Marketing Funnels

“The digital marketing funnel is an old-marketing concept used to track the customer life cycle. In its simplest form, it’s described as four phases: awareness, interest, desire, and action.” (source: Business Journal Daily)

In other words, a marketing funnel is a conceptual model that illustrates turning potential customers into actual customers. The funnel metaphor suggests that just as many substances can be poured into the wide top end of a funnel, but only a smaller amount emerges from the bottom, so too will only a portion of potential customers complete the entire buying process to become actual customers. The funnel consists of various stages that describe the customer journey, from the first interaction throughout the purchase process.

Why do we need a marketing funnel? 

The marketing funnel explains understanding a customer’s different stages before purchasing. This enables businesses to identify key touchpoints and areas that influence a customer’s decision to buy or not a product or service. A marketing funnel helps with the following: 

1. Strategic Planning: Businesses can use the funnel to guide their marketing and sales strategies, ensuring that efforts are aligned with business objectives and customer needs.
2. Customer Segmentation: The funnel allows companies to segment their audience based on where they are in their buying journey, enabling more targeted messaging and offers.
3. Performance Metrics: The funnel provides measurable stages that help businesses track the effectiveness of their marketing efforts and strategies, allowing them to fine-tune their tactics and improve ROI.
4. Resource Optimization: By understanding where potential customers are in the funnel, companies can allocate their resources—such as time, money, and personnel—more effectively.
5. Customer Retention: A more comprehensive understanding of the funnel beyond the initial purchase can help businesses focus on customer loyalty and long-term value, which are crucial for sustained growth.

AIDA Model and Customer Journey:

“This model was developed in 1898 by St. Elmo Lewis to explain how personal selling works. The model laid out a sequence that describes the process a salesperson must lead a potential customer through to achieve a sale.” (Source: Oxford University Press)

The AIDA model is one of the classic interpretations of the marketing funnel, with the acronym for Awareness, Interest, Desire, and Action. Each stage corresponds to a phase in the customer’s journey:

1. Awareness: This is where potential customers first become aware of a product or service. The primary goal at this stage is to increase visibility and attract the target audience’s attention. Marketing tactics often used include public relations efforts, social media marketing, and various forms of advertising.
2. Interest: After becoming aware of the brand, consumers may become interested and want to learn more. The focus shifts to providing more information and educating the potential customer. Content marketing, email marketing, and informational webinars are examples of tactics to nurture interest.
3. Desire: At this stage, potential customers start to see how the product or service could benefit them personally, converting ‘interest’ into ‘desire.’ This is where persuasive messaging, highlighting unique selling propositions, and showcasing social proof like testimonials come into play.
4. Action: Finally, the potential customer is ready to take action, typically making a purchase. However, action can also mean signing up for a newsletter, filling out a contact form, or any other step that moves them closer to becoming a paying customer. Tactics here may include special offers, guarantees, or a compelling call-to-action (CTA).

The AIDA model helps businesses understand and cater to the emotional and cognitive processes a consumer goes through before purchasing. By targeting marketing efforts to each stage, companies can more effectively guide potential customers through their journey, resulting in higher conversion rates and more successful marketing campaigns.

Case Study: An Online E-commerce Store Selling Organic Skincare Products

This is a hypothetical case, not a real case.

Objective:

To increase sales by 20% in the next quarter.

Awareness:

• Strategy: Use social media advertising and influencer partnerships to spread the word.
• Tactics: Paid ads on Facebook and Instagram; collaborations with beauty influencers with a significant following.
• Metrics: Number of impressions, reach, brand mentions.
• Results: 30% increase in social media followers, 10% increase in website traffic.

Interest:

• Strategy: Create high-value content to educate potential customers and capture leads.
• Tactics: Blog posts about skincare tips, video tutorials, and an e-book guide available for download in exchange for an email address.
• Metrics: Page views, time spent on pages, download rates, email list growth.
• Results: 2,000 e-book downloads, 15% growth in the email list.

Consideration:

• Strategy: Nurture leads through an email marketing funnel.
• Tactics: A series of automated emails offering further skincare advice, introducing products, and sharing customer testimonials.
• Metrics: Open rates, click-through rates, conversion rates.
• Results: 20% of those downloading the e-book opened subsequent emails and engaged with the content.

Any marketing strategy that aims to be effective must consider the steps a customer may take from their first interaction with the product or service to the end of the buying process. Having a clear view of the customer journey and knowing how to use different messages for each stage is vital for increasing sales, improving the customer experience, and enhancing the chances of achieving a better ROAS (Return on Advertising Spend). This is why it’s essential to define and understand what a marketing funnel is.