What is a Marketing Funnel and How to Create One
What Is a Marketing Funnel?
The marketing funnel is a visual representation of the consumer purchasing process. It provides a roadmap for businesses to nurture leads from the initial awareness (top-of-the-funnel) stage through the middle-of-the-funnel stages, where potential buyers research and compare their options, and ultimately to the bottom of the funnel, where they make a purchase.
Ideally, the lead-nurturing process would extend beyond the purchase stage, with businesses encouraging customers to become loyal advocates of their products, services, or brands. Many marketers consider this an additional stage of the funnel.
Depending on the type of business and the goods and services it provides, the activities and outcomes at each stage of the funnel may look different.
For example, inbound marketing plans may use search engine optimization to drive traffic to a website or build a social media platform to generate brand or product awareness, whereas outbound marketing strategies rely on more traditional methods of prompting customers toward the top of the funnel. These tactics may include billboards, direct mail, or cold calling.
In both cases the marketing funnel is a tool to help businesses narrow down a broad group of potential customers to those who will take some sort of action. In most cases, this means handing over their money in exchange for the company’s product or service.
The action could, however, be any of a number of conversion goals, including:
- Submitting an online form
- Downloading a white paper
- Registering for a workshop
- Creating an account
- Sharing a piece of content
- Installing an app
Regardless of the strategy or the outcome, the marketing funnel is a key component of business operations that allows companies to track the customer journey and provide effective, appropriate touch points at each stage.
Stages of the Marketing Funnel
Answering the basic question “what is a marketing funnel” and following the basic steps on “how to create a marketing funnel” differ slightly across industries and organizations as far as breaking down the stages, but most marketers adhere to some variation of the traditional marketing funnel.
The marketing funnel provides crucial data to marketing analysts, who then create a narrative for key stakeholders to consider when making important business decisions. Marketing analysts collect and mine data from various sources. Information about market size, profitability, distribution channels, target market demographics, consumer behavior and other factors can be leveraged to optimize each stage of the marketing funnel.
The terminology used to refer to the marketing funnel can also differ among marketers, and it’s worth noting that although many professionals in the industry talk about “how to create a marketing funnel” or “how to create a digital marketing funnel” they’re usually talking about creating marketing campaigns and assets that align with the stages of the marketing funnel.
For example, many people refer to the top of the funnel as TOFU, the middle of the funnel as MOFU, and the bottom of the funnel as BOFU.
And a blog post on SEO and marketing consulting website neilpatel.com states that there are different types of marketing funnels, including marketing sales funnel systems, webinar, email and video marketing funnels. In reality, the stages are the same, but the marketing activities for these goal-specific funnels vary.
Each marketing campaign or goal-specific initiative generates unique data that is measured using corresponding metrics. For example, a successful conversion for an email campaign may require a website visitor to sign up for an email newsletter or an email recipient to open an email.
The call to action is different from that of a retail or ecommerce transaction, but the stage of the funnel — conversion — doesn’t change.
Regardless of the type of data being collected, the marketing funnel helps companies see which parts of their plan are working and which are not.
The first stage of the marketing funnel is the broadest. Companies use a range of tactics across multiple channels to gain exposure for their brands and their products. Online communities, such as Reddit, Quora, Facebook Groups, and Slack Communities serve as platforms for companies to reach a large audience, of which only a percentage will progress to the next stage of the funnel.
Marketers can pull data from individual online communities and social media sites. Most of these platforms have their own analytics that measure likes, comments, upvotes, retweets, mentions, and other key performance indicators.
Third-party websites such as Ahrefs collect website traffic and social media performance data, and the traditional marketing strategies are measured to identify areas of opportunity for increasing awareness.
Data at this stage of the funnel is valuable to companies as they develop social media plans, outreach efforts, email campaigns, TV and radio ads, and other tactics for gaining exposure.
The top of the funnel is meant to capture the broadest audience, but companies should always have a clear picture of their ideal customer. Accurate and detailed buyer personas and robust customer journey maps can help marketers fill the pipeline with prospects who have a greater chance of becoming qualified leads as they progress through the funnel.
Marketing research firms such as the Nielsen Corporation collect the type of consumer data that allow companies to create precise buyer personas. Nielsen’s panels, for example, provide the media industry with critical insights about consumer behavior.
According to the company’s website, “with the truth-set data from Nielsen panels as a foundation, we can use modeling and calibration techniques to gain an accurate representation of the behavior in the larger data set.”
