A few weeks ago I gave a talk explaining some of the lessons I’d learned about marketing as I helped grow The Iron Yard. As I reviewed my presentation with the conference organizer, one slide towards the beginning caught his attention. Here it is:
His advice on that slide was, “you should explain what the marketing funnel is. Not everyone will know what that term means.” His observation was a great reminder that, when you are fully steeped in a discipline, concepts that are second-nature to you probably aren’t to people outside of that discipline.
After giving the talk, I had several great conversations about the marketing funnel with people, so I thought it might be helpful to write a simple blog post that explains what it is. One thing to note is that, out of habit, I generally refer to this concept as the “marketing funnel,” when it should be called the “marketing and sales” funnel. The distinct activities related to marketing and sales, respectively, should be viewed as a single process—different points on the same line the customer walks. From my experience, though, they are often (and unfortunately) separated. I’ll forego the SEO utility of using either “marketing” or “sales” individually for the sake of accuracy. If you’re looking for professional help with your marketing strategy, check out Indexsy.
With that, lets dig into the amazing marketing/sales funnel. We’ll start with a few definitions.
What is the marketing funnel?
Here’s a fancy definition I created:
The marketing/sales funnel is a framework for conceptualizing theories about the process your customers go through as they learn about and, eventually, purchase your product or services. This framework is the foundation for building the hypotheses and tests that will allow you to prove or disprove those theories.
In other words, the marketing/sales funnel is a system for thinking about all of the ways a potential customer interacts with your business as they move towards becoming an actual customer (this process is called the ‘customer journey’). More specifically, it is a framework businesses use to help them build ways of making assumptions, observing the actual path a customer walks, learning more about those customers and then modifying marketing and sales practices based on those learnings.
At its core, the marketing/sales funnel should be a optimizable system for turning theories about your customers into testable marketing and sales activities.
The funnel at its most basic level
As the slide at the beginning of this post suggests, the tactical implementation of tracking the customer journey can be complex. The good news, though, is that the principles behind that implementation—the funnel itself—is quite simple:
The top and bottom of the funnel are the same for every business: awareness and conversion.
- Awareness – Awareness is simply someone knowing about your product or service. If someone doesn’t know you exist, they can’t purchase from you.
- Conversion – Most often, conversion is considered purchase—the point at which someone gives you money for your goods or services and becomes a paying customer. (Depending on the type of organizations, things other than purchase can count as conversion1.)
The variable width represents the quantity of people at any given point in the funnel, which forms the familiar shape. More width means more people, and vice-versa. With the context above, the shape makes perfect sense: there are many more people who are aware of products and services than there are who actually purchase those products. This could be measured in terms of purchase intent—how likely is someone to hand over their money for the product or service? Lots of people are familiar with Ferrari’s brand, but far fewer people have one in their garage.
From awareness to conversion: the customer journey
The path someone follows from awareness to conversion is called the customer journey, as I mentioned above. The customer journey varies infinitely depending on the business, customer segment, product, service, etc. The same factors mean that the journey can vary significantly in terms of complexity.
Here’s a simple example. Let’s say a carnival is headed to town and wants to people to come buy tickets so they can enjoy the rides and funnel cakes (zing!). In order to make people aware of when and where the carnival will be in town, promotors run ads on local radio stations. As you’re driving your kids to school, you hear the ad and think, “the kids would love to go to the carnival this weekend.” When Saturday afternoon rolls around, you head to the carnival, purchase tickets at the booth, and complete a very linear customer journey that took you straight down the funnel, from hearing a radio ad to handing your money over to the carnival. Here’s what this might look like visually:
More often, though, customer journeys are more complex, involving multiple steps (or, in marketing speak, “micro-conversions”) along the way. Here’s an actual example we built at The Iron Yard based on real customer data:
Someone sees a billboard for The Iron Yard and becomes aware that we exist. Later, they visit the website to learn more. While on the website, they look at our free one-night courses and submit a request for more information about code schools. Because they gave us their email address, we place them in an automated email campaign, which leads them to a student success story on our blog, which they read. After reading that success story, they want to verify the quality of the school, so they spend a bit of time looking up reviews on the school. After that, some time passes because they get busy, but The Iron Yard has been on the back of their mind because they’ve seen ads (via retargeting) as they’ve browsed the internet. While on a run, they hear a Spotify ad for The Iron Yard and remember the free, one-night courses that they read about on our website. When they get home from their run, they sign up for the free course and attend the next week, making a direct, in-person connection with our staff.
Here’s how we visually represented that customer journey in an internal slide deck:
Remember that at this point, the potential customer still hasn’t converted—the choreography above only outlines the formal marketing activities that lead to more sales-focused tactics.
As you can see, thinking about every point on the customer journey can quickly become overwhelming, but the key is keeping it simple to start with, which I’ll address in more detail below.
You’ll notice in the examples above that some parts of the customer journey include interactions with the company itself, while others happen ‘outside of the funnel,’ in channels where the company can’t participate.
The act of companies pro-actively interacting with customers at various points along this path is called nurturing, a process that can drastically increase the velocity at which customers move down the funnel.
Because customer journeys vary significantly, so does nurturing. At the end of the day though, understanding nurturing is as simple as asking, “what do I need to do to help potential customers make the decision to purchase?” Depending on specifics, nurturing could be emails, text messages, push notifications, phone calls, reviews, content, free trials, face-to-face meetings and any number of other ways a company can interact with a potential customer.
Using the marketing funnel (keep it simple)
The internet is littered with prescriptive marketing advice that’s hard to adapt to the individual needs of a business, so I’ll avoid unhelpful specifics and explain the way we put the marketing/sales funnel into action.
Conceptually, it’s pretty simple: we started at the top and looked at the data we had about how people found out about us. If data was missing that we felt we needed, we put systems in place to start collecting it.
From there, we looked at the data we had about what the most common next step on the customer journey was. Again, we tried to fill data holes where needed. If no data was available, we created hypotheses and ran tests to create the data that would help us learn more about a particular step. Learning about what worked and what didn’t for a particular step allowed us to adjust specific nurturing activities to try and improve conversion rates. This process is what many people call “data-driven marketing.” We replicated this process for various points through the funnel, all the way down to conversion.
As I mentioned above, though, the key is keeping it simple. It’s possible that complexity can be a necessary starting point depending on the nature and size of the business, but in most cases, complexity should be the result of a high quantity of simple hypotheses about customers (and the resulting insights and activities). In my experience, if you’re starting from ‘ground zero,’ complexity should increase exponentially, so things will likely feel simple for a while. If your business is more established and has lots of data to work with (but haven’t mapped out customer journeys), the timeline of exponential increase will probably be compressed, but starting simple is still best.
Despite what many marketers and marketing software companies want you to believe, you don’t need a mystical agency or fancy software or complex automations to start using the marketing funnel. Anyone can ask good questions about their customers and come up with smart ways to get the answers, even if that’s a simple as taking with your patrons and intentionally asking questions.
1. I’m writing in the context of business, but conversion can also be a variety of events depending on the type of organization. Activities like votes, donations, volunteer hours, attendance and others are all conversions.