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What is a Lead Generation Funnel?

Written by:

Victoria Yu is a Business Writer with expertise in Business Organization, Marketing, and Sales, holding a Bachelor’s Degree in Business Administration from the University of California, Irvine’s Paul Merage School of Business.

Edited by:

Sallie, holding a Ph.D. from Walden University, is an experienced writing coach and editor with a background in marketing. She has served roles in corporate communications and taught at institutions like the University of Florida.

What is a Lead Generation Funnel?

What is a Lead Generation Funnel?

If you’ve just launched your business, it’s important to find and secure a loyal customer base. But how do you get there? Flashy ads might build awareness and interest, but they don’t always lead to sales. 

Successful business owners rarely wait for customers to make a purchase by chance; they know they need to proactively pursue and persuade them, which is the main objective of a lead generation funnel. 

If you’re looking to learn more about this crucial sales tool, you’ve come to the right place. This guide lays out all you need to know about lead generation funnels and how you can leverage them to boost your business.

Key Takeaways

  • A lead generation funnel is a framework that combines marketing and sales techniques to provide your sales reps with more leads.

  • Lead generation funnels seek to obtain the contact info of as many leads as possible in an effort to increase sales opportunities.

  • A lead generation funnel has three stages: grabbing a lead’s attention; offering a lead magnet; and obtaining contact information.

  • Best practices for creating a lead gen funnel include thoroughly researching your target, building landing pages for each lead magnet, and reaching out to leads as soon as possible.

What are Leads and Lead Generation?

As a quick refresher, let’s start at the beginning with an explanation of leads and lead generation. In sales, a lead is any potential customer the company knows little about. 

Sales reps reach out to leads to strike up a conversation and make a sales pitch; during the conversation, leads that fit the company’s ideal customer profile (ICP) are qualified as sales prospects. Once a qualified prospect shows interest in buying, they become a sales opportunity. Finally, when they make a purchase, they are a customer. 

Lead generation refers to a company’s effort to generate more leads. All lead generation, or lead gen, methods fall into one of two categories, inbound or outbound. 

Outbound lead generation is when a business reaches out to potential customers to begin a relationship in the hopes that they make a purchase. Some examples of outbound lead gen activities are cold calling, cold emailing, and asking for referrals. 

Inbound lead gen refers to potential customers who reach out and contact your business. Maybe the person saw your marketing, did some research, and reached out. Examples of inbound lead gen strategies include ads, social media posts, and maximizing search engine optimization (SEO). 

With inbound lead generation, there’s a decisive period between when the consumer first learns about your brand and when they reach out to express interest. The reality is that most curious consumers never become prospects or customers. It’s up to sales reps to identify which consumers, browsers, and visitors are leads, nurture their interest, and guide them to a purchase decision. 

So the question is, how do you discern leads from the masses so sales reps can reach out? That’s where the lead generation funnel comes in. 

What’s a Lead Generation Funnel?

A lead generation funnel, or lead funnel, is a framework that aims to ensure the highest possible number of leads provide their contact information.

There’s no legal way to track consumers who see a company’s ad online, so the lead generation funnel seeks to convince website visitors to share their name, along with an email or phone number, so the company can contact them to discuss a purchase. 

Five thousand people might visit your company website tomorrow, but how many will reach out to express interest? Many will lose interest, come up against budget constraints, or turn to a competitor. In the end, only a handful are likely to make a purchase. 

The lead funnel encourages curious visitors to identify themselves as leads by grabbing their attention and persuading them to leave their contact information. With that information, reps are able to research the lead, judge their sales readiness, and make a tailored sales pitch.

It’s generally the case that the more leads a company generates, the more sales it makes, so an effective lead generation funnel could greatly bolster your bottom line. 

Stages of the Lead Generation Funnel

Broadly speaking, a lead generation funnel has three stages: grabbing the lead’s attention, offering a lead magnet, and obtaining their contact information.

1. Grab Attention

The best way to get a consumer’s attention is to highlight their pain point, or primary area of concern. This is generally done through marketing and advertisements that use attention-grabbing keywords. 

Let’s say your accounting firm is making a major ad buy that should put it on the first page of Google search results. A dull appeal like “Great Accounting Services” is unlikely to attract many clicks. 

A better approach is to think about why people seek out an accountant: most want a CPA to file their taxes. Thus, an appeal like “Reliable, IRS-approved tax professionals” is much more likely to elicit clicks. 

2. Offer a Lead Magnet

Your enticing ad has brought the lead to your website with a pressing need, now it’s time to bait them with a lead magnet. A lead magnet is a piece of content that solves the consumer’s problem or addresses a key pain point. 

It could be a blog post, report, video, or infographic, or even a free trial or tech tool that provides a taste of your company’s solution. The best lead magnets are easily accessible and useful to consumers even if they choose not to buy. For instance, they could boost the company’s reputation as a trusted resource.

Take a look at your competitors’ lead magnets and go one further to stand out or improve your SEO ranking. To return to our accounting firm example, next to “Reliable, IRS-approved tax professionals,” you could offer a free income tax calculator. 

Those who click on the ad are taken to a landing page that allows them to use the calculator in exchange for a bit of information.  

