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What is the Funnel Used For? A Complete Guide to Funnels in Business & Marketing

March 14, 2025•5 min read

When you hear the word "funnel," the first thing that might come to mind is the tool used in a kitchen or a laboratory to guide liquids into a narrow opening. But in business and marketing, a funnel has a different, yet similar purpose—it guides potential customers through a journey that leads to a purchase or a desired action.

So, what is the funnel used for in business? And why is it so important for marketers, entrepreneurs, and sales professionals? In this article, we'll break it down in simple terms, explain how it works, and show you how to use it effectively.

What is a Funnel in Business & Marketing?

A funnel in business is a step-by-step process that leads potential customers from awareness to action—whether that action is making a purchase, signing up for a newsletter, or booking a service.

🔹 Think of it like a real funnel: At the top, many people enter, but as they move down through different stages, only a percentage of them take the final action.

For example, imagine you're selling an online course. Not everyone who visits your website will buy it immediately. Some will read your content, others might sign up for a free trial, and a smaller number will eventually make a purchase. That process is your sales funnel.

For a detailed explanation, check out HubSpot’s guide on marketing funnels.

Why is the Funnel Important?

Without a sales funnel, businesses would struggle to turn website visitors into paying customers. A well-structured funnel helps businesses:

✔️ Organize and track potential customers – Know where each lead is in the buying process.
✔️ Improve conversions – Guide people towards making a purchase.
✔️ Automate marketing efforts – Use tools to engage leads at different stages.
✔️ Increase revenue – More efficient sales = more profit.

Every business, big or small, benefits from using a funnel strategy to grow. Check out Salesforce’s CRM tools to see how automation can improve your funnel.

Types of Funnels & Their Uses

1. Sales Funnel

A sales funnel is used to convert leads into paying customers. Businesses use it to move people from interest to purchase through different stages:

✔️ Awareness: A potential customer discovers your brand.
✔️ Interest: They explore your product or service.
✔️ Decision: They consider making a purchase.
✔️ Action: They buy the product or service.

🔹 Example: An eCommerce business might attract visitors through Facebook ads, nurture them with emails, and offer a discount to close the sale.

For more details, read ClickFunnels' guide on sales funnels.

2. Marketing Funnel

A marketing funnel focuses on building relationships and generating leads before selling a product. It helps businesses educate, engage, and build trust.

🔹 Example: A digital marketing agency may offer a free eBook in exchange for an email address, then follow up with valuable tips before pitching their services.

Read more about marketing automation on ActiveCampaign.

3. Lead Generation Funnel

A lead generation funnel is designed to capture leads (potential customers' contact information) and nurture them into buyers.

🔹 Example: A real estate agent may offer a free property guide in exchange for contact details, then send follow-up emails about available properties.

Find more about lead generation strategies on Zoho CRM.

4. Webinar Funnel

A webinar funnel is used to attract, register, and convert attendees into customers.

🔹 Example: A business coach might host a free webinar about "How to Grow Your Business" and pitch a paid course at the end.

Learn how to create high-converting webinar funnels with GoToWebinar.

5. eCommerce Funnel

An eCommerce funnel helps online stores reduce cart abandonment and increase sales.

✔️ Attract: Social media and Google ads bring traffic.
✔️ Engage: Product pages, reviews, and testimonials build interest.
✔️ Convert: Discounts, limited-time offers, and fast checkout boost sales.

🔹 Example: A clothing brand may use email reminders and retargeting ads to recover abandoned carts.

For more on eCommerce funnels, check out Shopify’s sales funnel guide.

Step-by-Step Guide: How to Build an Effective Funnel

Now that you understand what a funnel is used for, here’s how to create one:

Step 1: Define Your Goal

Before building a funnel, ask yourself:
✔️ Do I want to sell a product?
✔️ Generate leads?
✔️ Book consultations?

Choose a clear goal before moving forward.

Step 2: Identify Your Audience

Understand your ideal customer. Research:
📌 Their needs and pain points.
📌 Where they spend time online.
📌 What motivates them to take action.

Step 3: Create an Irresistible Offer

People won’t enter your funnel unless you give them something valuable. Examples:
✔️ Free ebook
✔️ Discount code
✔️ Exclusive webinar

Step 4: Build a High-Converting Landing Page

Your landing page should:
✔️ Have a clear headline
✔️ Explain the benefits of your offer
✔️ Include a strong call-to-action (CTA)

For the best landing page tools, visit Leadpages.

Step 5: Capture Leads & Nurture Them

Once you collect leads, follow up with:
📌 Automated email sequences
📌 Retargeting ads
📌 Personalized offers

Use Mailchimp to automate your email marketing.

Step 6: Convert Leads into Customers

Guide your leads toward a purchase by:
✔️ Offering discounts or bonuses
✔️ Providing social proof (reviews, testimonials)
✔️ Using limited-time urgency (e.g., “Offer expires in 24 hours!”)

Check out Kartra for sales funnel automation.