What Is Funnel Marketing?

Key takeaways

Funnel marketing is a model businesses use to guide potential customers through the stages of the buying process.

• The four stages of funnel marketing include awareness, consideration, conversion, and loyalty.

• Funnel marketing is beneficial because it helps you identify your target customer, increase conversion rates, gain valuable insights, and build customer relationships.

• You can use funnel marketing strategies in both business-to-business (B2B) and business-to-consumer (B2C) marketing, making it applicable to companies of all sizes. 

Explore funnel marketing, how it’s used to engage potential customers, and how to implement funnel marketing in your business. If you’re ready to develop your marketing skills, consider enrolling in the Adobe Marketing Specialist Professional Certificate. You’ll have the opportunity to learn the fundamentals of digital marketing and build a content marketing plan in as little as four months. Upon completion, you’ll earn a career credential to share with potential employers.

What is funnel marketing used for? 

Funnel marketing helps businesses create marketing and sales strategies to move potential customers through several stages of their buying journey.

You might also hear references to the marketing funnel or a conversion funnel. Depictions of funnel marketing typically use an inverted pyramid or funnel shape that narrows from top to bottom. That’s because the top of the funnel has more potential buyers who are comparison shopping or gathering research before purchasing. When these customers reach the bottom of the funnel, you address a more select group of buyers further along in their decision-making.

Why funnel marketing is beneficial 

A funnel marketing strategy can help guide your efforts to speak to potential customers at various stages of the buyer’s journey. A marketing funnel plan can help you know what content you need, what channels to use, and how to budget effectively. When used effectively, funnel marketing improves customer targeting, increases conversion rates, provides data insights, and builds customer relationships.

Improves customer targeting

With funnel marketing, you can take a targeted approach, tailoring your messaging to the specific needs and interests of your target customers at each of the funnel's stages. You can create marketing materials that engage with your customers, whether they are at the top, middle, or bottom of the funnel.

Increases conversion rates

Thanks to your customer targeting, you can provide more specific messaging to the customer at their particular stage of the journey. This can help you to make the content more meaningful and useful to them along the way, increasing the likelihood of conversions. You can improve your targeting and messaging as you learn more about the needs, wants, and behaviors of your potential customers.

Provides valuable insights

This approach is especially efficient for digital marketers, who can use data to track customer behavior at each stage of the funnel. Using the information gained, your business can more easily identify what is working and what isn’t. This lets you optimize campaigns and improve the overall customer experience. Since it’s digital, you can get the data in near real-time, which can help you course-correct to save budget.

Builds customer relationships 

Your attention to guiding potential customers through their buying process helps build trust. As you move that prospect through the funnel, you also establish a relationship with your customers. Your efforts to tailor your approach to their needs and to make the process as easy as possible can lead to increased customer loyalty and repeat business.

Marketing funnel stages 

You will see funnel marketing phases given different names in various sources. You may even see some places that have broken the process into more stages. Sometimes, you may see the stages referred to as “top of the funnel (ToFu),” “middle of the funnel (MoFu),” or “bottom of the funnel (BoFu).” In general, funnel marketing falls into four main stages: awareness, consideration, conversion, and loyalty.

Awareness: The awareness stage is when potential customers learn about a business or product. At this stage, potential customers may be searching for information or solutions to a problem they have. They may be unfamiliar with your brand and have not yet engaged with your business in any way. This is an opportunity for your business to create content that provides value to potential customers and captures their attention.

Consideration: Consideration includes content focused on features, benefits, and how other customers have reviewed the product. Provide information that helps potential customers understand the benefits of your product or service and how it can solve their problems. You’re helping that buyer compare your offerings to your competitors or evaluate their options. Consider this the “Tell, don’t sell” stage.

Conversion: Also often called the action stage, this is when potential customers decide whether to buy your product or service. Marketing efforts at this stage work to convert a prospect into a sale by providing reviews, testimonials, and other forms of social proof. Your focus in this stage is to streamline the buying process; you want to make things easy to encourage customers to complete the transaction.

Loyalty: After successfully making a sale, you can move your customer into the last stage: loyalty. This is where you entice customers to remain loyal to your brand and even advocate for your business. By connecting with customers after you make a sale, you can keep them interested in your products and services. Content at this stage demonstrates your continued interest in helping them solve problems and that you’re there when and if they need assistance, providing excellent customer service.