Better data means better prospects and a more efficient marketing funnel.
Things to Consider at This Stage
- Where does the target audience spend their time?
- How can the company grab the attention of potential customers?
- What types of activities will facilitate engagement?
At the interest stage of the marketing funnel, prospects have identified a problem for which they need a solution and have begun to research their options. Through their research, they have learned enough to have refined their search.
For example, a customer may have initially typed the search query “saving for retirement” into a search engine. But after a bit of internet research and a conversation with a financially savvy friend, the customer began searching for a specific product or investment option. Now “saving for retirement” has become “financial advisors in Seattle” or “how to open an IRA.”
Ahrefs, a company that makes SEO tools, describes these as “high business potential” terms. People who search specific and long-tail keywords are demonstrating intent. They are prime candidates for the next stage of the funnel, and businesses that rank for their queries are more likely to capture consumers at this stage of the funnel.
In an article for Towards Data Science, SEO specialist Kyle Freeman explained how a data-driven approach to SEO contributes to a stronger pool of prospects at the interest stage of the funnel.
“Two important points to consider when choosing a tool to help you collect data is what data you want to analyze, and what data would help add greater clarity to your strategy,” Freeman wrote.
Interacting with consumers on social media is another effective method for bolstering this stage of the funnel. Hootsuite and other social media management platforms collect data from Twitter, Facebook, Instagram, and LinkedIn that allow companies to track mentions, as well as language and sentiment, to present a holistic view of their brand’s reputation.
These reports offer valuable information for developing a powerful engagement strategy.
Things to Consider at This Stage
- How can the company deepen engagement with its audience?
- What value can the company provide to the customer at this stage?
- Where are the company’s weaknesses at this stage, and how can they be turned into opportunities?
This is the point at which rich marketing data can give the company a competitive edge. When customers start comparing one company’s offerings with another’s, they consider several factors. These factors range from quality to price to brand reputation and beyond. Having accurate, comprehensive customer insights allows marketers to map the buyer’s journey and provide prospects with the right information at the right time.
For example, people who are in the market for high-priced products and services or services that require a long-term commitment will likely feel more comfortable with a try-before-you-buy option. They may ask for references from previous customers or search for reviews from credible sources.
Some potential customers will base their decision on a company’s level and quality of customer service, whereas others may prioritize a company’s core values above all else.
For example, impact investors — who comprise a relatively new segment of investors — seek “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”
The Global Impact Investing Network’s 2020 Annual Impact Investor Survey captured data from 294 impact investors worldwide. The survey revealed that the impact investing market is diverse and growing, which illustrates the importance of aligning buyer personas with marketing campaigns and activities at this stage of the funnel.
Understanding what drives this particular market segment helps investment managers craft compelling narratives about their brands to optimize the marketing funnel. Those who offer impact investment opportunities can showcase their unique value proposition and gain a competitive advantage.
Things to Consider at This Stage
- What sets the company apart from the competition?
- How can the company position itself as the right solution to the customer’s problem?
- Which factors drive the buying behaviors of discrete market segments?
The conversion stage is the last step in the lead-nurturing sequence of the traditional marketing funnel.
Survey data and other customer feedback reveal patterns in drop-off at this stage. If customers make it to the conversion stage but don’t take an action, something needs to be adjusted. Abandoned shopping carts, low click-through rates and poor form-submission rates can signal a disconnect between the prospect and the seller. Customer feedback can supply the qualitative data needed to put these numbers into perspective.
Conversely, marketers can track successful conversions to determine which marketing strategies worked and double-down on those efforts.
The type of content served to prospects at the point of conversion often include success stories, customer referrals and testimonials, all of which should be tailored to them. For example, a B2B model that for maximizing revenue won’t necessarily resonate with a B2C audience.
Things to Consider at this Stage
- Which type of call-to-action is appropriate to the consumer at this stage?
- Are there any obstacles or points of friction standing in the customer’s way?
- What tactics have proven successful, and can they be expanded or replicated?
Post-Sale Stages: Customer Retention & Advocacy
The traditional marketing funnel includes four distinct stages — awareness, interest, desire and action, or AIDA — but the post-conversion stage can have a significant impact on sales and brand reputation.
This is the stage that can propel a company from good to great. Companies that continue the nurturing sequence after the sale has been made build trust and loyalty, which allow them to tap into one of the most powerful forms of marketing: influencer marketing.
