What are Marketing Funnels and How Do They Work?

What are Marketing Funnels and How Do They Work?

It’s critical to create adaptable marketing strategies that can be implemented and executed according to plan and modified based on data analytics and customer feedback. Integral to this is a well-developed, closely managed marketing funnel that effectively and efficiently drives sales and, ultimately, delivers ROI (return on investment).

The funnel, which identifies various stages in converting potential customers into buyers, is a powerful, customer-focused tool. It has evolved, but the core elements remain the same. Our marketing funnel guide below defines the funnel and what marketing initiatives best align with each phase.

What is a marketing funnel?

A marketing funnel defines the buyer journey from product or service and brand awareness to purchase completion. Funnels provide a framework that enables marketers to track leads as they turn into prospects, and as prospects convert to customers. The funnel also helps you understand where and how leads and prospects are lost (leaks in the funnel), how to shorten the sales cycle, measure ROI, and create a more streamlined, personalized buyer journey. Ultimately, this drives more sales, boosts brand loyalty, and enables you to improve your marketing strategy over time.

In the past, buyers predictably passed through the marketing funnel one stage at a time, top to bottom, wide to narrow. In our digital age, the buyer’s journey is more complex, taking twists and turns. For example, today, buyers conduct more research before purchasing a product or service because they have more information at their fingertips. After they learn about a product, they usually check out online product reviews. If they like what they read, they move down the funnel to the next stage. Then they might see a competitor’s blog post or product comparison that makes them take a step backward or even exit your funnel. At some point, they may re-enter it at a different stage for various reasons, including digital remarketing efforts.

What are the benefits of marketing funnels?

By now, you’re beginning to understand why marketers should care about the marketing funnel. It plays a crucial role, helping you understand how customers interact with your brand and how and why you need to nurture them at every stage of the funnel. It’s especially useful to marketing teams that use a martech stack and marketing automation tools to more easily analyze the impact of marketing efforts along the funnel and adjust them when necessary.

Marketing funnels help you:

  • Select and fine-tune your marketing strategy: The funnel narrows your focus on what matters most at each stage. It helps you determine how to enhance the customer journey, leading to a higher conversion rate. It can also identify which touchpoints are the biggest influencers or detractors, so you can make adjustments and apply tools such as A/B testing to fine-tune content and messaging.
  • Better relate to your customers: With insight into buyers as they traverse the funnel, you learn about their pain points and how to address them. Today’s consumers expect brands to know and understand them. A well-managed funnel offering the right assistance and information helps you demonstrate this.
  • Generate more sales: A primary intent of the funnel is to drive sales. Building a closer relationship with potential customers and enhancing the buying process at every funnel stage helps you accomplish this.
  • Stay competitive: Analyzing your buyer journey, identifying where leads or prospects exit the funnel and are lost to the competition, and making changes to stop funnel leaks keeps your marketing campaign fresh and competitive.

Stages of the marketing funnel

Modern marketing funnels are usually nonlinear, flexible models that can adapt to digital technology changes, advances in data analytics, and fluctuations in consumer buying habits and behavior. Regardless of the actual funnel shape, which likely includes loopbacks and re-entries, there are six classic stages, followed by an advocacy stage.

1. Awareness (upper funnel)

This first stage in the upper funnel fuels lead generation. Marketing campaigns generate demand and make potential customers aware of your brand and your solution to a problem or need. Marketing efforts such as social media posts and comments, digital ads, organic SEO (search engine optimization), media coverage, blog posts, articles, direct mail, events, and pop-ups create awareness and generate leads.

2. Interest (upper funnel)

Here, you begin to create a relationship with a lead, positioning your product or service and brand, and apply marketing tactics that make them want to learn more, Marketing efforts at this stage include sending emails, providing newsletters, and offering links to downloadable content such as eBooklets.

3. Consideration (middle funnel)

At this stage in the narrowing funnel, leads become qualified prospects considering their options. Show prospects you know and understand them through refined targeting and messaging. Send invitations to free webinars and offer access to white papers, podcasts, and original research reports. Remarketing also comes into play in the middle funnel stages. For example, when customers leave a product in an online cart, lure them back into the funnel using remarketing tactics, such as strategically positioning your ads in front of these audiences as they browse online.

4. Intent (middle funnel)

At this point, a prospect shows some intent to buy. If you have a sales team, this is the stage where making contact and presenting sales-level content makes sense. It’s also the point where marketing efforts focus on presenting your product or service as the best fit for a buyer. In addition to sales presentations, provide case studies, additional information about your product or service, and competitor comparison charts that indicate why you best meet their needs.

5. Evaluation (lower funnel)

Your prospect is close to making a final decision to buy. Buyers are probably comparing your product or service to those of the last competitor or two in the evaluation stage. Besides the relationship-building and hand-holding sales efforts, marketing can support sales by providing additional targeted content that helps the prospect stay focused on your brand.

6. Purchase (lower funnel)

This is the funnel’s last stage where prospects decide to buy and become customers. Depending on the type of sale, the sales organization usually handles the purchase transaction. Online consumer sales typically don’t involve a salesperson, although, for example, a chat box option can offer live assistance from a company representative.

7. Post-purchase behavior (advocacy)

A positive buyer journey (assuming customers are happy with the purchased product or service) generates leads through referrals that fill the funnel at the awareness stage.

Upper funnel versus lower funnel marketing

Upper funnel marketing tactics and goals are different from lower-funnel marketing efforts and objectives, as outlined above. You might think that all marketing funnel stages are equally important, but this is not always the case. Let’s say, for instance, you have decent brand and product awareness, but you need more customers. Focusing marketing efforts on the lower funnel to drive conversions is paramount. If your company is launching or entering a new market, you may concentrate more on the upper funnel.

Conclusion/Next steps

Defining and managing a marketing funnel is key to garnering leads and effectively and efficiently guiding the customer journey to a purchase decision. Ultimately, a funnel drives sales, boosts ROI and enables you to refine marketing strategies. But as we’ve noted, today’s funnels are dynamic and ever-changing, rising to marketplace needs and catering to changes in buyer behavior.

Creating and managing funnels, gleaning insightful, meaningful data, then analyzing it requires time and skills. Consider staff augmentation if you don’t have available staff or staff with the appropriate experience and knowledge. Staff augmentation increases your team’s talent capacity, filling the gaps with high-quality temporary workers or contractors with the right skills. Upwork enables you to hire top independent professionals with the confidence of using the world’s largest work marketplace. Learn more at Upwork.com.

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