KISS Series: Marketing Funnel
In this KISS (Keep It Super Simple) Series, we break down the Marketing Funnel to illustrate what each step entails, and what that means for your business's digital marketing strategy
As part of our mission to educate small business owners with digital knowledge, we have created the KISS Series (Keep It Super Simple), where we take digital theories and concepts and break them down into bitesize, understandable explanations.
In this post, we break down what the Marketing Funnel is, to illustrate what each stage means and what your business's digital marketing strategy should be for each part of the funnel.
Content:
The Marketing Funnel
The history of the marketing funnel dates all the way back to 1898 (!), when Elias St. Elmo Lewis (great name!) created the model to highlight how a customer's relationship with a business evolves. It is widely considered to be the first formal theory of marketing, and despite all the changes retail, commerce and the world in general have gone through, it is incredible that the funnel is still very much a relevant and widely-cited model to this day.
The funnel goes by a few names, with some calling it the Purchase Funnel, others calling it the Conversion Funnel, we're calling it the Marketing Funnel, but ultimately they all describe similar--if not the same--theory of how a business moves a customer from potential to actual to loyal.
As this theory is over 100 years old, it is understandable that it has gone through a few iterations so there are some slight changes to the names of the stages. However, even if the names are different, the theory and premise behind them remain similar, so don't be alarmed if you come across another version down the road with different names.
As the name suggests, the Marketing Funnel is funnel-shaped to signify the size of the (potential) customer base at each stage. At the top, the funnel is the widest, meaning that stage has the widest audience possible; whereas at the bottom, the funnel is the narrowest, meaning at that stage, a much smaller number of the original audience have followed the journey all the way through to the end.
So at the top you have Awareness, which filters into Consideration, then Conversion, then Loyalty and finally Advocacy. As the funnel-shape suggests, the number of people decreases at each stage, so the goal in marketing, digital marketing and running a business in general is to get as many people through the funnel from the top (Awareness) to the bottom (Advocacy) as possible.
As we go through each stage, it is helpful to think of a brand you love, or the last successful purchase you made in a store or a website, and see how your experience relates to each stage of the funnel.
Stage 1: Awareness
For any brand or business, the first stage of marketing is raising awareness. If nobody knows your brand exists, you won't have any customers to try to convert into purchases. Therefore, any marketing activities that are designed to spread the word about your business and thus raise awareness is referred to as top-of-the-funnel activities, or part of the "awareness" stage. It is also sometimes called "discovery" or "engagement", but ultimately they all refer to the similar concept of making your audience aware of your business's existence.
(Sometimes this is referred to as ToFu, aka Top Funnel, but we will not be referring to it as such as we think this is unnecessary industry jargon, and tofu should remain in the world of food)
Some examples of awareness-driving activations, both traditional and digital, include:
Out-Of-Home Advertising
Out-Of-Home (OOH) advertising is any form of advertising where the content is consumed outside the home, such as a billboard in a Tube station or an advert on the side of a bus. If you choose your location well, you can reach a huge audience to learn more about your brand as they go about their daily commute.
Social Media Marketing
Due to the wide reach and active users (in the UK, we spend an average of 1 hour 49 minutes on social media every day), social media is one of the most effective ways to raise brand awareness. It's free to open an account, so theoretically, social media is a free form of advertising (unless you pay for ads on those platforms).
Blogs
Writing new and relevant content such as a blog is great for SEO in general, but it is also part of the awareness-raising section of the funnel. By providing relevant answers to search queries and further insights into the topic of your business, you establish authority within your industry, thus gaining the trust of potential customers who will then remember your business should they need your services in the future.
Stage 2: Consideration
You've spread the word about your brand and business, and now a potential customer has come into your store, whether a physical or digital one. Yay! But just because they're in there, doesn't automatically mean they will buy something. They are likely there because they are aware of your business, but they are now considering whether your products or services are appropriate for them.
If you've ever been drawn into a store by a mannequin in the window, and you then pick up the shirt that was on the mannequin to inspect it further, you were in this consideration stage.
(These middle funnel stages are sometimes referred to as MiFu. Again, we will stay away from using it, but we want to highlight this should you encounter this elsewhere)
Some activations target this consideration stage include:
Visual Merchandising
Visual merchandising (VM) is essentially ensuring the relevant products are displayed in an accessible and sensible manner. From a physical store perspective, if a shirt is on the mannequin in the window, it is good VM practice to place the shirt near the entrance, so if any potential customer enters the store because of what they've seen in the window, they can easily find that product and then consider whether they want to purchase it. As a customer, there is nothing more frustrating than seeing something you actually want to buy in the window, but then going into the shop and not being able to find it; as a business, this is missed revenue: you have a customer who is willing to spend money, but has not done so not because they ended up not liking the product, but because it wasn't even there for them to consider.
