The Lead Generation Funnel – What it is & How to Build It

The Lead Generation Funnel – What it is & How to Build It

You need to keep your sales pipeline full if you want your online business to thrive.

That being said, lead generation can be quite a challenge if you don’t have a solid system for gathering the contact information of potential customers. But how can you set up such a system?

That’s exactly what we are going to discuss today:

  • What is a lead generation sales funnel?
  • What are the differences between B2B lead generation funnels and B2C lead generation funnels?
  • How to build a lead generation funnel?

So the question is…

Are you ready to start generating more leads?

What is a Sales Funnel?

Okay, so before we get into lead generation funnels, let’s make sure we understand what a sales funnel is.

It’s the path that the customer takes from first hearing about your product or service to purchasing that product or service.

At its most basic level, it consists of these three parts:

  1. Top of the sales funnel (ToFu): Target audience
  2. Middle of the sales funnel (MoFu): Potential customers
  3. Bottom of the sales funnel (BoFu): New and existing customers
traffic marketing funnel diagram

Every online business has a sales funnel through which they convert people in their target audience to potential customers (leads) and then to existing customers.

However, these sales funnels often aren’t well-thought-out, which is why they tend to be ineffective.

Here at ClickFunnels we promote a specific sales funnel template called The Value Ladder which was created by the company’s co-founder Russel Brunson.

Here’s how it looks like:

marketing value ladder graphic

The main idea is this:

  1. You use bait, also known as a lead magnet, to get the potential customer to step into the funnel.
  2. You present them with your frontend offer which is an inexpensive product that is the most affordable one in your product range. 
  3. You then present them with your middle offer which is both more expensive and more valuable. 
  4. Finally, you present them with your backend offer, which is your most expensive and most valuable product.

This sales funnel template works so well is because you get the customer to make increasingly serious commitments by offering them more value at each stage of the funnel.

What is a Lead Generation Sales Funnel?

So now you know what a sales funnel is. But what is a lead generation funnel?

A lead generation funnel is the top of your sales funnel where you:

  • Catch the attention of people in your target audience.
  • Offer them a super valuable lead magnet that they can’t resist.
  • Get them to click through to the lead magnet’s landing page and give you their contact information.

Once you have their contact information, they become a lead. Your job then is to get them to move through the rest of your sales funnel.

B2B Lead Generation Funnel vs. B2C Lead Generation Funnel

You may be wondering what’s the difference between the B2B lead generation funnels and B2C lead generation funnels.

What matters isn’t so much whether you are selling to businesses or to consumers, but how much your products cost.

Here’s a helpful rule of thumb: the higher the price of your products, the more value you need to provide in your lead generation funnel.

That’s because providing value is how you establish trust. And the more expensive your product is, the more the potential customer needs to trust you to make the purchase.

How to Build a Lead Generation Funnel

You can follow this seven-step process to build your own lead generation funnel:

Step #1: Define Your Target Audience

You need to know who your ideal customers are if you want to generate quality leads.

It’s important to remember that if you try to appeal to everyone, you will end up appealing to no one. You should clearly define your target audience.

When you have an established business, you can simply look at the customer data to figure this out.  Who is buying your products? Don’t assume anything. Look at the data. 

Once you know who your existing customers are, you can then start thinking about how to attract more people like them.

Of course, if you haven’t launched your business yet, then you will need to make an educated guess. Who is likely to benefit the most from your products? 

Step #2: Identify a Problem That Your Target Audience is Struggling With

Once you know who your ideal customers are, it’s time to do some customer research. Go where they hang out online and observe the discussions happening there.

This can mean:

  • Keeping an eye on relevant Twitter hashtags.
  • Subscribing to relevant subreddits on Reddit.
  • Registering to relevant online forums.
  • Joining relevant Facebook groups.
  • Reading the comments below relevant YouTube videos.


Your aim should be to find a painful problem that your ideal customers are struggling with that is either the same or related to the problem that your frontend offer solves.

Step #3: Create a Lead Magnet That Offers a Solution to That Problem

Once you found a painful problem, it’s time to create a lead magnet that offers a solution to it.

Your lead magnet can be anything that your ideal customers can either download directly to their devices or access online:

  • An ebook.
  • A video course.
  • An email course.
  • A cheat sheet.
  • A spreadsheet.
  • A step-by-step plan.


You want to pick a format that is best suited for conveying your message. If you were in your ideal customer’s shoes, in what form would you like to receive that content?

What’s important here is that you approach creating your lead magnet with the same seriousness that you approach creating your paid products. 

You want your ideal customer to come away feeling that they have learned something valuable from your lead magnet.

For example:

Brennan Dunn went to great lengths to make his free “Charge What You Are Worth”email course super valuable.

Brennan Dunn email copy example for a freelancer

He even gives new email subscribers a quiz to determine their goals and customize the email course accordingly.

