Two business professionals are sitting in front of laptops and brainstorming over a piece of paper with handwritten notes about marketing and sales funnels

What Is a Lead Funnel and How Does It Work?

In the marketing world, it feels good to get noticed. It’s a sign that your efforts are paying off and, perhaps most importantly, resulting in leads. But what is a lead?

In short, a lead is a trackable sales prospect that is beginning to show signs that they may soon make a purchase. People interested in your products or services may reach out to your company through a phone call or various internet methods to learn more. When you capture a potential customer’s contact information — such as their phone number, email, or social media account — you’ve secured a lead

When it is established that a lead has the need, budget, and (in some cases) the authority to buy a good or service from you, they turn into a prospect. Sales professionals must then work their magic to convert these qualified leads into loyal customers.

As you can see, transforming a lead into a customer is a dynamic process with many tasks and considerations to balance. In addition to investing in leads, you can simplify this process with a lead generation funnel. This can streamline the conversion process while giving you valuable insights into your business’s marketing, such as the percentage of leads that turn into customers.

In these ways, a lead funnel can save you time and give you actionable data with which to shape your marketing efforts going forward. This article will discuss the stages of a lead funnel and provide lead management best practices to help you realize your business’s full potential. Read on for a comprehensive look into this topic.


Lead Funnel vs. Sales Funnel

You may already be familiar with the concept of the sales funnel, and there are many similarities between lead funnels and sales funnels. Both are ultimately designed to attract consumers to a business and improve the brand’s worth in the market.

However, conflating these distinct concepts can lead to confusion. While sales and marketing are highly related, they have different aims. As such, there are some key differences between these two funnels:

  • A lead funnel is intended to improve a brand’s visibility in order to grant it a competitive edge. This involves generating and nurturing leads to transform unaware consumers into potential sales prospects.
  • A sales funnel is intended to move sales prospects toward making a purchase. It moves individuals from being sales prospects to being actual customers and, ideally, brand advocates.

A lead funnel and a marketing funnel should be used in conjunction to drive conversions. In the words of management consultant Peter Drucker, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Leveraging both funnels in conjunction can help your business make this concept a reality.

Both of these funnels have distinct stages, and the nature of each stage can vary depending on your industry and niche in the market. Potential customers in certain fields may spend more time in different parts of the funnel than others.


Stages of the Lead Funnel

It is vital to be aware of the stages of the lead funnel and how to best navigate industry-based differences if you want to achieve sustainable business growth. There are several stages, and each represents a different role that your marketing team will need to play. Review the specifics on each stage below to inform how you handle lead generation.


The earliest stage of the lead funnel is awareness. This is the point at which a potential customer has realized that they have a specific problem — one that your product or service is designed to help with. Because they’ve only just begun to identify their challenge, they may need further information to help guide them in the right direction.

Lead Capture

If site visitors don’t leave any information about themselves with you, then you don’t have any leads. Lead capture involves saving lead information in order to facilitate attempts to convert them into a client. This can come in many different forms:

  • Phone call leads: Incoming phone calls can be tracked as leads. Outbound calls — sometimes called cold calling — is another method. In this method, you will need to purchase leads, then validate them through outbound communication. Legal businesses can buy real-time legal leads for this purpose.
  • Web forms: Using an information request form on your site, visitors will be able to enter their contact information so that you can reach out with info on your offerings.
  • Email leads: Incoming messages to your company’s email address may also constitute leads. Purchased leads may also be validated through cold emails.
  • Social media leads: Any presence your company has on social media can be a lead generation channel. Incoming messages, including comments or questions, can be entered as a lead.

Customer relationship management software may automatically capture lead information, though some small businesses may opt to manually enter data. There are also many types of call tracking software that can help when it comes to capturing lead data.

Prospecting & Marketing Qualified Leads

Prospecting leads involves validating them to determine whether they are qualified — meaning that they are able and willing to buy from you — as discussed above. The act of prospecting can vary in depth, depending on a business’s industry and scope of its marketing efforts. This step is the transitional point at which a potential customer moves from the lead funnel to the sales funnel.


Once a potential client makes a purchase, they are considered a customer. At this point, a business should make efforts to continue to build brand authority, foster further engagement (including future sales), and maintain existing customer relationships. Customer relationship management consists of efforts a business takes to retain customers and drive sales growth.


Lead Management

Understanding the stages of the lead generation funnel is only the first step in taking full advantage of it. You must properly manage leads in order to maximize sales growth and create a stable customer base. At various stages of the funnel, you can take action to shape your marketing efforts and drive conversions.

Improving Brand Visibility

In the “awareness” stage, potential customers need more information. You want your potential prospects to feel informed about their buying decisions. As such, it can help to create a content marketing campaign designed to directly address common pain points that may necessitate your goods or services. This can guide traffic to your site and generate leads. Further, it can establish your brand as an authority in your niche and, in some cases, guide traffic further down the lead funnel and into your sales funnel.

This content can be leveraged on social media in order to maximize its visibility. You should optimize this content based on real-world queries that your target demographic may use when looking for solutions online. Doing so may improve your content’s visibility on search engine results pages, which can be a lucrative way to generate leads.

Incentivize Lead Captures

Sites may incentivize visitors to leave contact information by offering a weekly newsletter, special discounts through email, or other offerings. Further, lead opportunities can be found in existing customer relationships. Current customers may provide assistance through referral programs to potentially generate additional prospects. A referral program also involves incentivizing existing customers to become brand advocates in return for discounts or other benefits.

Personalize Marketing Efforts Based on Lead Information

Early on in the lead funnel, once you have a newly prospected audience, you can begin marketing to them. Many companies create prospect profiles to organize leads into discrete categories and improve outreach personalization.

This data can also be used to refine your buyer personas and create effective pay-per-click campaigns. By narrowing down your target buyer personas, your content, social media, and email marketing efforts can all be personalized toward the desires and needs of specific segments of your audience.



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