide to buy those goodies, you have reached the last stage of your sales funnel journey – congrats! So, how does it look when we apply this example to an e-commerce website? When we take the previous example to the online business world, we’re looking at a series of steps which are – Awareness – Interest – Decision – Action.

There are many ways to describe the stages that make up a sales funnel, and you may see them under different names on other websites or find more steps to describe the process. However, the concept is what matters.

So, once you understand how it works and how it flows from one stage to the other, you will have mastered one of the most important steps of your marketing strategy.

“Boost your marketing game today by learning about lead funnels.”

The online sales funnel

Let’s take a look at the concept of an online sales funnel, then:

  • When a new visitor lands on your website, they are referred to as a prospect.
  • Let’s say that this prospect signs up for your email newsletter. They have now become a lead.
  • Because you now have their email, you can market to them outside of your website. And if you offer them something special (like a discount or coupon), they will potentially come back to visit your website.
  • And if they are enticed enough, they will make the purchase. This is known as a conversion.

The graphic depiction of a sales funnel is so accurate because, at the base of your funnel (the widest it will ever be), you will have a lot of visitors. But as those visitors move further down through the funnel, only a few will remain. The percentage of people converting into sales will be very small compared to the number of people that first landed on your website. And that is where the importance of a well-structured sales funnel comes in.

When you construct a well-structured sales funnel, you can expect to meet your ROI (return on investment). Alternatively, you might find your potential customers leaking through the funnel negatively impacting your conversions.

But, let’s backtrack a little and take a closer look at the stages of your sales funnel so you can properly see how it all comes down together.

The four stages of the lead funnel

If you are somewhat savvy when it comes to marketing, you will have heard this term before. Otherwise, lo and behold the acronym, AIDA, or Awareness, Interest, Decision, and Action. These four steps are what constitutes your potential customer’s mindset, and they are exactly what you need to mimic throughout your sales funnel.

The order of these four steps is not random, and it should be implemented as stated. Otherwise, you will send the wrong message to your leads which could result in them abandoning your site. To put it bluntly, altering the order would be the equivalent to having dessert before your main course. You definitely don’t want that. So, let’s move on to each particular stage and see what they’re all about.

1# Awareness

Our first stop is awareness. This is the moment when you catch your consumer’s attention for the first time. Maybe they landed on your site through an ad or as a result of digging around. You can think of this stage as the first date of a blooming romance. Your customer sees you, they take a shine to you, and your job is to make them want to stick around and, if you’re lucky, commit to you.

2# Interest

In this stage, your consumers are comparing your products to others on the market. They are gathering up information, trying to see which option is the best one for them. Again, you can metaphorically see this as your customer having other suitors vying for their attention and the customer trying to decide whether you are the one for them or not.

3# Decision

Your customer is ready to decide, and if you want to be the winner, you should make them an offer they can’t resist, like a special discount.

4# Action

You have done a marvelous job of wooing your consumer. They’ve decided to buy from you, and they are now at the bottom of the funnel. However, the journey does not come to an end here. You have made a sale but what you want to aim for is multiplying them. So, the new name of the game is called “customer retention”.

Bonus tip – how to step up your game?

Now that you know what a lead funnel is and how it works, we would like to give you some tips and tricks to make your game a little better. Take note!

The Leads Funnel and How it Works
  1. Pamper your clients – once you have turned a lead into a conversion, you should focus on retaining that customer and gaining their loyalty. Getting new leads is harder than retaining the ones you have already converted. So, make the most out of your trusting clients and pamper them to gain their faithfulness!
  2. Customise your messages – there’s nothing more off-putting than a message from any business that sounds soulless and robotic. Personalise your communications so that each client feels like you’re talking solely to him. This will make them feel like they are special to you and more likely to keep buying from you.
  3. Use upselling and cross-selling – when you upsell, you are offering your client a more expensive choice than the one they initially wanted to buy. Cross-selling is offering add-ons to the item your client is buying. These two techniques allow you to sell more without putting in the extra effort.


Building a leads funnel is crucial for any online business that has a goal. Those goals can be different. Perhaps you want people to subscribe to your newsletter, or maybe you want them to buy an item from you. Whatever the case, you will need to design a funnel.

By doing so, you are illustrating the series of steps that your prospects will take to reach that goal. Your funnel will help you see if there are any leaks that you need to fix and, ultimately, it will show you what works and what doesn’t. If you manage to have a clear grasp of this journey, you will be able to influence how the prospects travel through the funnel and help you to reach your goals.

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