3. Obtain Contact Information

The last step of the lead generation funnel is of course obtaining contact information, which transforms a curious consumer into a promising lead. 

To return to our accounting firm example, just as your lead hits the “calculate” button at the bottom of your income tax calculator, a popup appears: “Input your name and email below to get your results!”

Eager to see their taxes due, the lead inputs their contact information and walks away happy with the lead magnet’s results. And your sales reps now have a name and contact method of a marketing-qualified lead, so they can research and email them in hopes of interesting them in your business’ full tax filing services. 

Some companies like Deloitte request more than an email, asking for the visitor’s company name, department, job title, and more. This saves their sales reps the time spent researching whether a lead is authorized to make a purchase, but the effort also likely drives away some possible leads. How much or how little info you request is up to you and your sales process, but keep in mind that the more you ask for, the more effort leads will have to go through, so your lead magnet better be worth it.

Best Practices for Building a Lead Generation Funnel

Now that you know the key stages, you might be chomping at the bit to make your own lead funnel and boost your sales opportunities. Here are some tips for crafting a successful funnel. 

1. Know your target audience

Having a robust picture of your ideal customer profile is absolutely critical. What are their demographics, psychographics, and common pain points?

The more you know, the better chance you have of creating appealing lead magnets and targeting your marketing at the right audiences. And as we mentioned earlier, companies like Deloitte that incorporate qualifying questions into their survey don’t have to lift a finger to qualify leads, smoothing out the whole sales process.

2. Create a designated landing page for each lead magnet

Rather than having an ad that leads straight to your company’s home page, your lead magnets should be hosted on designated web pages, called landing pages, made specifically for lead generation.

By hosting lead magnets on web pages inaccessible from the main website, managers have clear metrics such as page visits and click-through rates to gauge the success of your attention-grabbers. 

Plus, having each lead magnet on a separate landing page for itself will make it obvious by page hits which magnet is more enticing to leads.

3. Follow up as soon as possible

You’ve now got a name and contact info, so it’s time to celebrate, right? Not so fast. You haven’t even made contact yet, which means you’re miles away from making a sale. 

You can begin closing that gap by reaching out to the lead as soon as possible. Firms that contact leads within an hour are seven times more likely to get in touch with a key decision-maker than those that wait an hour later, says the Harvard Business Review.

Also, nearly eight out of 10 customers (78%) buy from the first company that responds to their inquiry, according to business software provider Vendasta

With these factoids in mind, this means that to make the most out of a hot lead, your sales reps should contact them within an hour of obtaining their contact information. They may not make a sale on that first call, but they’ll have a great chance to make a good first impression and gain top-of-mind awareness.

If your sales reps are particularly slow when it comes to following up on leads, maybe our guide on lead distribution could help you find a method to run a tighter ship.

Conclusion

A robust lead generation funnel can significantly improve your inbound lead generation, increasing your chance of sales success. But if it’s not done right, it could be a waste of time and resources. 

This is especially true for businesses just starting out, be sure to take the time to develop an effective lead funnel, and turn many more curious consumers into real revenue. 

Lead Generation Funnel FAQs

Is there software to help me develop a lead generation funnel?

Sadly, no. A lead generation funnel is only a strategic framework to help guide your lead generation campaign, rather than a concrete tool or spreadsheet you can manipulate. 

However, if you’re looking to track sales funnel metrics, lead contact info, and sales processes, you could invest in a CRM such as Zendesk or HubSpot.

How do I get more leads?

There are many ways to get leads. Broadly speaking, there are two types of lead generation strategies: inbound lead generation, in which customers contact the business, and outbound lead generation, in which the business reaches out to potential customers.

Examples of inbound lead generation strategies include social media marketing, collaborations, and SEO optimization. Outbound lead generation might involve cold contacting, asking old customers to refer you to new ones, revisiting old leads, and participating in trade shows.

Should I pay money to generate leads?

Well, you should probably invest in marketing to generate leads and develop landing pages and other survey tools to capture lead information. The average cost per lead varies by industry, so do your research into how much you should be spending and how your competitors are generating leads.

But if you’re asking whether you should purchase a list of leads from a company, we wouldn’t recommend it unless your situation is particularly dire. Companies peddling lead databases often provide outdated and dubious leads, and you’ll likely be routed directly to the customer’s spam folder. You’re better off cultivating your own organic leads.

How does a lead generation funnel fit with the marketing and sales funnels?

You’ve probably heard of marketing funnels and sales funnels, and you might be wondering if they can be used in conjunction with a lead generation funnel. First off, a marketing funnel shows the customer’s journey from becoming aware of a product or brand to beginning to consider making a purchase. At that point, when they express some interest, they progress into the sales funnel to complete their sale. 

A lead generation funnel bridges the two: it attracts consumers who come into contact with advertisements, offers material to nurture their interest, and hopefully obtains their contact information, handing them off to sales. 

Lead generation funnels aren’t used for every lead (i.e. outbound lead generation efforts), so companies tend to neglect them when outlining their customer journey. But if you notice a large gap between your website’s hits and the number of customers you get, a lead generation funnel could better connect your marketing and sales efforts.