What is a marketing funnel?
This post will give you a basic summary of potentially the most useful tool in your marketing arsenal - the humble marketing funnel.
Your marketing (or sales) funnel represents the journey a customer goes on to find, acquire and use your product.
What is a marketing funnel?
While it can be unique to your business or industry marketing funnels generally follow the same flow:
Awareness - is your customer aware of your product or brand, or are they aware they even have a problem you can fix? How do we introduce your brand to them or help them become ‘problem aware’?
Consideration - OK, they know who you are. Now they’re comparing you against your competition and weighing up who to buy from. How do you stack up? What’s going to put you above your competitors?
Preference - you cut the mustard and they’ll buy from you at the next chance they get. How are we going to stay front of mind and make sure they don’t go looking elsewhere?
Purchase - So you’re their first choice and the opportunity has arisen for them to buy. What’s that experience like? How do we make it easy for them to buy? Do you have a sales team that need to get involved?
Post purchase - now they’ve bought your product, how are they using it? How are we making sure they’re getting value and buying more from us?
This is very basic funnel, but the overall objective of your marketing and sales activity is to move customers from top to bottom - then ideally back in the top again for repeat purchases or, if you can to cross sell other products.
Why a funnel?
Marketing funnels are referred so as such because the logic is more people will be aware of you than will consider you. Of those who consider you, fewer will prefer you, make a purchase and purchase again. As you move down the number of customers at each stage gets smaller and so your funnel narrows.
But, why funnels?
The analogy that I like to use is probably the one you can relate to if you own a shop, or have ever been in one before.
When someone walks in the door, you don’t say ‘can I ring that up for you?’ You ask - ‘can I help you’? The customer is in the shop, so they’re aware of you. But they’re likely still in their consideration stage unless they’re literally walking to til with something in their hand.
Customers might move through stages instantly. And for low involvement or impulse purchases they might even skip them or move through them so quickly you don’t have a chance to influence their decision making. No matter how quickly they move through, customers have different needs at each stage of the funnel and the better you can cater to those needs and help them move through each stage, the better.
Why are they useful?
Because funnels are linear they give us a great way to track, measure, report and improve your sales and marketing activity.
Plus there’s more and more data which shows just how much research people do before buying something. They’ll often be well past consideration and even potentially showing signs that they prefer you before you hear from them. So having an understanding of the needs your customer has and answering them online can put you well ahead of your competition.
Anyway, here’s how you do it…
Make your own marketing funnel
Start with the steps above as a loose guide and then customise the funnel to your industry or customers. Ideally you’d use research to help shape it along with your own experience and the experience of your sales team, if you have one.
Don’t get caught up on trying to make it too complex. You’ll need to be able to:
Accurately (and more importantly, consistently) track how many prospective customers you have at each stage.
Easily identify the challenges or pain points customers have when progressing through to reduce friction.
Make strategic decisions on which parts of the funnel to work on, and which parts to leave for now.
If you have more than a handful of stages in your funnel, that’s going to make things challenging. That being said if you have a long, highly involved product or service that it takes a long time for customers to buy - it’s completely reasonable to have a longer one. Generally though this is one of the instances though where shorter is better!
A good way to test you have it right is to make sure it’s functional. By that I mean you can see customers at each stage which means you can…
Track customers through the funnel
Once you have your funnel the next thing you need to do is track how many customers are at each stage. This will help us figure out why not all customers who are aware of you purchase from you, and prioritise plugging the gaps!
The best way for you to track customers through your funnel is with research. But this isn’t always accurate and takes time to set up. It can be done using a survey of your target market using something like Survey Monkey and a few bucks into Facebook advertising to get people to complete it. How many people you need to have reply to your survey will depend on the size of your market and how confident you want to be in your data. There are plenty of resources online to help!
If research sounds like too much hard work there are other ways to track - the important thing to ensure is that you’re consistent with you tracking so you can measure the improvement your activity causes.
I’ll use examples to try and explain what to look for at each stage.
Awareness - this should be based on the entire market, not just your customers (which is cheating, they’re your customers so they obviously know you). It’s very difficult to track without research. If you’re small you can probably assume most people don’t know you, and avoid getting hung up on tracking this.
Consideration - You can use general unique web traffic as a proxy for this to give you a rough idea of how many of your market are aware of you and considering you. If you want to get clever you might want to focus on how many customers browse your pricing page as it’s a clear indicator that someone is considering your product when they’re looking at the price of your goods.
Preference - this one is another one which is far easier to track using research. Another proxy could be something like your number of email subscribers or social followers. Not ideal, but another one you could skip if you’re a smaller company.
Purchase - This is the easy one as you should have most of the data and you can get into detail of who is buying from you.
Post purchase - Another relatively easy one, but could be an array of things depending on your market. Repeat purchase is a great proxy here. There are also non-sales targets here too like volume of customer service enquiries. Are you customers really satisfied if they need to call you daily to get the product to work for them?
Consistency, consistency, consistency
One of the most important things I’ll say again is; consistency. You don’t have to track constantly. Doing so might be a waste of time and resources. Once or twice a year for research is plenty.
The metrics you can track directly should be an ‘always on’ report though. Don’t be that person that tries to lose weight and jumps on the scales daily to measure changes in grams - just keep an eye on it.
Quick maths
At each stage we want to get a number which we can extrapolate into the previous stage to show the reduction.
I’m going to use a very basic example because… maths.
Let’s say we have a business which services a total market of 10,000 people.
We do research, and of the 10,000 people in our market…
5,000 of them know who we are.
1,000 consider us.
900 have bought from us.
90 have bought from us more than once.
Based on some very basic division, you’ll be able to get a funnel that looks like this:
Aware - 50%
Consider - 20%
Purchase - 90%
Re-purchase - 10%
Ok, now what?
Now we plug the gaps!
Based on the example above we definitely don’t have a problem with customers who consider buying from us - but we do have a big gap in the number of customers who’ve purchased from us once, but not again.
So if we decide to focus on that one, we could try something like an email to customers with a special offer to increase repeat purchase.
We won’t get into budgeting here, but this is an easy example one to quantify the value of, as we can see a direct link between activity and sales.
The benefits of your activity higher up the funnel will have a flow on affect to the stages below. So if, for example, we increase consideration by writing a compelling piece of content which compares you vs your competitors, that could increase consideration, meaning there are more people to purchase. And if we maintain that strong purchase rate, we’d see a marked increase in sales and a flow on benefit to re-purchase.
Also - the general rule is if you’re looking to fix your funnel is you start from the bottom. It’s pretty straight forward there’s no point pouring more customers in the top, if they simply fall out and don’t convert.
Summary
Marketing funnels are awesome!
They’re not too hard to set up, but tracking can be a little more challenging.
You can use them to better understand and optimise your customer’s purchase journey.
That in turn will help you prioritise your efforts and make your business more money.
That was a lot of information. We’re always happy to chat and walk you through it. Contact us for a chat and let us take your six.