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What Is A Marketing Funnel & How Does It Work?

what is a marketing funnel
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Ecommerce and Saas business owners are always looking for ways to generate consistent streams of leads. Every successful online business uses marketing funnels to create consistent lead flows. Marketing funnels are a simple concept, but successful funnels often become more complex.

A business that takes the time to build, understand, and improve its funnels will have more leads than its competitors. This article will be a high-level discussion on marketing funnels, specifically:

Table of Contents

What Is a Marketing Funnel?

what is a marketing funnel

A marketing funnel is how a brand turns a potential client into a paying customer. Because buyers go on a journey, marketing funnels often get compared to roadmaps.

Most marketers think about their funnel in 3 stages: top, middle and bottom. Content at the top of the funnel creates awareness. The middle of the funnel facilitates evaluation. At the bottom, we convert leads to sales, and our content should match that goal. Let’s use a brand that sells coffee to consumers with sensitive stomachs as an example to see this in action.

Top of the funnel: Blog post titled, “Why does coffee hurt my stomach?”

GOAL: To inform and create awareness for the consumer that your brand is a credible source to help them solve their problem.

Middle of the funnel: A quiz at the end of the blog post that asks specific questions about what digestive issues the consumer is experiencing and gives suggestions for products that fix their problem.

GOAL: Identify the problem and allow the consumer to evaluate if our product solves their problem.

Bottom of the Funnel: An email with a discount code for our product.

GOAL: Give a reason for the consumer to act now and purchase our product.

Combining channels forms a marketing funnel. The most popular channels are paid ads, SEO, social media, and content marketing. To prevent getting overwhelmed, tailor your funnels to address specific audiences.

Each individual that enters your funnel will vary. Some may already be familiar with your business, while others have never heard of you.

Depending on where each individual enters your funnel, you need to guide them to the next step. The easiest way to think about it is that each funnel section has one goal. The goal of the TOFU is to feed the MOFU (Middle of the Funnel). Don’t try to sell people your product in the TOFU. This will confuse customers who are not ready to buy.

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Note: A marketing funnel that potential customers slip away from is known as a leaky funnel.

Consider the examples below:

Marketing Funnel Examples

Blog: A potential customer reads your blog. They like what they read, so they sign up for your mailing list. According to SEO expert Neil Patel, an influential blog will have a conversion rate of between 2% and 5%. 

Podcast Ad: A potential customer hears about your site from an ad on their favourite podcast. This prompts them to check out your website.

Facebook Ad: An ad on Facebook encourages a potential customer to visit your landing page.

Influencer Post: An influencer’s post on social media convinces a potential customer to check out your products page. Although a variety of factors determines the effectiveness of each influencer campaign, the consensus seems to be that an effective influencer post has a conversion rate of 3% or higher.

Is Every Market Funnel Interaction the Same?

Marketing funnels may seem straightforward on paper, but consumers will experience them differently. Many individuals don’t follow a straight path when navigating a funnel. This isn’t to say nobody goes from top to bottom in a linear fashion.

Some leads go through a marketing funnel quickly, skipping steps. In contrast, others take their time and may get stuck or even go backwards in the funnel.

Note: A marketing funnel doesn’t end when a potential customer becomes a customer. The best funnels then convert them into repeat customers.

Why Marketing Funnels are Useful?

Marketing funnels are beneficial for both consumers and businesses. For one, they help consumers find the products and services they need. 

For example, an individual searches Google for a solution to a problem they are facing. Then, they read the Blog and presented solutions to fix their problem.

The Blog may list various solutions, one of which may be a product or service. The Blog will start by educating the reader on their possible solutions. Then, the Blog aims to lead the reader to a link for a product or service to solve their problem.

It is essential to understand why the Blog did not present the product/service to the reader first. A successful funnel “warms up” a lead before trying to sell anything. The Blog is then a resource to the reader instead of an advertisement.

Marketing funnels are also excellent for collecting valuable data and feedback. This is known as a marketing funnel report. A business can use this data and feedback to understand:

  • Which marketing funnels are useful 
  • Which marketing funnels are inefficient
  • How to nurture relationships with both potential and repeat customers
  • How to find what stage “leaks.”
  • What drives consumers to research and buy

Of course, a marketing funnel report will offer more relevant and actionable insights. Fine-tuning your funnels whenever possible will maximize the effectiveness of each funnel. One of the best ways to do this is by studying where your customers first learn about you.

Once you know this, invest more in that channel. For example, 50% of your customers first heard about you from a podcast. If you know this, you should make sure the first thing they see on your website matches what they heard.

This will let you answer any initial questions a podcast listener may have. It will likely be different from the first question someone has after reading a blog post.

