If you are involved in marketing or run your own business, you have probably come across the term Marketing/Sales Funnels. Today I will tell you a little more about what they are, what they are for, and how to create them.
What are marketing funnels?
A marketing funnel is a path that a consumer must follow from the moment they first learn about your brand to the moment they become a customer (make a purchase). Sometimes the funnel also includes the buyer's next actions that have sales significance, such as cross-selling, upselling or recommending a service/product to others.
There will always be some potential customers who will drop out along the way, for a variety of reasons. This is why the design of this path resembles the construction of a funnel (and that's where its name comes from). In both cases, there are the most people at the top, and the fewest at the bottom.
Funnels can be very general or very specific, spelling out every single action a person needs to take throughout the journey. They are usually divided into three segments – TOFU, BOFU, and MOFU.
TOFU – Top of the Funnel
TOFU, or the top layer of the funnel, is the stage where the main goal is to build brand awareness. It is also the stage where a potential customer begins to realize a pain or need that they can satisfy, which smoothly moves them to the next segment.
MOFU – Middle of the Funnel
The middle part of the funnel is where the consumer is looking for a solution to their problem. This is where they read the information that will help them make a purchase decision. They are already aware of your solution, but are now trying to learn more about it.
BOFU – Bottom of the Funnel
The last part of the funnel is where the customer has already made a purchasing decision: they want to use your service. This is when they come to the store and go through the purchasing process.
For example, if we were to think about the furniture industry, we could (in a simplified way) write a funnel like this:
TOFU – our potential customer looks at his old couch and decides that he could use a new one. At this stage, it is worth not only hearing about our furniture store, but also having good associations with it. Then we have a very high chance that he will consider us in further actions. The main threat is that he does not know about us at all, which is why he will not consider our offer at all.
M.O.F.U. – the prospective buyer looks at options – this is where we show them the value of our solution. At this stage, they browse websites, compare prices, consider color, reviews, and the like. The main risk is that our website or products will not be convincing enough for them.
BOFU – if we managed to convince the customer to use our offer of sofas, at this stage they enter the website to place an order. Although they seem convinced, there are also risks here – maybe the delivery time will be too long, maybe we do not support the payment methods they want, and so on. In such a situation, they may go to the competition.
The above funnel is of course a very simple form, you will find more details below :)
What are funnels for?
The first application of marketing funnels is appropriate communication planning, depending on what stage of the funnel our potential customer is at.
For example, when building brand awareness, we don't want to show strictly sales ads. At this stage, our potential customer may not even have a need to buy our product, so this type of content will only scare them away. Returning to the example of the couch, if our recipient currently has no need to buy this type of product, a much better form of communication would be, for example, sharing ideas for interior design - in this way, we simultaneously build a positive perception of our brand, and above all, awareness that we exist at all.
At the same time, for people who are already at an advanced stage of decision-making, sales remarketing can be an ideal form of communication – reminding them of the products they have viewed and are currently considering. We can then emphasize their value once again. On the other hand, we do not necessarily want to talk about bathroom design ideas that will only distract from the target product.
Optimization, optimization and more optimization
The second, extremely useful application of marketing funnels is conversion optimization. As I wrote at the beginning, some people drop out during the funnel, but you can work on making fewer of them drop out. In special cases, we can even make their number grow as they reach the very bottom of the funnel (thanks to referrals).
To illustrate this, we need to build a more detailed example. There are many funnels that can be created – every possible path that consumers take can be written out.
For example, let's say our furniture company runs a newsletter about interior design, in which it also advertises its products. To increase the number of subscribers, it offers a free ebook about interesting ideas for arranging a living room. So we could write a sample funnel like this:
- A person from the target group clicks on an advertisement for a free e-book.
- She then signs up for the newsletter to receive the guide.
- As a subscriber, she receives regular emails that also contain product ads. At some point, she clicks on one that piques her interest.
- Then, she is retargeted, which are ads showing products she has viewed. She clicks on one of them and goes to the product page.
- Adds a product to the cart.
- Completes the data and makes the payment.
The exact same funnel could be described in more detail:
- A person from the target group sees an advertisement for a free ebook.
- Then he clicks on the ad.
- After going to the website, he enters his e-mail address and subscribes to the newsletter.
- Receives and opens emails.
- At some point she clicks on a product that piques her interest.
- Then he sees retargeting ads.
- Clicks on a product ad.
- When she visits the store again, she adds the product to her cart.
- Goes to cart.
- Entering the registration.
- Fills out the data and sets up an account.
- Completes shipping details.
- Makes payment.
The more detailed the funnel layout, the more accurately we can examine conversion. Tools such as Mixpanel, Google Analytics or Facebook Analytics are used for this purpose. They allow us to examine at what stage our potential customers drop out.
Knowing exactly where in the funnel a bottleneck occurs allows you to create hypotheses about what is causing decreased conversions.
For example, if they get stuck between step one and step two (i.e. seeing and clicking on the ad), maybe our ad isn't engaging enough, or the target group isn't well-chosen?
If they drop off between the third and fourth (i.e. between receiving and opening our newsletter), maybe our email subject lines aren’t sufficiently compelling to open? Maybe we should check if our emails are ending up in spam?
Once we have a hypothesis, we need to test it. For this purpose, we can use so-called A/B tests - we introduce a change in the funnel that does not affect all visitors, but only some, i.e. the test group. The rest - the control group - still receives the original version. After comparing conversions, we decide whether the new version works better, and if so, it becomes the binding version for everyone from now on.
This type of activity can go on forever. Big companies like Facebook and Google are constantly creating new tests, constantly striving to improve their products.
How to build a marketing funnel?
As you can see, there are almost endless variants of funnels. You can build them separately for separate target groups, customer acquisition channels, you can create them in more detail (to study conversions) or more generally (for example, to compare sales channels).
To make it easier for you, I will present two funnel building formulas that are used most often.
AARRR
If you thought of a classic pirate slogan when you saw the name above, then that's great - that's exactly what it's all about. If you want to feel like a real sea wolf, you can use this framework by Dave McClure, especially popular among startups.
He suggests dividing the funnel into five parts:
AND or Acquisition – consumers learn about our existence
AND or Activation – we convince them that it is worth using our services
R or Retention – they come back to us for more
R or Revenue – they make a purchase
R or Referral – at the end they recommend us to their friends
It can be noticed that the topic of retention – the return of potential consumers – is emerging once again. This is because in the vast majority of products or services, purchases are not made on the first contact with the product or service. Hence, one of the most important metrics is how many of our potential customers return to take a second look at our offer.
AIDA
AIDA is probably the oldest written approach to what we now call marketing funnels. The first mentions of this approach date back to the 19th century.
Similar to the previous example, AIDA divides the funnel into several parts:
AND or Attention – the consumer learns about our solution
AND or Interest – we arouse their interest, they start to consider our offer
D or Desire – we convince him that our proposal is the best
AND or Action – at the end he makes a purchase action
As I wrote, there are many examples of approaches. For example, we can also give AICC (Awareness, Interest, Consideration, Conversion) or AIECS (Awareness, Interest, Evaluation, Commitment, Sale). However, all of them are based on a similar approach, illustrating the path a potential customer must follow from the moment they first meet our brand to the moment they become its customer.
I strongly encourage you to work, play, experiment and experiment with marketing funnels, which I believe can turn out to be a real milestone in your marketing activities.
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