According to a 2020 member survey from the Association of National Advertisers titled The State of Influence: Challenges and Opportunities in Influencer Marketing, 65 percent of ANA marketers had used influencer marketing in the 12 months prior to the survey, and 71 percent reported being satisfied with the results of their influencer marketing efforts.
Survey respondents stated that engagement, reach and impressions were the most important metrics for measuring return on investment from influencer marketing.
This positioning of the customer as an agent of awareness, creating a buzz around the company’s product or service and driving engagement, is sometimes referred to as “flipping the funnel.”
Things to Consider at This Stage
- How can the company leverage social media to encourage positive conversations around its brand?
- Who are the influencers in the space?
- Is there a budget for influencer marketing, and if not, is there an opportunity for a grassroots approach?
Using Data to Refine the Marketing Funnel
The specific steps involved at each stage of the marketing funnel are fluid and will be based on a company’s product offerings, its customer base, industry trends, and market conditions and growth rate. This is where the customer journey mapping comes in.
Marketing analysts present their results to the marketing sales funnel system teams as predictions and forecasts. These reports inform the customer journey map as well as the marketing mix.
The Marketing Mix: The “4 Ps”
Businesses create marketing assets and campaigns that will appeal to consumers at each stage of the funnel based on the predictions for these key factors. For example, a content marketing strategy may include a podcast for potential customers at the top of the funnel — in the awareness stage — and testimonials at the purchase stage.
Using Big Data to Maximize B2B Sales
Omer Minkara and Keith Blackwell of Aberdeen Strategy & Research, presented a webinar titled How to Align B2B Buyer and Seller Journeys to Maximize Revenue, during which Blackwell, Aberdeen’s chief operating officer, stated that sellers face challenges when identifying opportunities within the total addressable market because “over 50 percent of this research phase is conducted in stealth.”
Blackwell went on to describe how Aberdeen monitors 3.5 billion signals a day across 100 million devices to determine which prospects are currently in-market to assist sellers in aligning their timing and messaging with the journeys of active buyers.
In addition to firmographic and technographic data collection and classification, data analysts at Aberdeen look at external data, intent scores, high-value engagements, and insights extracted from pixels added to websites.
In other words, rather than predicting buyer behavior based on observations and models of previous purchases, Aberdeen’s marketing analysts track prospects’ real-time behavior over a course of 52 weeks and predict buyer intent based on that behavior.
According to Minkara and Blackwell, only 22 percent of firms are satisfied with their ability to use data to inform or influence marketing sales funnel systems. The rest “struggle using data to drive their activities” and face challenges with messaging across the various channels in the modern buyer journey.
Citing a case study in which intent data increased a client’s ROI by 4,000 percent, Blackwell notes a direct correlation between making better use of data and achieving better outcomes.
Sentiment Data Enriches Each Stage of the Marketing Funnel
Forex.com published a guide on how to read and implement Market Sentiment Indicators, explaining how businesses can use sentiment data collected from blogs, online forums, and social media channels to tap into the views and attitudes of their target market.
Their paper explored three approaches to sentiment analysis: machine learning, lexicon based, and hybrid, which combined machine learning with lexicon-based methods.
The tools the researchers presented were categorized according to these approaches and used to classify texts in terms of sentiment — positive, negative, or neutral. The tools varied in functionality. Some were used to train machine-learning models, some employed natural language processing (NLP), sentiment dictionaries, lexical databases, or sets of words — such as the Affective Norms for English Words (ANEW). Yet others implemented APIs or sentiment analysis algorithms.
Tools Used in Sentiment Analysis Research
- Happiness Index
The researchers concluded that sentiment analysis tools and methods could be applied to business, finance, and politics.
“In the business domain, sentiment analysis is mainly used for detecting consumer’s voice, brand reputation and the online advertising and on-line commerce trend,” the authors wrote.
Sentiment analysis can be applied at all stages of the marketing funnel to discern relevant consumer preferences and brand-specific insights. but is particularly useful at the retention and advocacy stage.
Businesses of all sizes can benefit from optimizing their marketing funnels. The marketing funnel is the foundation for a strategic marketing plan, whether the digital marketing funnel or traditional, and the only way for companies to refine their plans, streamline efforts, and increase their marketing ROI is to carefully analyze large amounts of data to inform their marketing practices.
Learn more about how to become a marketing analyst.
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