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What Is a Marketing Funnel and How Does It Work?

8 min read

Once your initial awaA marketing funnel encompasses the different stages of a customer’s journey with you. It starts with the initial stages where someone learns about your business and ends with them becoming a paying customer. Carefully evaluating and optimizing your marketing funnel can help startups generate more leads, boost sales, and develop customer loyalty.

What Is a Marketing Funnel and How Does It Work?

A marketing funnel is a system that uses various strategies to lead potential customers through an online sales process. It contains multiple stages to lead prospects, from brand awareness to loyal customers.

While there are different types of marketing funnels, most of them begin with attracting strangers to check out your content, website, or products. From there, they are led through the rest of the stages and end up buying your products or availing of your services.

Marketing funnel to reflect customer journey

A marketing funnel is a conceptual framework that helps you visualize the steps your customer takes when they first encounter your brand, build a relationship with it, and finally, what makes them a customer.

It is especially crucial for startups to accurately define their marketing funnel and implement the right strategies since their marketplace growth depends on attracting their target audience in the early stages and developing a loyal customer base.

Types of Marketing Funnels

When people or businesses hear “marketing funnel” for the first time, they might picture an actual funnel with an enormous mouth at the top and a tiny tip at the bottom. But this kind of mental image is inaccurate and misleading.

1. AIDA

The most common type of marketing funnel is the AIDA model. This model has four stages:

  • Awareness: To make users aware of your brand and products.
  • Interest: Engage users with great content and valuable information about your business.
  • Desire: Connect with prospective customers by showing them how your product can help them.
  • Action: Encourage the user to complete the purchase.

Let’s take a closer look at each of these stages:

Awareness

Once your business has completed website, app, and product development, it’s ready for launch. But how do you get your first customer or your first 50? You need to attract strangers and induce curiosity about your business or product.

The goal of the Awareness stage is to generate leads, aka prospective customers. You can use various strategies during this stage, including SEO, social media promotion, and email marketing. Whatever tactics you use have to lure customers in.

Interest

Once you have users looking at your website or product, you need to generate interest. Show them what you can offer in exchange for their time and money.

moveBuddha provides an excellent example of a lead nurturing tool via their moving cost calculator.

An example of a lead nurturing tool by movBuddha

This web page helps users in need by showing them a ballpark range for moving costs and letting them compare different movers and packers. This exchange of simple details for valuable information makes users more likely to trust the company and interact with them in the future.

Desire

Next, you must form a connection with your audience so that they trust your business. You want customers to go from “I like this product” to “I want to buy this product.”

To successfully create a sense of desire, you need to deeply understand your target audience and their pain points. Then, you create and promote content that highlights how your product or service is the best solution for one or more of their pain points.

Your content should showcase your brand positively while simultaneously answering the customer’s question, “What benefit do I get from this?”

Action

The final stage of the marketing funnel aims to push users to complete the purchase.

You want to create urgency and make the transaction process as smooth as possible.

Here, you can offer incentives to seal the deal. This includes free shipping, a discount on the first order, and personalized product recommendations. Make sure you provide multiple payment options so that customers can check out quickly. Any hiccup could lead to second thoughts. You want to avoid this.

2. 3-stage model

Many marketers use a simplified version of the AIDA model and divide the stages of their marketing funnel into TOFU, MOFU, and BOFU.

The Top of the Funnel (TOFU) is the same as the Awareness stage, while the Middle of the Funnel (MOFU) combines the Interest and Desire stages. The Bottom of the Funnel (BOFU) is when users take action.

The 3-stage model is common in content marketing, where marketers create unique content for customers in each stage. For example, MOFU content is often filled with informational guides and resources, like this video library from AI Dash Cam and Connected Operations Cloud provider Samsara.

Marketers use informational guides and tutorials in the MOFU stage

Videos are an effective marketing tool in this stage, with one survey revealing that 84% of users bought a product or service after watching company videos.

3. Don’t get stuck on a specific model

These are just two of the most common marketing funnel models. Your funnel does not have to have a rigid structure. A better way to think about the marketing funnel is a flowchart that captures all of your potential customers’ interactions with your business.

You can create and customize your own funnels based on this. The most crucial part is accurately capturing customer interests and deploying marketing strategies to address them.

Your marketing funnels will evolve with your company. For example, when your company scales, launch a new product or shifts its primary focus, your marketing strategies will automatically need to be updated.

The Benefits of Using the Marketing Funnel Approach

Most marketers tend to use a marketing funnel to guide their efforts. Here’s why:

  • A marketing funnel lets you see your business and products from the customer’s perspective. Consequently, you can create strategies and implement changes that best serve user needs.
  • Marketing funnels come with measurable metrics. This means you can see where your current strategy is failing and how you can optimize it. Metrics also allow you to predict factors like sales volume and revenue.
  • Marketing funnels are flexible. They can be adapted to any business or industry and customized to match individual companies.
  • Funnel stages help target leads better since they are shown content or offers that are relevant to them, rather than a random selection.
  • You can use the marketing funnel to simplify the customer journey by eliminating redundancies and enabling a smoother buying process.
  • Since defining the stages forces marketers to look at every aspect from start to finish, you can uncover flaws within your website or customer journey map. This could be something technical like a payment gateway error or on the front-end, like a poorly-crafted landing page.