History of funnel marketing

Before the funnel marketing model commonly used today, Elias St. Elmo Lewis introduced the original funnel marketing concept, the AIDA model, in 1898. AIDA stands for attention, interest, desire, and action, similar to the stages of modern funnel marketing. While customers still had options to choose from and could conduct comparison shopping, most customers were limited by the items they could purchase locally. 

Who uses funnel marketing?

Both business-to-business (B2B) and business-to-consumer (B2C) companies can benefit from funnel marketing. The sales funnel approach gives you tools to establish trust, educate potential customers, and provide the information needed to close the sale. Companies of all sizes, from startups to large corporations, benefit from funnel marketing.

How to create a marketing funnel 

If you’re ready to implement a funnel marketing strategy at your company, you can follow these steps to begin: identify your audience, create content for each stage of the funnel, generate and nurture your leads through the funnel, provide support as people convert to new stages, and identify what went well and where you can improve.

Identify your audience

To use the funnel marketing approach, you must first research your target audience. Once you know the groups your product or service may appeal to, you can dig deeper to develop individual buyer personas. These fictional profiles of your customers help you tailor content throughout the funnel.

Create content for the funnel

Each funnel stage demands different content to develop the relationship with the potential customer. For instance, say you make customized phone chargers. Imagine your customer is looking for a gift for Father’s Day:

• To appeal at the awareness stage, you might post a blog that rounds up various ideas for Father’s Day, including your own offering. 

• To appeal to a prospect in the consideration stage, you might have a blog and social media content about the appeal of personalizing a gift.

• For conversion, you might have a landing page that explains your company’s personalization process and how the customer can verify their purchase before it’s sent.

• After they’ve purchased, you might send a thank-you email to encourage customer loyalty and future purchases, and encourage them to post a testimonial.

Generate and nurture leads

For the marketing funnel to show a return on investment (ROI), you need leads to nurture through it. To find leads, you’ll typically generate content that people want enough to provide their contact information or indicate interest. Lead generation can also involve events and contests.

Then, you need to nurture the leads to guide them through their journey. Often, this uses email campaigns to send targeted messages that resonate with buyers based on typical customer behavior or preferences.

Support conversions 

You might have a prospective customer move through the entire funnel, but not convert at the end. To help prevent this, optimize your landing pages, implement retargeting and personalized offers, and test various messages around urgency and scarcity for your potential customers.

Conduct funnel analysis

By continuously optimizing your funnel, you can improve your success rates. Using analytics tools, you can track behavior throughout the funnel and identify areas for improvement. You may need to adjust your strategy to drive conversions and grow your business.

Funnel Metrics & KPIs

Metrics are a way to measure the success of your marketing funnel. At the top of the funnel, you’ll want to measure reach, impressions, traffic, click-through rate (CTR), and engagement. These will give you insights into consumers’ awareness and interest in your brand.

• Top of funnel marketing often carries a conversion rate between two percent and five percent.

• Middle of funnel metrics might include lead generation, marketing qualified leads, email open or email click rates, time spent on page, and cost per lead (CPL) to determine the rate your brand is being considered by potential buyers. While benchmark rates vary widely by industry and company size, a measure of funnel health is a CTR between 2% and 5%, engagement rates above 5%.

• Bottom of funnel metrics often focus on conversions, but might also include customer acquisition costs (CAC) and return on ad spend (ROAS). An average ROAS is around 2:1, while 4:1 is considered a strong return. 

Measuring Performance

There are different approaches to measuring funnel performance, and one aspect of this work is attribution modeling. This describes a group of methods used to calculate which parts of a marketing funnel are most effective by assigning different weights to conversions from each stage of the funnel. Here are the main marketing attribution models:

• Single-touch: This model is divided into “first click” and “last click”. First click attributes conversions to the first time a customer “clicks”, or interacts with a brand. This could include signing up to receive an email newsletter, clicking on an ad or social media post, or finding a website through organic search. Last click attributes the conversion to the last stage of the funnel in which a customer clicks. This might include clicking on affiliate links, paid search ads, or retargeting ads.

• Multi-touch: This approach assigns conversions across multiple touchpoints in the marketing funnel. This may look like equal credit to every touchpoint, or a custom attribution mix determined by the brand. 

• Position-based: This describes 40% of credit to both the first and last touches by a customer, with 20% going to the rest of the customer’s interactions with a brand. 

The attribution model you choose will depend on your marketing goals. Single-touch attributions are often simple to set up, but can give incomplete data around full customer journeys. Multi-touch attributions offer a comprehensive understanding of consumer behavior, but require more in-depth tools and data. 

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