It is possible to visual merchandise in an eCommerce store as well, by reordering the order in which products appear on the PLPs (product landing pages). There are debates within the eCommerce world as to whether this is relevant, because many eCom stores allow the customer to sort the PLP in different ways, such as from lowest to highest price, based on New In etc. However, at Mpowering Solutions, we are of the opinion that you should still merchandise your page so you display your bestsellers or most relevant products at the top, because you want to ensure all customers are served with the best experience possible, and showing them the relevant products will increase your chances of conversion. If they then change the order of the products displayed, that's their prerogative; what is important is you have tried to present the customer with the most relevant products first.
PDP Optimisation
PDP stands for Product Display Page, and is the webpage of the product being sold. eCommerce stores don't have the luxury of having a sales associate talk the customer through the product or to answer any questions, nor can the customer touch and feel the product, so the PDP has a huge responsibility of showing as much detail of the product to the customer. We have a more detailed KISS guide to PDPs, but some of the key elements of a PDP that have a huge impact on conversion are listed below:
Product name
Imagery and other visual representations such as videos
Copy and relevant product detail
Price
Shipping information
If your business sells services instead of products, the same logic applies. Your website needs to display as much relevant information as possible in order for your potential client to make an informed decision.
Stage 3: Conversion
You've spread the word about your brand, you've attracted customers in, they've considered your products on offer and are ready to purchase. Wonderful! Now you need to ensure your business is able to convert these potential sales into actual ones.
Some activations that target this conversion stage include:
Call To Action
In a store, you'll notice that the cashier is often very clearly signposted, or at least there are directions to the nearest cash desk. That's because when you have a customer who is willing to part with their hard-earned cash to purchase your product, you want to ensure they can compete the action of purchasing, so you give them as clear guidance as possible.
In eCommerce, it's exactly the same. You want to ensure the Add to Basket (or however you want to word it) button is clearly visible to the customer, and that it's obvious what the function of that button is. Usually, this Call to Action (CTA) is in the format of a button with a coloured background to ensure it stands out on the page and to clearly indicate that it is not just some more text, and that it has a specific function.
Social Proof
The premise of social proof is that, when humans are unsure of something, they will look to other humans for behavioural guidance. So within a Digital Marketing perspective, social proofing is when a business deploys a tactic that persuades unsure customers to convert. An example of social proof is reviews. According to industry-leading UGC (user generated content) company BazaarVoice, 89% of shoppers consult reviews before making a purchase. We've all been there where we've been on the fence about something, then you read the reviews and they persuade you to purchase. Word of mouth and organic endorsements from other fellow humans have a much stronger impact than paid advertising, so displaying reviews is a great way to convert those customers who are on the fence.
(It can also be said that reviews are relevant at the Consideration phase, as the customer considers whether or not to purchase. This is an example where an activation can straddle different parts of the funnel.)
Another form of social proof is a purchase counter, sometimes called a FOMO counter (FOMO = Fear Of Missing Out). We've all seen them (and probably been annoyed by them). On hotel reservation websites, they will show "only 1 room left!" or "5 other people have booked in the past 24 hours", in the hopes to create a sense of urgency that you need to take action. Ever panic-bought because a pop-up said "20 people have purchased in the last hour!"? Congratulations! You have experienced social proofing.
Stage 4: Loyalty
You've successfully gotten a customer to purchase from you, or you've signed on a new client. Hurrah! Now you want them to be a repeat customer or client and to come back to you again if they need something else. Why? You have gained their trust, and, according to Forbes, existing customers are 50% more likely to try new products and spend 31% more than new customers, and it can cost between 4-5 times to acquire a new customer than to retain an existing one.
(As the other sections suggest, this stage of the funnel also has its abbreviation: BoFu for Bottom Funnel. Just for your reference)
Some tactics that promote loyalty include:
Loyalty Programmes
A loyalty programme encourages existing customers to become repeat customers in order to earn their reward. If you take Starbucks or Caffe Nero as examples, they run a loyalty programme whereby you collect stamps for every coffee you purchase. Buy enough drinks, collect enough stamps, and the 10th or 12th or whichever cup is then "on the house". This is a very simple but effective way to create loyalty and affinity to your brand, as then customers will bypass competitors in order to reap the rewards with your business.