How to Build an Effective Marketing Funnel

The most important thing to remember about marketing funnels is that they aren’t linear. Stages will often overlap as your relationship with your customer grows more complicated and nuanced over time.

That’s because you’re constantly interacting and building relationships with potential customers throughout their entire journey of learning about your product, deciding whether to buy it, and when (and how often) to buy again.

Having said that, here’s how you can build a marketing funnel to resonate with your customers:

#1. Know your audience

Start your marketing funnel creation process by understanding your target audience: who they are, what they are looking for, and their frustrations and pain points. All of these factors help you create a personalized marketing strategy while also helping improve product development.

If your product is a running app for millennials aged between 18 to 30, the marketing for this will vary vastly from a similar product aimed at older runners. So, their marketing funnels will also be different.

Develop an Ideal Customer Profile (ICP) or buyer persona that represents what your average customer will look like. This can include demographic data like age, gender, location, and income. Then, it can go deeper into factors that affect lifestyle and shopping habits, such as occupations, marital status, and children. You can use online resources, like an ICP template, to speed up this process.

To collect data for your buyer persona, you can use social media surveys, website forms, feedback from existing customers or test groups, and web analytics.

When you have a comprehensive customer persona or profile, you can use it to understand how a user will interact with your website and content. This will shape a better marketing funnel.

#2. Define the stages

You can use different types of marketing funnels, but the buyer persona will define the stages within them.

The marketing funnel also depends on your company type. For instance, the funnel for a SaaS business will not be the same as for restaurants or retail. A SaaS funnel for a trail-blazing startup will focus more on education and explaining how their technology can make the lives of their target audience easier.

An introductory image like this is a common marketing asset at the top of the funnel for an online company looking to make a mark in a mature industry:

Introductory images as a TOFU marketing asset

Once your initial awareness efforts reel in users, you can define stages depending on your audience.

Does your audience warrant a complex, multi-stage funnel, or is it as simple as awareness-educate-purchase? The answer relies on your product and how deep it is within an industry or niche.

A highly technical B2B product that caters to a specific part of your industry could require more stages since audiences could take longer to understand what you’re offering and how it helps them. They could also be more reluctant to try something new, so your interest-generation content will have to be precise and in-depth.

Marketing funnels for startups are ever-evolving. Since crucial elements of a product or app can change during the development phase, your marketing strategies and their stages will also have to change.

Always adapt your funnel for your business rather than trying to make the best out of an outdated strategy.

#3. Create marketing strategies for each stage

In a 2021 survey of marketers, websites, blogs, and email marketing were the most used channels.

A survey showing the most used marketing channels

But, the channels and types of content you use vary based on the stage of the funnel, buyer persona, and product type.

If you’re using the 3-stage model, here what’s your marketing strategies could look like:

Top of the funnel

Typical tactics for this stage include:

  • Social media marketing to raise brand awareness.
  • Paid advertising to reach your target audience.
  • Blog posts and other content that generate traffic from organic search rankings.
  • SEO to gain higher search rankings.
  • Lead generation tools (like the moveBuddha example above).
  • Giveaways and contests to gain promotion and increase online visibility.
  • Influencer marketing campaigns.

Middle of the funnel

Popular strategies for this stage involve:

  • Product reviews, guides, and tutorial videos, from reputable sources, like influencers or high-authority guest posts.
  • Website conversion rate optimization tactics like link building and exit-intent popups keep visitors engaged longer.
  • Case studies that highlight how your product helps businesses
  • Sharing user-generated content like social media posts to build credibility and trust.
  • eBooks and whitepapers to engage users, especially for B2B companies.

Bottom of the funnel

Strategies at the final stage include:

  • Personalized offers and discounts to encourage purchases.
  • Limited-time offers to induce urgency.
  • Limited stock notifications create scarcity, so users make their purchases faster.
  • Free trials or demos to prove your product’s effectiveness before encouraging buying.
  • Retargeting tactics focused on people who visited your site but left before completing the purchase.

Your marketing funnels should look past just conversions. Avoid the fallacy of ending your marketing funnels once conversions are over. Instead, focus on creating a loop that fosters customer loyalty and repeat purchases. This is especially crucial for startups, and many marketers are now adding post-purchase stages to their funnels.

Conclusion

An effective marketing funnel will work for any business, whether it’s a startup that’s just launched or an established brand. The process of creating a funnel also promotes a better understanding of your customers, an overview of your product that could help improve it, and removing flaws from your products, website, and content.

All of these changes help companies drive more sales online and boost revenue for your company.

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About The Author

Vikas Kalwani is a product-led growth marketer and B2B Marketing Specialist skilled in SEO, Content Marketing, and Social Media Marketing. He manages partnerships at uSERP and is a mentor at 500 Global and Techstars.

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