So how exactly does a marketing funnel work from top to bottom? Let’s see!

How Does a Marketing Funnel Work From Top to Bottom?

How Does a Marketing Funnel Work From Top to Bottom?

There are three stages to each marketing funnel. The top stage is where the majority of leads will enter the funnel. The middle stage of the funnel is where many leads will “leak”. This stage is where people are somewhat familiar with your business.

Then there’s the last stage at the bottom of the funnel, and this is where the warmest leads enter. Again, these leads likely know your products or services could solve their problem.

Tip: Think about how you navigate marketing funnels as a consumer. Walk yourself through one of your favourite brands’ funnels. Does it start with an email about a new product or sale? If so, what do you do next? Do you go to their website, check their Instagram, and search Google for reviews? Thinking this way while building a funnel can help you avoid needless trial and error. 

Below, each section of the marketing funnel is briefly outlined:

Stage One- Top Of Marketing Funnel (TOFU): A Problem or Need Arises

Once individuals decide to address a problem or need, they become consumers. This is when they are likely to enter the top of your marketing funnel. Remember, just because an individual seeks a solution doesn’t mean they know exactly where to look.

A potential customer may enter your funnel at the top and have no idea what your business does. You must clearly show them what your business offers once they’ve entered. Some examples of TOFU informative content are:

After becoming aware of your offer, many consumers will believe you can help them and flow to step two. It’s important to note that there may be many people in this stage for whom you have zero contact information. Moving consumers from the top of your funnel to the middle requires capturing an email or a phone number.

Stage Two- Marketing Funnel Middle Of Funnel (MOFU): Searching for Information & Comparing Alternatives

Searching for Information

At this stage in the marketing funnel, it must be clear that your product or service is what the consumer wants/needs. Keep in mind that consumers use different approaches to seek information online. Some products/services need minimal research, while others require extensive research.

For example, a consumer is looking for an excellent place to eat. They may conduct a quick search to find restaurants close to their home.

But, if a consumer is looking for someone to rewire their house, more research is necessary. This may include reading reviews, comparing electricians, or calling to get more information.

According to Trust Radius, there’s been a 33% year-over-year increase in time spent researching products. This statistic means the middle of the funnel is even more important nowadays.

If potential customers reach this stage of your funnel, they’re likely to send their business your way. Therefore, you need to educate them on why your business is what they’re looking for at this stage.

Comparing Alternatives

Once a consumer has a clear idea of what your business offers, they can compare you to competitors. But, once again, the time taken to compare businesses depends on how significant the problem or need is.

Going back to the restaurant example. After consumers see all the restaurants in the area, they may narrow down by which type of food they want. This might be all that is needed to decide what restaurant to order from for some consumers.

Consumers may look at many metrics when searching for someone to rewire their house. The consumer will likely reach out to many electricians to see who’s best equipped to tackle the job. Metrics looked at may include who’s offering the best price, who has the most experience, who’s local and who’s not, etc.

Stage Three Marketing Funnel Bottom of Funnel(BOFU): A Purchase Is Made

When potential customers reach the bottom of the funnel, they’re ready to become customers. At this point, the individual knows your company, and they’ve compared alternatives. Finally, they will act on their judgment and buy your product or service.

Tip: Offer money-back guarantees, risk-free trials, and other incentives to close any doubts.

Your website must allow seamless conversions. There is nothing worse than losing an eager consumer because they couldn’t figure out how to buy.

What Happens Once the End of a Funnel Is Reached?

As mentioned earlier, consumers’ interaction with a marketing funnel doesn’t end when they buy. Therefore, converting a one-time customer into a repeat customer is not luck. However, there are certain things your company can do to foster this. 

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For example, providing an in-depth how-to guide to ensure it’s used correctly. This simple action ensures your customer reaches the solution they were after. But, if a customer is disappointed after buying, they likely won’t buy from you again. They may even request a refund, post a negative review or go to your competitor.

After buying your product or service, you can only do so much to ensure the customer is satisfied. One strategy for increasing satisfaction in creating and sending an FAQ with your product. For services, this is best when sent before you perform the service.

Then, answer the common questions past customers have had. Doing this may be all it takes to avoid frustration with your product. It’s also essential to have reliable customer support. If a customer needs help and can’t easily reach you, they will rarely buy again.

What Is AIDA and How Does It Help With Content Creation?

Qualifying your leads will make your marketing funnel more effective. In contrast, not every consumer who enters the funnel will make it to the bottom. Your business should not waste resources on consumers if it doesn’t know their interests.

Leads who have shown interest but may need one more reason to buy should be pursued by your salespeople. Some quick reassurance often wins over these consumers. Organize potential customers into marketing qualified leads (MQL) and sales qualified leads (SQL).

