Go to the profile of Commission Factory
Jul 6 · 8 min read

How marketing funnels work

Are you paying close attention to how your customers make their buying decisions?

You’ve spent some time doing your groundwork and figuring out a rough outline for your company’s marketing. You have a good idea about who your customer is, but what do you want them to do? The answer is not as simple as just “click that link” or “buy my product”. You have to pay special attention to how your customer actually makes that decision because 57% of the buyer’s journey is completed before sales actually get involved. It’s called marketing funnels, and here’s the lowdown on how it all works.

What are marketing funnels?

In a nutshell, a marketing funnel is a set of steps a person goes through before they achieve a particular goal. Usually the end goal is a purchase, but often — particularly for affiliate marketers — it’s clicking through to another website or filling out a form. Marketing funnels are an efficient way to get your purchase process to work smoothly.

To get an idea of how the funnel works, think about the steps you usually take before you buy something. Let’s say you want to buy a TV:

  1. You visit an electronics website.
  2. You browse the products and make your selection.
  3. You add your chosen TV to your cart.
  4. You make the purchase.

You’re probably imagining an actual funnel right now, and wondering why this process is named after one. There are four steps to consider: Awareness, Interest and Evaluation, Commitment and Advocacy.

Think about it: At the beginning of the process, there are a slew of people who are taking the first step (or visiting a website). As people begin to travel further along in the purchase process, some of them drop out, thus the crowd thins out a little bit. It’s kind of like if you were to tip rice down a funnel: a lot of grains go in the top, but the rate at which they come out the bottom starts to slow considerably.

Why do marketing funnels help?

One of the benefits of marketing funnels is the fact that they’re a relatively straightforward plan to follow. You can easily and quickly map out each stage of the customer decision process and plan what marketing activities you’re doing in each.

The beauty of marketing funnels is that they can be applied to virtually any consumer interaction, whether you’re an online store looking for sales, an affiliate marketer looking for some clicks, or a company wanting sales leads. The funnel is a great way to clearly see all stages of the sales and marketing life cycle and according to Forrester, generate 50% more bottom of the funnel leads at 33% lower cost.

Another advantage of using the funnel is its measurability. You could be losing lots of customers before they even get to stage 2, so perhaps you need to work on your brand awareness. Or you might be wondering why you have a huge amount of drop-offs before the final conversion — maybe your shopping cart page needs work, or perhaps you need to do more personalised sales outreach. Funnels are great for not only planning your activities, but also for seeing where you might have some weak spots.

According to Aaron Agius, Co-founder of Louder Online, no matter how much care and attention you’ve put into improving your funnel, there can still be cracks and leaks that can cause leads to slip away without ever making a purchase. It is why it is crucial to properly map out your marketing activities in order to optimise and improve your return on ad spend for affiliate marketing.

What marketing activities do I need to do?

You can match your marketing activities to every stage of the funnel.

1. Awareness

The first stage — when the funnel is the widest — is the most critical. You’re trying to drive awareness so that people learn about your brand or website. Think broad, big-picture stuff here: Get your website ranking high in search, look for opportunities for lead generation via white papers and blogs, and consider doing AdWords.

2. Interest and evaluation

This is where things start to get a little more personalised. You can start doing more targeted communications to your customers, like email marketing, social media posts and even product demos if it suits your business. If you’re an affiliate marketer and you want your customer to click through to your partner’s website, you could look at doing A/B testing on certain pages to try to capture different audiences.

3. Commitment

This is the final step in the funnel before a purchase (or other conversion) takes place. A little reward to entice people to make the final leap can work well: For example, you could offer a discount code if they wanted to make the purchase that very day. You could also get customers in the right frame of mind by helping them focus on the benefits after the sale. So, if you sell vitamins, you could write a blog post about how great people feel after taking a particular vitamin for 30 days. This stage of the marketing funnel is a chance to ease any potential worries that may be stopping a customer from converting, and to also make the final conversion process as easy as possible. So if you’re an online merchant, make the checkout process easy; if your conversion goal is for people to fill out a form, make that form short and sweet.

4. Advocacy

The marketing funnel doesn’t end after the conversion is made. You now have the chance to make these people more than just customers: They can be advocates for your brand. Repeat business and brand loyalty is fantastic, but customers in this final stage can be even more valuable as they spread the word about you. Engaged, active customers can unknowingly become ambassadors for your brand, continuing your sales cycle automatically. The key marketing tool here is social media. Online reviews and a strong social community can do wonders for building your brand’s legitimacy in the eyes of future customers.

Example — Groupon.com

Groupon is still a major company reaching millions of consumers every month with personalised deals.

They have a very clear email opt-in pop-up on their site. It focuses your attention and has clearly been a successful strategy for growing their audience since they have continued to use it over the years. Let’s examine the rest of their sales funnel to see how it works.

Steps in Marketing Funnel

  1. Homepage
  • The pop-up on the homepage incentivises you to give your email address. You get a coupon code for $10 off $25 on your first order just for signing up.
  • From there, you can browse and shop for services.

2. Internal homepage view offer details

  • For example, Groupon in Chicago.

3. Purchase form

Marketing Funnel Metrics

All of the above might seem a lot, so the only method in staying focused with your key initiatives is by focusing on a few key metrics and use data to make your decisions in revising expanding your performance metrics. Some key metrics for you to consider:

  • Sales funnel conversions — Prospects that enter the funnel and convert into customers
  • Entry sources — Sources people are entering your funnel from
  • Time in stage — How long it takes to go from awareness to advocacy.
  • Exit rate — The number or percentage of people that fall out of a particular stage
  • Engagement rate per stage — The conversion rate or specific behavioural metric of your marketing activity
  • Opportunity arrival rate — Number of opportunities in your current funnel
  • Close rate — In comparison to sales funnel conversions, this looks at only those that move from decision to purchase.

There are many ways to track this including the use of CRM tools such as Hubspot and PipeDrive, Analytics and marketing automation software such as Google Analytics, Kissmetrics and fix the funnel through heatmapping tools Crazy Egg, Clicktale.

Lead scoring can be also used to help prioritise your prospects. This topic in itself is worth an article.

Recap

We’ve gone through a fair amount, so here’s a recap:

  • Pay special attention to how your customer makes a purchase decision; this is why marketing funnels exist
  • Benefits and considerations of a marketing funnel
  • Marketing activities using multiple channels can fill and support your marketing funnel and customer purchase journey — refer to the Groupon example.
  • Some metrics which support your performance measurement
  • There are many tools you can use which map out, measure, fix and enrich your marketing funnel

What are your overall experiences and challenges of marketing funnels within your business? Please feel free to share this article or leave a comment below.

Did you enjoy this article? Don’t forget to share.

Related Posts