Step #4: Create a Landing Page for Your Lead Magnet

Once you have your lead magnet, you need to create a landing page for it. 

Think of it as a sales page but instead of asking for money you are asking for the potential customer’s email address.

Since lead magnets are free, “selling” them doesn’t require much persuasion, so their landing pages tend to be short. They are called squeeze pages.

For example:

Jon Morrow, a popular blogger and a renowned writing coach, uses this squeeze page for his “52 Headline Hacks” lead magnet:

Jon Morrow landing page example

When you click the “Click Here For Free Instant Access” button, you get this pop-up:

email capture sales page example

As you can see, this squeeze page is very simple but it’s probably safe to assume that it converts well given that Jon Morrow has kept it up for several years now.

However, while squeeze pages are the most popular option, you can also create a proper “sales” page for your lead magnet.

For example:

Nick Stephenson, a best-selling author who teaches writers how to market their work, has put a ton of effort into his lead magnet landing page.

Above the fold you can see:

  • Headline.
  • Social proof.
  • Sales copy.
  • Sales video.
  • Call-to-Action button.
above the fold landing page example

This would make a great squeeze page. But Nick didn’t stop there.

As you scroll down, there’s more social proof:

social proof landing page example

Then there’s more information about the lead magnet:

lead magnet video diagram

And then there’s even more social proof:

New York times bestseller testimonials

Finally, there’s another call-to-action button:

call to action sales page

You might think that it’s crazy to put this much effort into persuading people to download your freebie. But it’s not. It’s clever.

Think about it:

  • The more appealing your lead magnet landing page, the more people will download that lead magnet.
  • The more people download the lead magnet, the more leads you have that you can sell to.
  • The more leads you have that you can sell to, the more sales you are going to make.

So treating your lead magnet landing page as a proper sales page makes sense. Consider doing it yourself.

Step #5: Create a Lead Nurturing Email Autoresponder Sequence

You also need a lead nurturing email autoresponder sequence. This means a series of emails that are automatically sent to everyone who downloads your lead magnet.

This email sequence should:

  • Provide value to the potential customer.
  • Warm the potential customer to the idea of purchasing your frontend offer.
  • Make the sales pitch for your frontend offer.

What’s important here is to strike the right balance between providing value and selling your product.

Focus too much on the former and you risk leaving money on the table. Focus too much on the latter and you might put the potential customer off.

Step #6: Start Driving Traffic to the Lead Magnet Landing Page

Once you have:

  • A lead magnet.
  • A lead magnet landing page.
  • A lead nurturing email autoresponder sequence.

It’s time to start driving traffic to that landing page.

It’s probably safe to say that the fastest way to do that is via paid advertising. Set up a Facebook or Instagram ad campaign. You will quickly find out whether your lead generation funnel works.

That being said, you may want to focus on SEO as your long-term traffic generation strategy, so that you could eventually stop relying on paid ads to generate leads.

Step #7: Analyze the Data and Adjust Accordingly

Once you have enough data, analyze it to see what could be improved. 

Make sure to examine:

  • Ad conversion rates.
  • Landing page conversion rate.
  • Lead to customer conversion rate.

Also, if you get any feedback from people who have downloaded your lead magnet, pay special attention to it. What did they think about it?

Once you know your conversion rates, you can start experimenting with various ways to improve them. 

This can include increasing the traffic quality, trying out different ad creatives, implementing the best conversion rate optimization practices, and more.

Never Lose Sight of the Big Picture!

It’s important to understand that a lead generation funnel is a system. Each stage exists in connection with other stages. 

Don’t make the mistake of myopically analyzing the funnel components in isolation from each other. You need to see the system as a whole to understand why it’s working the way it does.

Moreover, you need to understand that a lead generation funnel exists within your overall sales funnel. It’s a system within a system. 

Keep in mind that everything that happens at each stage of your sales funnel affects the potential or existing customer’s behavior in the subsequent stages of that sales funnel.

This means that sometimes what appears to be a problem at a specific stage is actually a result of something going wrong in one of the previous stages. 

For example:

Let’s say that your landing page doesn’t convert well. What could be the issue?

It could be:

  • The landing page itself.
  • The ads that you use to drive traffic to that landing page.
  • The people that you target with those ads.

In this situation, it may be tempting to obsess over the landing page, but you need to resist that temptation.

You should instead examine your lead generation funnel as a whole if you want to correctly identify the problem and then find an appropriate solution.


As we often say:

Sales are the lifeblood of any business. 

But you can’t make enough sales if you aren’t generating enough qualified leads.

That’s why you need to set up a proper lead generation system. It’s just too important to leave to chance.

So take the time to build a lead generation funnel. It may take a while to get it right. But once you do, you will be able to put lead generation on autopilot. And you will never look back.

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