How to build a lead generation funnel

Small businesses have been hit hard by the sudden changes in buying behavior that have accompanied the 2020s. From shifts to remote work (and then back again) to peak inflation rates, small businesses have had to navigate unexpected shifts in spending habits.

That's why it's more important than ever to develop an ironclad lead generation strategy. If you have a solid sales plan in place, you can adjust to changes by adjusting your strategy. A business that just relied on foot traffic to bring in customers, on the other hand, would have to build a lead generation funnel from the ground up if a major change interrupted people's normal shopping habits.

I want to share with you how my team has tackled lead generation. Because every business will have different lead gen strategies, your journey won't look exactly like this, but the goal is for it to spark some ideas that help take your lead gen to the next level.

What is a lead generation funnel?

Lead generation is the process of bringing in potential customers and turning them into qualified leads.

The lead gen process is like fishing. You'll start by choosing the type of fish you're after and figure out where to find them, then choose the right bait for your hook and cast your line. It doesn't end there, though—once you've got a bite, you can't just start reeling in your line. There's a technique to getting your fish on the hook and bringing it in without losing it along the way.

Stages of the lead gen funnel

There are five main stages of the lead generation funnel: awareness, interest, appraisal/desire, action/confirmation, and conversion. Each stage maps to a part of the lead generation funnel—top-of-funnel (TOFU), mid-funnel (MOFU), or bottom-funnel (BOFU), as you can see in the diagram below.

• In the awareness stage, you'll use a lead magnet to capture potential buyers' attention.

• In the interest stage, you'll capitalize on that attention by demonstrating your company's value and garnering interest in your brand.

• In the appraisal/desire stage, you'll focus the prospect's interest on a particular product or service that provides them a specific benefit or solution.

• In the action/confirmation stage, you'll convince the prospect to pull the trigger and buy the item they've been considering.

• In the conversion stage, you'll close the deal by making the sale.

How to build a lead generation funnel

Here's the step-by-step process my company followed to increase sales. 

1. Find your target customers

At Solvid, we provide businesses with copywriting and content services, and part of our long-term strategy is to build a network of loyal brand ambassadors—AKA affiliates—that promote our services in return for a generous commission. Our goal was to generate enough quality affiliates that we didn't have to spend a dime on paid marketing. Our affiliates would take care of it for us.

So first things first: we needed to make sure that we were reaching the right people. In our case, we wanted to target bloggers as potential brand ambassadors.

We knew that bloggers often monetize their blogs once they start generating a good amount of traffic, and that one of the most popular ways to do that is through affiliate marketing. So after a few days of keyword research and competitor analysis, we came up with a strategy: produce an in-depth blog post covering the best affiliate marketing programs for bloggers.

2. Create great content (and other lead magnets)

We created the piece, and within a few months (which is what it takes to gain traction with SEO), it started generating around 500 daily visits. We'd initially not included our own program in the list to avoid seeming overly self-promotional on the first go, but once we saw that our content was offering value to readers, we added our own affiliate program to the list (only at the second spot). 

We were getting signups from the blog post, too. In the image above, you can see that the post generated 316 unique visitors, 34 of whom proceeded to the affiliate registration page. From there, 17 registered—that's a ~5.4% conversion rate. Not bad for a blog post, considering that we didn't even put our own affiliate program first on the list.

Lead magnets like this are, essentially, prospect bait. These are things that provide value to your target customer—guides, offers, information, entertainment—and get them "through the door," so to speak. And when it comes to lead magnets that provide value without breaking the bank, content really is king.

Content as a marketing strategy isn't new, but simply creating content isn't enough. Your content has to be good, not just … there. Content that gets attention but doesn't draw people in will get you solid brand awareness, but it won't generate leads.

Though we were lucky enough to see some immediate results, content alone isn't enough to generate reliable conversions. That's where calls-to-action, or CTAs, come in.

3. Use CTAs to drive traffic down the funnel

We used two types of calls to action (CTAs) to get more traction: sticky CTAs and exit CTAs. Here's what a sticky CTA looks like:

This banner wasn't very intrusive, and it generated a good number of signups (over 600, which we measured through OptinMonster).

Our exit intent pop-up was intended to capture the email addresses of people who were about to leave the website (meaning they were moving their cursor toward the close button).

You may find these kinds of pop-ups annoying as a reader, but as a seller, you'll find that not everyone agrees. This pop-up alone generated over 700 email subscribers over 12 months. 

You'll notice that these two CTAs have different goals—the first asks readers to sign up for our affiliate program, while the second asks them to sign up for our newsletter. Those who will move quickly through the funnel will be more likely to click the sticky CTA, while the exit CTA targets those who need a little more time in the interest phase. Which brings us to our next tactic: email marketing.

4. Engage leads with email marketing

Email marketing provides a way for us to keep leads engaged and show them more content that will continue to increase their interest and move them toward eventually signing up for the program. We wouldn't send the same types of emails to potential affiliates that we sent to potential customers, so we use ConvertKit to tag each subscriber with identifying information based on which form they used to sign up.

Once someone subscribes to our email list, they're segmented into a very specific email channel with its own chain of automated emails relevant to their interests—in this case, affiliate marketing.

The first email is a welcome email that includes links to resources on our blog that might be helpful for someone just starting out with affiliate marketing. We include a link to our affiliate program, but it's not front and center quite yet.

Two days later, we send out a second email, designed to promote a few specific affiliate programs—including ours. And the automated emails continue until someone signs up, at which point they're moved into a different email journey.

Tips for optimizing your lead generation funnel

Now that you've built your lead generation funnel, use these tips to optimize it: 

• Qualify leads: Determine what leads are most likely to purchase, and direct more efforts toward those leads. For example, a lead that starts a free trial is likely further down the funnel than a lead who clicks a CTA. 

• Find tools that fit your workflow: There are many lead generation tools on the market to help drive traffic, capture leads, and facilitate communication. For example, if you need to schedule meetings with leads, choose software that manages your calendar and allows you to set up video calls. 

• Use trial and error: Experiment with different strategies and lead funnels to find what your audience connects with. A few examples of strategies to test include creating different types of content, adjusting advertising efforts, and testing landing pages. 

• Learn from rejected leads: Analyze rejected leads by looking at the source of those leads, weighing the amount of engagement, and asking for feedback to understand what happened. 

• Keep quick turnaround times on leads: Consider investing in lead management automation to ensure fast lead response times. 

When automated correctly, a lead generation funnel is kind of like having a salesperson to work on bringing in new clients while you work on other things. You'll need to continually create new lead magnets and funnel content, but a good automated funnel can do a lot of the tedious work and free up your time to focus on all the other things that make your business tick.

Here are a few more resources to help get you started:

• 3 ways to automatically keep track of leads

• 4 ways to automate your email marketing for better communication

• 6 fatal mistakes in lead generation strategy

• How to deliver content that matters

This post was originally published in February 2021 and has also had contributions from Shea Stevens. The most recent update was in August 2023.