Demand funnel 101: How to build and grow a demand gen funnel

As organizations invest in demand generation, the use of the demand funnel becomes a clear way to organize and move prospects into buyers. Implementing a clear demand generation funnel can be challenging because it requires clear sales and marketing alignment.


What is a demand funnel?

First, let’s cover what a demand funnel is. Demand generation funnels are a system of steps that takes someone from a lead to a customer. Some demand funnels extend and capture how to retain your customers. Overall, the funnel represents how leads, prospects and customers fit into your sales process.


How many stages are there in a demand funnel?

Defining the number of steps in a demand generation funnel is tricky. There can be as few as three stages, but depending on how your organization defines the funnel, it can get complicated. Ultimately, there can be as many stages as you need. Some organizations enjoy the simplicity of simpler funnels, while others require a more detailed funnel to make this concept relevant for their team. 

Here are a few examples of demand funnel stages to get your brain turning:

1. Top, middle and bottom of funnel

One of the most straightforward demand generation funnels relies on defining the top, middle and bottom of the funnel

  • Top of funnel (TOFU)
  • Middle of funnel (MOFU)
  • Bottom of funnel (BOFU)

While this funnel seems simple, it gives context into how to bring someone from awareness to consideration to purchase of your product. Setting up your funnel this way can be a great way to begin your demand generation journey.


2. Awareness to retention

If you like the TOFU, MOFU and BOFU model, there is a similar funnel that adds intent and retention.

  • Awareness
  • Consideration
  • Intent
  • Purchase
  • Retention

Intent is an integral part of the funnel because it provides depth to the buying process. Consideration is when users have shown interest in your product, but intent is interest in purchasing your product.

Further, retention is an essential part of demand generation. When you keep your current customers on board, you create a strong base from which to focus on company growth. As a bonus, the loyal customer base you built often provides referrals to your business or purchases from you again when they make a move to a new company.


3. Unique users to closed-won

Lastly, you can look at the funnel as a way to convert unique website users and visitors into closed-won. 

  • Users
  • Leads
  • Prospects
  • Opportunities
  • Closed-won

With this funnel it’s easy to see how sales and marketing work together to drive demand. Everything starts by driving more users to your marketing website. Eventually, you should be able to convert users to leads through form fills on your website. After that, sales takes over to convert leads into prospects, opportunities and closed-won.


Demand funnel terms you need to know

Demand generation funnels can be complicated because there is a lot of jargon to understand. Here are a few terms that can help:

  • Lead: Leads have expressed interest in your product or service. They are hand raisers who have shared that you can contact them with more information.
  • Prospect: A prospect goes one step further. Prospects meet your business criteria as a potential customer. Leads become prospects after sales have done some due diligence to look into their needs/wants in a product or service.
  • Marketing qualified lead: MQLs are leads that marketing has qualified by gathering data on your company’s marketing website. These people have typically requested a demo, downloaded a resource or connected with your company’s marketing chatbot. Based on lead scoring, sales typically have knowledge of which leads to go after first.
  • Sales qualified lead: After sales connects and discovers a potential need, potential customers convert into SQLs.
  • Sales qualified opportunity: Once sales has worked with a potential customer and put together a potential deal SQLs become SQOs.
  • Closed-won deal: If everything goes according to plan, deals are closed-won, which means that your organization has a new customer. You might also track closed-lost deals based on any contracts you couldn’t win.
  • Advocate: After a customer has worked with your organization and found value in what you offer, hopefully, they become an advocate who continues to purchase your products while recommending your product to others.


How to use (and improve) the demand generation funnel to grow your business

Now that you have a basic understanding of how to create a demand funnel, let’s dive into ways organizations can use the funnel to improve sales.


1. Align sales/marketing to the use of the demand generation funnel

Demand funnels can often feel like a theory instead of something that can help marketers and sales professionals. Companies use funnels to ensure that they are meeting the needs of potential and current customers.

If you want to make it tangible, provide context. The funnel helps marketers and sales professionals understand where prospects are in their sales journey and what strategies are working to move them through the funnel.