Qualifying Marketing Funnel Leads

Qualifying your leads will make your marketing funnel more effective. Furthermore, if you have qualified leads, you can assign your best sales associates to those consumers who are most likely to make a purchase.

After all, every consumer who enters the funnel won’t make it to the bottom. Therefore, your business should not use its limited resources to entice consumers.

Unless it can be determined in advance if this consumer isn’t likely to make a purchase.

Identify customers who’ve shown significant interest in your business, who are on the fence and are looking for that last good reason to purchase what you have to offer.

These customers should be pursued by your best salespeople, as they are often won over by the feeling they’re getting preferential treatment. You can separate leads into marketing qualified leads (MQL) and sales qualified leads (SQL). 

What Are Marketing Qualified Leads?

Marketing qualified leads (MQL) are individuals who have shown interest in purchasing. There are a variety of metrics to identify MQL in a pack of potential customers. Here are some common behaviours and actions that identify a potential customer as an MQL

  • Individuals can be classified as MQL if they request a product demonstration.
  • If an individual views a range of conversion-centric pages without navigating away.
  • If consumers open a certain number of emails, they may be considered an MQL.
  • An individual interacts with an online advertisement.

Note: You can use several marketing tools to automate the search for MQL.

What Are Sales Qualified Leads?

An individual who will likely purchase in the near term is a sales-qualified lead (SQL). Most salespeople use two factors (interest and fit) when classifying and ranking SQLs.

  • The interesting factor takes into account the likelihood that the individual will buy.
  • Every business has an ideal customer, and this is where fit comes in. If a potential customer holds the characteristics of your perfect customer, they are a good fit.

Four main interest-fit combinations classify SQLs:

  • Low interest & low fit
  • Low interest & high fit
  • High interest & low fit
  • High interest & high fit

Of course, the most promising SQLs show high interest and high fit. In this case, businesses don’t need to do extra work to convince these consumers to buy.

Are B2C and B2B Marketing Funnels the Same?

It’s true; B2B and B2C businesses both use marketing funnels. The main difference is how their consumers interact with the funnels. For example, most B2C consumers don’t consult a large number of individuals before buying.

If a B2C consumer does ask for advice before purchasing, they’re likely asking close friends and family. On the other hand, B2B consumers usually have to consult with others before buying. According to Gartner, B2B buying groups include five or more consumers.

Furthermore, B2C consumers rarely interact with company reps beyond the customer support team. But it’s normal for B2B consumers to interact with sales reps when nearing the bottom of the funnel.

Which Marketing Funnel Metrics Are Important and Why?

At this point, you should have a basic understanding of how a marketing funnel works. You should also know which leads to being on the lookout for. Now it’s time to decide which metrics you’ll use to determine the efficiency of your funnels. Any data you’ve collected to distinguish MQLs from SQLs will be helpful here.

An excellent place to start is to figure out how individuals interact with your website. Also, find out what they like about your content or why they subscribe to your channels, etc.

ALSO READ; How To Build The Most Effective Affiliate Marketing Funnels

The more information you have, the easier it will be to optimize your funnels. However, remember that too much data and many metrics can remove the essential elements.

For this reason, you should use key performance indicators (KPI). You should view data points and metrics, not in your KPIs, as supplemental. However, don’t let unimportant metrics keep you from running an efficient funnel. Some popular metrics are briefly explained below:

Funnel Conversion Rate:

Funnel Conversion Rate: You’ll need to keep track of a funnel’s conversion rate. This metric tracks how many potential leads become customers after entering the funnel. You’ll see this number fluctuate as you make changes to the funnel. The goal is to get this rate as high as possible.

Point of Entry:

You also need to understand where most leads are entering the funnel. With this information, you’ll be able to strengthen the stage of your funnel that gets the most traffic. For example, if many individuals are led to your landing page via your Blog. Then, it would help if you focused on warming up those blog readers as much as possible.

Content Engagement Rate:

If your blogs include CTAs, you need to know how engaging these posts are. Suppose you can see what makes a specific post attractive. In that case, you can replicate the formula and use it in another funnel. You can also pay to promote your blog, which will boost its popularity even more. Use Google Analytics to see which elements of your blog produce the most engagement.

Final Word on the Marketing Funnel

Creating an efficient marketing funnel isn’t something that you can accomplish overnight. The key to an efficient marketing funnel is to keep fine-tuning it. You’ll soon have an efficient funnel if you fine-tune it based on your KPIs. Creating others will be easier once you have one efficient marketing funnel. In the end, an efficient marketing funnel can turn your mediocre business into a success.

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