Membership
You can also create a membership programme, so customers can sign up to get exclusive deals and access. An example of this is ASOS's scheme ASOS Premier, where you pay £9.95 for a year's subscription, and in return you get unlimited next-day delivery and other perks such as early access to sales and discount codes. You can also send out emails to your members to alert them to new product launches, upcoming sales and events and other key brand messages, so you create a connection with your customers by speaking directly to them and treating them like VIPs.
An added bonus for your business is then you have a database of your customers, so you can perform data analytics to understand your customers' location, shopping habits and any other insights that can help hone in on your business's strengths and steer your strategy.
Subscriptions
This lends itself better to some businesses than others. Using our household as an example, we buy our dog Kobe's food from a particular store, because they provide a subscription service, whereby I can select the quantity of food and the frequency in which I want it shipped to me, and then the ordering is taken care of. I don't have to worry about what happens if I forget to place an order; the company's subscription service takes care of it all. This added convenience can convince some to remain loyal to your business, because you've taken care of the hassle of repeat ordering off their to-do list and automated it instead.
Stage 5: Advocacy
This stage sometimes doesn't exist in certain models of the funnel, but we feel it is still important to keep as it drives home the importance of loyal customers. The final stage of advocacy is when your customer is not only loyal to your business, they will actively advocate for you to their friends and family.
It is so valuable to have customers advocate for your business because word of mouth is so powerful and carries so much weight. As discussed in our KISS guide to PPC and also earlier in this article, humans tend to see through ads, and instead we tend to trust the experience and opinions of other human beings, aka social proof. And so advocacy is like a free form of advertising, as you aren't paying that customer to spread the positivity about your brand to others; they are just doing it organically.
(Of course, it actually isn't, as you've likely paid to acquire that customer in the first place, but you get the idea).
At this point in time, your customer has travelled through the whole funnel and fully trusts your business to fulfil their needs, so there's not much else you need to do to encourage them to advocate for you. However, there are still some activities that can be done to promote advocacy.
Referral Schemes
By offering your customers a perk or discount to refer their friends to your business, you are providing an incentive and added benefit for your existing customer to spread the word. A lot of businesses will provide a referral code to offer something like 10% off your next purchase as a token of gratitude for spreading the word.
How do I use the Marketing Funnel?
As we have discussed in another post, it is important as a small business owner to set business goals, because then you know which areas of the business to focus on. The Marketing Funnel provides a good guidance of where your business's pain points are, and what tactics you should use to achieve those goals.
For instance, if you are a newly launched business and you need to get the word out about your brand's existence, then you're at the Awareness stage, so you should investigate methods in that top funnel section to help raise brand awareness. If you have a brand awareness but people aren't purchasing from your store, you may have issues at the Conversion stage, so you should check out solutions at that stage to resolve any issues in the purchase or conversion flow.
However, one thing is for sure: regardless of which stage of the funnel your business is in, the fundamentals are key, and will likely resolve any issues that could hinder the middle and bottom of the funnel. A strong, functional and optimised website is the digital foundation for any business, and is crucial at every stage of the funnel. This is why, at Mpowering Solutions, we are huge advocates (pardon the pun!) of building a strong digital foundation, because the basics drive the trajectory of your business's future.
TL;DR Conclusion
The Marketing Funnel is sometimes referred to as the Purchase Funnel or Conversion Funnel. The wording of each stage can also differ sometimes, but ultimately they refer to similar if not the same stages of customer mindset
The 5 stages in the Marketing Funnel are Awareness, Consideration, Conversion, Loyalty and Advocacy, and the goal is to get as many customers through the funnel as possible
Specific digital marketing tools, channels and tactics target each stage of the funnel. Some can straddle a few stages, depending on how that channel is deployed
It is recommended that you understand what stage your business is at to know what actions you need to take to improve performance
At Mpowering Solutions, we have a wide variety of services that can help your digital needs, whichever stage your business is at. Whether it's our CRO Audit to check for any hindrances in the conversion process or Brand Scan to check your business's digital identity to ensure consistency and thus trustworthiness, we are here to provide digital marketing solutions to help small business owners feel empowered in owning their digital space
If you're unsure where to start, our Strategy Consultation package provides a full analysis of your business's performance and provides recommendations for your business's short and long term steps. Otherwise, get in touch and ask us whatever you'd like, and we can see if we can help you with your business's digital journey