2. Update prospect progress regularly to get an accurate look at the funnel

When it comes to the later stages of the funnel, it’s easy to get off track. A prospect can stay in an earlier stage of the sales process for too long, which has a ripple effect. Sales and marketing leaders want to see how quickly prospects are moving down the funnel, but this only works if sales professionals keep accurate data. Encourage your sales team to check their funnel regularly and move potential customers to the right stage.


3. Use AI to increase leads in the demand funnel

The demand generation funnel thrives on consistent lead generation. AI can be a fantastic tool for generating leads at scale.  Artificial intelligence can often spot trends and potential customers we don’t see. Our Sales Development Platform, for example, uses AI to reveal the characteristics that make your best customers your best. Then, it uses that exegraphic data to create a prioritized list of companies that look and act like your best accounts. 


4. Create content for every stage of the funnel

One way that marketing can have a hand in the funnel is through content creation. Many marketers focus on the top of funnel pieces to build awareness like listicles, how-to guides and social media posts. Sales professionals need more middle and bottom of funnel pieces like case studies, one-pagers, pre-recorded demonstrations, explainer videos and thought leadership articles. With extended content for later funnel stages, sales can use more marketing content in outreach and follow-up.


5. Make the funnel easy for end users

Is your funnel making it harder for potential customers to get the service they need? While the demand generation funnel makes it easy for companies to denote where prospects are, it can add additional steps to the sales process. Sometimes, you’ll find that potential customers have done a lot of research before reaching out to a sales professional. Is your sales team ready to move quickly to meet the demands of potential customers? If not, your funnel could do end users a disservice.


6. Understand trends to improve your demand funnel

Your organization and industry have trends that change how your demand funnel works. If you sell flowers, you’ll likely see an uptick in orders during special holidays like Valentine’s Day and Mother’s Day. As a result, you can expect the sales process to speed up during those times. Look at any spikes in sales over the past few years. Are there any trends you can spot from this data? If so, let those trends inform how you connect with prospects during those periods.


7. Address leaks in your funnel

Occasionally, there are leaks in your funnel. For instance, you may find sales can overlook leads, or they may take too long to do the initial outreach. As people enter your funnel, sales needs to stay on top of new opportunities. Inspect the different areas of your funnel to ensure no leads or prospects are left behind. 


8. Invest in new sales strategies to make the best use of the demand funnel

Sales is a dynamic field. There are many sales models and pricing strategies that can inform how you do business. You can start by testing new systems to improve your demand funnel playbook. Each sales person on your team will likely have a sales strategy that works best for them. Experimenting will allow your organization to make more sales. 


9. Consider how changes to the funnel impact the entire process

Every change you make to a part of your demand gen funnel has a greater effect on the whole system. For example, many organizations invest heavily in top-of-funnel content/experience without wondering how potential prospects will feel as they continue down the funnel. Are there enough reps? Will prospects be contacted promptly? Investing heavily in one part can create a lackluster experience in others.


10. Spend more time than you think on the retention phase

Retention is better than selling.

Often, companies spend a lot of money on new opportunities and forget their current customers. If your current paying customers leave, you have to make up for that in new business. On top of that, you must make a certain amount of new sales to grow your company. No one wants to be stagnant, but it’s often the only option if you’re bleeding current customers.

Retention through contract renewals and upsells is essential to the demand generation funnel. Invest in account executives to connect and sell to your existing client base.


Conclusion: Improve the demand generation funnel through simple tweaks

Whether you pick a simple or more complex demand gen funnel structure for your organization, remember that it’s not a “set and forget” decision. Your funnel needs regular maintenance and adjustments, and it needs to be giving sales and marketing cues on how to improve the entire experience—for your company and for your customers. By making small modifications over time, you give your funnel an opportunity to evolve with your business and optimize your bottom line.


Looking for more ways to improve your funnel? Schedule a call with us to see how our AI-powered Sales Development Platform can help you get better leads.