Marketing funnels go by many names. You might call yours a sales funnel or a conversion funnel. You may not even realise that you’re employing one as part of your sales process.
But trust us, if you run a business that depends on new customers to grow (which is almost all businesses), then you’ve got one. But you might not quite understand the dynamics of the process, and perhaps you want to dig a little deeper to ascertain whether you’re doing it right.
We don’t blame you. Who doesn’t want to find a way to secure new customers?!
So let’s run you through some of the basics to give you a little more context and help you develop a killer marketing funnel formula of your own.
What is a Marketing Funnel?
Let’s make a start with the fundamentals.
A marketing funnel represents your customers’ journey from prospect to customer, along with the tools and mechanisms you use to guide them through the process.
The concept first came to prominence back in the early 20th century when advertising agency owner Elias St. Elmo Lewis developed his AIDA purchase funnel.
It mapped out the different stages of a customer’s relationship with a company, which, in his eyes, are as follows…
- Awareness: A prospect becomes aware of their problem and starts researching potential solutions.
- Interest: The prospect expresses interest in a particular group of products or services that solves their specific problem.
- Desire: The prospect shows interest in a particular brand or product and begins to evaluate whether it meets their needs.
- Action: The prospect decides whether that brand or product meets their needs. If it does, they become a customer. If it doesn’t, they continue to evaluate until they find a brand or product that does.
In 1924, William H. Townsend built upon this model to develop the first recognisable marketing funnel. He realised that more and more prospects were lost as they progressed through each stage of the buying process. He found that when the steps were drawn graphically, they depicted a funnel shape, with masses of people trying to solve a problem at the top and only a few making it to the bottom of the funnel (purchasing a specific brand’s product or service).
But the modern-day marketing funnel looks very different. In fact, many would argue that the funnel shape is a relic of the past. Today’s funnel looks more like an hourglass. But more on that later.
Let’s take a look at how the stages have changed and evolved over the years.
Progression and evolution of the marketing funnel concept.
As time has gone on, not only has the funnel lost its shape, but stages have been merged, and many processes and tools have been added. So let’s take you through a brief overview of how far we’ve come since the 1920s.
First, it’s essential to clarify that the marketing funnel is no longer a universal concept. Many different professionals define the stages differently. However, what has become prevalent in the years since William H. Townsend is that there is now an inverse funnel tacked on to the original funnel concept.
This shift has come about from the realisation that the customer journey seldom ends at the first purchase. Rather, it marks the start of a whole new chain of events.
These after-purchase stages are incredibly valuable to a company. For example, increasing customer retention by a mere 5% can raise profits by 95%, according to research undertaken by Bain & Company. What’s more, it costs five times more to attract a new customer than it does to retain an existing one.
The names of these “new” stages are different depending on who you refer to, but generally speaking, these additional stages of the marketing funnel comprise:
- Repeat – Customers that were impressed enough the first time round come back to repurchase your product.
- Loyalty – Customers in this stage now no longer consider other brands for the solution to their problem. When they experience this problem, your brand is their default choice.
- Referral/Advocacy – Some categorise these terms as two different stages, but effectively this is where a customer isn’t just loyal to your brand, their advocate on your behalf. They recommend your products to their friends, family, and peers, widening the number of customers coming in at the top of the funnel.
Thus what you end up with is an hour-glass shape.
Deconstructing the modern-day marketing funnel.
Now that you understand what today’s marketing funnel looks like, let’s take you through what your business should be aiming to do at each stage of the funnel.
The awareness stage.
This is the stage at which your customer first becomes aware they have a problem and begin their research into a solution. Your goal as a brand is to position yourself as a worthy solution.
High-quality educational and authoritative website content is crucial at this stage. It demonstrates your company’s knowledge and ability in a specific field, and it entices customers to learn more about your business.
Other examples of attention-grabbing strategies to gain customer awareness include:
- Social media content
- Email campaigns
- Blog articles
- Free ebooks or guides (lead magnets)
Once you’ve caught a prospect’s attention, it’s time for the consideration stage.
The consideration stage.
This is the stage where a customer is aware of your company and starts exploring the multiple ways they could solve their problem and evaluate you against other similar providers.
For instance, a customer may be looking for help filing taxes for their self-assessment. They may first look at DIY options that help you to do it yourself versus hiring an accountant. If they decide they are going to hire an accountant, they will start comparing different accountancy firms.
This where you have to hammer home the reasons why your business is the best provider of the specific solution they’ve chosen. Marketing methods such as automated email marketing campaigns (marketing automation) can help to warm up a cold lead who merely expressed an interest.
Case studies are also extremely effective during this stage as they allow the customer to picture themselves receiving the product or service themselves. It also provides social proof to your prospect.
The purchase stage.
After your continued nurturing, this is the stage whereby your prospect decides to “take action” and make a purchase. This stage should focus on helping prospects choose the best product or service from your brand and demonstrating why it’s the best solution.
In other words, they have decided they are going to buy a product or service. You just need to convince them that yours is the best choice.
For example, if you’re a SaaS company, can you offer a free trial to help make up their minds that yours is the best solution to their problem? If you provide a personal service, why not offer a no-obligation consultation to prove that you can solve their problem?
By contrast, if you operate an e-commerce store, it’s an excellent idea to include testimonials and reviews on your product pages to reassure your prospect that they present the best solution to their problem.
An increasingly prevalent tactic within e-commerce web design is to visually stack your products up against your nearest competitors in a visually appealing manner to demonstrate how much better your solution is.
The loyalty stage.
This is about after-sales care and ensuring that your customer keeps coming back for more. This stage is all about nurturing the lifetime value of your customer. You need to provide the support they need. Otherwise, they’ll abandon you for a business that can.
If you sell a product that has a specific usable timeframe, then you need to ensure that they come back to you when you need a replacement. Here’s where you need to implement customer support solutions such as live chat, customer forums, FAQ and supporting documentation pages, tutorial videos, and so on.
Providing unrivalled support is one of the critical factors of turning a neutral customer into a loyal one, and those good experiences help them become an advocate for your brand.
The advocacy/referral stage.
This is the stage whereby you get to reap the most rewards for the least effort. It’s when your hard word during the loyalty stage pays off in spades. Happy customers will not only stay loyal to your brand, but they’ll advocate on your behalf.
Every time they witness a friend, family member or peer experiencing the same problem as they did, they’ll recommend your brand. Word-of-mouth marketing is still one of the most effective tools available to a business. This rung of the marketing funnel allows you to harness and take advantage of it.
In terms of what you need to do during this stage, the answer is not a lot. But you can incentivise your most loyal customers into advocacy and referrals by offering loyalty discounts. You can also set up a referral program that rewards existing clients for recommending new customers.
Here, your existing customers are helping their peers head straight to the consideration/purchase stages. With many of them buying your products or services based on their recommendations of your loyal customers alone.
That’s about it for now! Hopefully, you’ll have learned the basics about the key stages of a modern-day marketing funnel and understand why it’s no longer a funnel at all. We’ve also told you about what you need to do during each stage to progress your customers further down the funnel.
As a business that offers digital marketing services, the team here at Cakecrumbs can help you to put large chunks of this process on auto-pilot and implement the most effective techniques for attracting as many people as possible to the top of your funnel.
This blog article was also published on our subsidiary website, Cakecrumbs.