Marketing Funnel

The Cambridge Dictionary defines a funnel as "an object that has a wide round opening at the top, sloping sides, and a narrow tube at the bottom, used for pouring liquids or powders into containers with narrow necks".1 So, "What does this have to do with marketing?", you might ask. Well, the marketing funnel is a concept all marketers must be familiar with, and its model is shaped exactly like an ordinary funnel. It starts wide at the top and gets narrower at the bottom. It represents how marketers can guide customers through their purchase journey. The wide opening represents the larger group of consumers who are aware of a product, and it narrows down to the select few customers who end up purchasing the product. Read along to learn more about the strange relationship between funnels and marketers.

Marketing Funnel Marketing Funnel

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Table of contents

    Marketing Funnel Definition

    The marketing funnel plays a foundational role in many companies' marketing plans. It describes customers' purchase journeys from awareness to action and helps marketers gain insight into the customer experience. So, let's first look at the marketing funnel's definition.

    The marketing funnel is a tool marketers use to describe the customer purchase journey.

    It is called the marketing funnel, as the model is shaped like a funnel. At the top of the funnel (the widest part) is the awareness stage, as many potential customers are aware of the product or brand. The funnel gradually decreases throughout the customer purchase journey, narrowing down to the number of customers who take action. Let's now look at this model in more detail in the following section.

    Marketing Funnel Stages

    The basic model of the marketing funnel is based on the AIDA model, which stands for awareness, interest, desire, and action.

    The AIDA model is the basis of the marketing funnel. AIDA is an acronym for awareness, interest, desire, and action.

    Figure 1 below shows the marketing funnel.

    The funnel starts with awareness, the widest portion of the funnel at the top. During this stage, the marketer's job is to inform consumers about the existence of a product. Specifically, a product that fits their wants and needs or solves a problem they face. This is where customers start their journey with the brand.

    Check out our explanation of Brand Awareness to learn about this topic in more detail.

    The next layer of the funnel is interest. Here, the funnel starts narrowing down as not all consumers will be interested in buying the product. Although they may be aware of its existence, it might not suit their wants and needs. During this stage, the goal is to ensure customers that they are searching for a product in the right place.

    The third stage of the marketing funnel is desire. In this stage, potential customers will likely evaluate other alternatives and seek information on all available options. This step is crucial for marketers as they must ensure that customers have access to all the information they need to make a decision.

    The final stage of the marketing funnel is action. This is the most narrow part of the marketing funnel, as, by this point, only qualified potential customers remain. Logically, not every customer aware of the product will take action to buy it. As a result, at this stage, we are left with the customers who are most likely to buy the product. The role of marketers during this stage is to encourage customers to act as soon as possible and purchase the product.

    How do Customers Make Purchase Decisions?

    Before we dive deep into the steps marketers can take to guide customers through the marketing funnel, let's take a quick look at consumer decision-making, specifically regarding purchasing. The steps of the customer decision-making process are as follows:

    1. Problem recognition - In the first step, customers recognize that they are facing an issue. This step usually involves recognizing a want or a need that is unmet. For example, a customer might have just broken their washing machine and needs a new one.

    2. Information search - During this step, customers gather information either online or in person about product options and specifications. In this stage, the customer would assess the different functions they need from a washing machine. For example, they might want it to be a specific size or have washing and drying functions.

    3. Evaluating alternatives - Once the customer has gathered sufficient information, they assess the different alternatives to find which product suits their needs the most. Here, the customer evaluates which brand or product meets the size, functionality, or price aspects they are looking for and eventually chooses the washing machine that meets it.

    4. Purchase - The penultimate step is the purchase decision. The customer actively purchases the product.

    5. Post-purchase - However, the customer buying process does not end with a purchase. There are various actions a customer can take after purchasing a product based on their satisfaction level. For example, a dissatisfied customer could post a negative review about the product or brand online. On the other hand, a satisfied customer might become a repeat purchaser and loyal to the brand. Based on the example, if the customer was satisfied with a Miele washing machine, they might also consider buying a Miele dishwasher in the future.

    Marketing Funnel Strategy

    The overarching strategy behind the marketing funnel is that marketers should attempt to guide customers through the stages of awareness until action through various marketing efforts. First, let's examine marketers' different strategies to guide customers through each stage.

    1. The awareness stage - During this stage, marketers' primary objective is to capture their audience's attention to make them aware of the brand and the products they sell. Marketers must understand their target audience and make target customers aware of their brand through various communications tools such as advertising, social media, direct marketing, search engine optimization (SEO), etc.

    2. The interest stage - How can marketers reinforce interest in a product? The marketer must reiterate how the brand or product can solve the customer's problem. It is also vital that the company provides customers with all the information they are looking for. For example, email campaigns, webinars, blogs, etc., can be effective methods. This way, the marketer can start nurturing the relationship with leads and cultivate the beginning of a potential long-term customer relationship.

    3. The desire stage - Desire tends to be the longest stage of the marketing funnel. During this stage, marketers should help customers make the decision to purchase the product. Some methods include maintaining customer communication, answering questions or queries, or presenting them with reliable reviews.

    4. The action stage - This stage is the final step of the funnel, where customers have already decided to purchase the product. Marketers' main goal during this stage is to convince customers to purchase as soon as possible. How can they do that? Through promotions, exclusive discounts, tailored offers, bundles, etc. Marketers must also ensure that the brand leaves a positive impression on the customer to convert the one-time customer into a loyal one.2

    The marketing funnel strategy's objective is to guide customers through the funnel effectively with the help of various marketing activities.

