If you’ve spent any time with marketers, marketing agencies or business strategists, you’ve probably heard of the ‘marketing funnel‘. But do you know what a marketing funnel is? Or how to set one up? Or whether they even work?
My job today is to help you understand the marketing funnel concept, and then to decide how (whether) it applies to your own business.
TL;DR: Marketing funnels are fantastic for simple, low-risk, impulse buys. If your offer’s riskier, complex, or involves multliple decision-makers, you may need a different approach.
How did I get to that conclusion? Let’s start at the beginning.
What is a marketing funnel anyway?
The core concept of the marketing funnel is closely related to that of the buyer journey.
The ‘buyer journey’ is the idea that buyers progress through various stages – awareness, interest, questions and research, discussion and negotiation – before they reach the decision to purchase.
The ‘marketing funnel’ refers to a system or process which encourages them along that journey.
Think of a farmer funneling sheep towards the sheep dip. There is no way out except to go forward, and eventually through the dip. Marketing funnels can be set up the same way – except that humans are not quite the same as sheep. All the farmer’s sheep will eventually go through the sheep dip. Some of your leads will, but others will (so to speak!) dip out without ever buying from you. Here’s the standard diagram (or one version of it – some versions has slightly different stages):
What does that mean in practice? Here’s an example for a CRM software provider:
- The ‘awareness‘ might be an online ad campaign.
- Those who show ‘interest‘ click through to a landing page all about your offer.
- The content of the landing page answers ‘questions‘ and provides information so that potential buyers feel their ‘research‘ is complete.
- There may be limited ‘discussion and negotiation’. Your prospect simply has an option to buy at a set price.
In more sophisticated funnels, there may be upsells (Get the full-value CRM solution which includes extra users and these features ); cross-sells (Add SMS and automation to your email marketing with this extra module) or downsells (Try our basic pipeline software with limited features instead).
Full funnel vs part funnel
The example above went all the way from generating first awareness to closing the deal – online. That might work for some products and services. This kind of marketing funnel is key in e-commerce.
Other products and services are more complex. and more sensitive. They’re harder to sell purely online. Instead, the goal is to convince someone they should interact with you and your business as they move into research, discussion and negotiation. These part-funnels generate a lead rather than a sale.
Another way of looking at this is to think of
- a marketing funnel generating a lead for a salesperson to interact with
- a sales funnel generating an actual sale
Do marketing funnels work?
Plenty of marketers have said that the marketing funnel is dead. The internet has changed buyer behaviour. Buyers no longer progress down a simple funnel. They go back and forth and bounce around in the middle.
Personally, I think that’s an oversimplification.
It’s true that the internet has changed things. There are more options for research. There’s more information available. In particular, reviews and opinion from other buyers are much easier to find. So are potential competitors. Even when you get buyers into your funnel, they can see through the bars and look at what’s outside. And they can jump those bars any time they want to!
On the other hand, buyers always looked for alternative providers. Buyers always asked what other buyers or experts thought. They just do more of it than they used to – because it’s so much easier to be informed. (Plus, it’s much easier to track online funnels than it ever was to track offline ones, so marketers can see the buyers leaving!)
Funnels were always porous. They’re more porous now. And it’s easier to see people leaving than it used to be.
Understanding how well marketing funnels work in different scenarios
Exactly how porous your marketing funnel might be depends on your offer. Not your industry, your offer.
With more information available, your potential clients have more opportunity to research, ask questions, discuss and negotiate. But will they? Only if what you’re offering matters so much that it’s worth the effort.
Take a look at these four examples.
A simple consumer funnel or buying process
Imagine you’re in a suburb you don’t know well, and you want a coffee. It’s a simple, low-cost purchase. And it has an element of urgency – you want that coffee now, not next week.
Only a huge coffee snob is going to spend ages researching options. For most of us, if we can get the kind of coffee we want now, nearby, that’s good enough. Even if it turns out to be awful, we didn’t lose much.
A more complex consumer funnel
Taking your significant other out for a significant date (a wedding anniversary, for example) is a different issue. It may not be a huge expense in dollar terms, but it matters in emotional terms. And you only get one chance to get it right. You’re far more likely to spend time investigating options, checking out reviews, asking your friends what they think and so on. That research and discussion part of the funnel just got messy!
A simple business funnel
Now let’s take a business example. Your website’s been hacked and you need it fixed.
This could be expensive. And unlike the first consumer example, it’s not an impulse buy. But it is an urgent buy. Depending on your business, even a day’s delay could cost you big time. So if you can find someone to do the job now, and you have enough proof to trust that person, you’re probably ready to go.
A complex business funnel
This buying scenario is at the other end of the scale from buying a coffee. Imagine you’re in a business partnership. You and your partners have a company looking after your technology and communications. They’re OK, but sometimes they’re slow to respond. And that printer they recommended has broken down twice in the last 3 weeks. Maybe it’s time for a change.
There are so many things which make this a complex decision:
- How do you assess potential new IT providers? Will they be any better than your current one? Will they be worse? How do you even start comparing?
- You’re one of three partners. Do all of you agree you need to change provider? Maybe one of you doesn’t like the risk involved, or the change.
- You’ve spoken to a couple of providers and they offer very different pricing models – hourly rates vs a retainer. Which will work better for you?
- What about managing the transition from one provider to another?
It’s hard to imagine a situation where this decision would be made via a simple online marketing and sales funnel. There are simply too many questions, too many variables, and too many decision-makers.
Deciding whether marketing funnels will work for your business and your offer
So, what insights can we extract from those examples?
There are some questions you can ask to determine whether and how well a marketing funnel could work for you. Here goes:
- How important is this purchase to the buyer?
Consider dollar cost, level of risk and emotional context to reach a conclusion.
The more the decision matters to the buyer, the more likely you are to need personal, human interactions from the research stage onwards. - How many people are involved in the buying decision?
If more people are involved in making the decision, you need that personal interaction again – so that they all know and trust you. - How well does the buyer understand what they’re buying?
Once again, if the buyer doesn’t know a lot or understand a lot, they’ll have questions. And you can build a lot of trust by answering those.
Essentially, the more complicated or important the buying decision, the more complex and messy that ‘information’ part of the funnel gets. In many cases, it simply doesn’t look like a funnel any more.
If your offer is like this, creating a traditional ‘funnel’ may not be effective. But you still want leads. So what do you do?
Think about where your potential customers are going when they leave a traditional marketing funnel. They’re
- searching for information.
- looking at reviews.
- asking their friends.
So you need to
- show up in search – with useful information
- have good reviews
- have a good reputation and increased brand awareness
Notice something here?
None of this is about the quality or price or features of what you offer. It’s all about trust and reputation and helpfulness.
And about the potential client knowing your business exists in the first place.
In conclusion
So what does all that boil down to?
- Is your offer straightforward, low-cost and low-risk? Create a marketing funnel and invest in ads to drive traffic in at the top. Then measure each stage, find the leaks and plug them.
- Is your offer complex, expensive or risky? Invest in building your profile and reputation online. Reviews – everywhere which is relevant for your business. Information, advice, stories (ie a blog!) and case studies on your website to drive SEO, increase traffic and build trust.
Of course real life is rarely a simple either / or choice. You may want to do both. But this should give you some idea of how to prioritise or split the time and money you invest.
Good luck!
PS: If your offer falls into the second camp, I’d love to help you build that online presence and trust. If you want a traditional marketing funnel for a simple impulse buy, I may not be your best choice. But I know a few people who might fit you better. So please, get in touch.
