The concept of a marketing funnel is not new, it has been around for a long time, but it has taken on a new meaning in the age of internet marketing.
Nowadays, it is a marketing concept that is related to the journey of your prospective customers within your website, from the initial stages of identifying the problem through to the actual conversion of prospects to paying customers.
Marketing Funnels and Conversion Optimization
When we speak of marketing funnel optimization, we are actually referring to widening the funnel and getting more people through each stage to maximize the conversion at the end of the funnel. So, conversion optimization is getting more people to go through the funnel and become customers.
This is where most businesses fail. In the words of Gabriel Weinberg, CEO and founder of DuckDuckGo:
“Most start-ups don’t fail at building products. They fail at acquiring customers.”
The hardest part of a business isn’t creating a product or having knowledge or an idea, but attracting and acquiring customers. No matter how good your idea or product is, it won’t do you any good if there’s no one to buy or utilize it.
What Is the Customer Funnel?
The customer funnel is a concept based on psychological theory that delineates the various states that customers’ minds go through before they decide whether to purchase or not.
The marketing funnel theory identifies five such states. These are, starting at the top and widest part of the funnel:
This is the first stage, and starts with the number of visitors to a company’s website or any other marketing channel that it may have.
The larger the number of people who visit the marketing channels, the more conversions you can hope for. Any interaction between businesses and prospective clients can be counted as acquisition.
This stage makes prospects aware of the product and motivates them to go on to the second stage of consideration.
At the second or activation stage of the funnel, if prospects are happy with the first interaction, they may take action and subscribe, sign up, and prepare to take the relationship further.
This is where prospects start thinking about making a purchase. This is also the stage where prospects start to look for additional information and feedback about products and start comparing competitive products.
How many people actually take action will depend on the satisfaction they derive from the interaction that they have had so far.
If prospective customers are happy, they will return and this is the third stage of the funnel.
If prospects are happy with the overall interaction with the company or business, it is natural that they will have a positive view of the company and will return for additional information and feedback over a period of time, before actually committing to buy.
The commitment to buy is the fourth stage of the funnel.
Once customers are satisfied with the information, feedback and interaction with a company, they are likely to commit to engage in monetization behavior and make a purchase from the company or business.
This means revenue for the company.
The larger the number of people who transit through from retention to revenue, the better it is for the business.
This is the last stage of the funnel and relates to customer loyalty. If customers are happy and satisfied with their purchases, you can be certain that they will recommend the business to acquaintances, friends, and family, or in the online community in reviews and feedback.
This will help widen the top of the funnel, with more people expressing interest in the business at the acquisition level.
The key to widening the marketing funnel is to optimize each stage, making it easier for a larger number of acquisitions to transit through to the base of the funnel and become loyal customers who will recommend the business to others.
Optimizing the Marketing Funnel
Optimizing a marketing funnel is not a one-time exercise; it is an ongoing process that requires adjustments through trial and error, over a period of time, to perfect it.
Very rarely it may happen, but it is highly unlikely, that one change will make a marked difference to your business.
Mostly, optimization happens by making micro adjustments to the funnel.
The whole process of making adjustments to get the most out of the marketing funnel is aptly summed up in this quote by Andy Johns, former product manager of growth at Facebook, Twitter and Quora:
“Growth is about taking your product and optimizing it to produce compound interest. There are very few (if any) silver bullets when it comes to growth. But there are many micro optimizations.”
The fact remains that most of the things that you are going to try will fail. So, it is in your best interest to fail faster to find things that will work better.
The marketing funnel is a model that describes the stages of a prospect’s transit from the initial interaction with your company or brand to the final culmination, which is conversion.
Conversion rate optimization is the process of moving people through your marketing funnel so as to turn them into loyal repeat customers who will refer other people to you.