    However, since its introduction, the marketing funnel has been extended to include customer retention, as, to build long-term relationships with customers, marketers must look beyond the 'action' stage. As a result, the marketing funnel can be elongated with a few additional steps to showcase the retention phases. After an active purchase, we can characterize customers as:

    • Triers (non-rejecters) - Customers who have purchased from the brand - were satisfied with it - but have not repurchased it in the past couple of months and are not planning on repurchasing it in the next couple of months.

    • Recent users - Customers who have purchased the product or brand in the past couple of months but are not regular users.

    • Most often used - Customers who purchase from the brand and use it most often but also use similar products from a different brand.

    • Loyal - Customers who always purchase from the brand.3

    The extended funnel shows how important it is for marketers to look beyond a one-time purchase and strengthen the relationship with new and existing customers. Satisfied and loyal customers are known as the company's customer retention capital3 and act as one of its most valuable assets.

    Marketing Funnel B2B

    The marketing funnel model is the same in business-to-business (B2B) environments as in business-to-consumer (B2C) environments. It starts with awareness and progresses to action and loyalty. We can divide the marketing funnel into three sections in B2B and B2C settings.

    Top-of-the-funnel (TOFU) relates to the initial steps of the marketing funnel (e.g., awareness).

    Middle-of-the-funnel (MOFU) can be characterized by the middle stages of the marketing funnel (e.g., desire).

    Bottom-of-the-funnel (BOFU) includes the last stages of the marketing funnel (e.g., action and loyalty).

    So, what marketing strategies and tactics can we use at each step of the funnel in B2B environments?

    • TOFU activities - inbound marketing, SEO, pay-per-click (PPC), content marketing, digital ads, webinars, etc.

    • MOFU activities - surveys, reviews, testimonials, emails, trial offers, etc.

    • BOFU activities - answering questions, offering outstanding customer service, post-sales support, etc.

    Check out our explanation of Business Markets and B2B Marketing to learn more.

    Marketing Funnel Examples

    Finally, let's observe an example of the marketing funnel. Imagine a new sustainable clothing brand, I&N, trying to pull consumers through the marketing funnel.

    The company has already segmented the market and identified its target customers. Its goal is to make this group of customers aware of the brand. It uses paid and organic social media and various digital advertisements to create awareness. The ads lead customers to a landing page through which they can sign up for the brand's newsletter.

    To create more interest in its products, I&E uses email marketing to encourage customers to make a purchase. The brand also creates a blog to inform customers about how it is using a sustainable supply chain and helping local communities. Marketers at I&E hope this will build brand equity and pull customers to the desire stage.

    Check out our explanation of Brand Management to learn why brand equity is crucial for marketers.

    During the desire stage, I&E counts on its customer support team to answer any questions potential customers might have about shipping and delivery costs, return policies, refunds, etc. Finally, I&E offers sales promotions and "limited time only" offers to pull customers to the action stage and encourage a purchase. The brand also sends customers a special “Thank You” email and a customer survey to fill out after making a purchase.

    Marketing Funnel - Key takeaways

    • The marketing funnel is a tool marketers use to describe the customer purchase journey.
    • The AIDA model is the basis of the marketing funnel. AIDA is an acronym for awareness, interest, desire, and action.
    • The marketing funnel strategy's objective is to guide customers through the funnel effectively with the help of various marketing activities.
    • The marketing funnel can be extended to include customer retention.

    References

    1. Cambridge Dictionary. Funnel. Cambridge University Press. 2022. https://dictionary.cambridge.org/dictionary/english/funnel
    2. Alina Sapian and Marina Vyshnevska. THE MARKETING FUNNEL AS AN EFFECTIVE WAY OF THE BUSINESS STRATEGY. 2019.
    3. Philip Kotler and Kevin Keller. Marketing Management (15th global edition). Pearson Education Limited. 2021.
    Frequently Asked Questions about Marketing Funnel

    What is a marketing funnel?

    The marketing funnel is a tool marketers use to describe the customer purchase journey. The awareness stage is at the top of the funnel (the widest part). The funnel gradually decreases throughout the customer purchase journey, narrowing down to the number of customers who take action.

    What are the 5 stages of the marketing funnel?

    The five stages of the marketing funnel are awareness, interest, desire, action, and retention (loyalty).

    Why is the marketing funnel important?

    The marketing funnel plays a foundational role in many companies' marketing plans. It describes customers' purchase journeys from awareness to action and helps marketers gain insight into the customer experience.

    What is an example of a marketing funnel?

    The marketing funnel varies based on the type of business using it. A typical example of a marketing funnel would start after the company has segmented and identified its target customers. First, the goal is to make them aware of the brand. The company does this through social media ads and uses email marketing to create more interest. The company might also write a blog to create brand equity and pull customers to the desire stage. Finally, the company decides to offer promotions and special offers to pull customers to the action stage and encourage a purchase.

    How will digital transformation change the marketing funnel?

    Digital transformation will change the marketing funnel in the sense that parts of the funnel can be automated to help guide customers through their purchase journeys. 

    Test your knowledge with multiple choice flashcards

    The ____ model is the basis of the marketing funnel.

    The marketing funnel starts with ________, the widest portion of the funnel at the top.

    During the _______ stage, the marketer's job is to inform consumers about the existence of a product. 

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