What is a marketing funnel? What you need to know before using advertising and digital to increase awareness
Posted: Wed Dec 04, 2024 6:57 am
The word "funnel" is often used in marketing and sales. Although many people have heard of it, surprisingly few people understand what purpose a funnel is actually used for.
The benefit of understanding the funnel is that it makes it easier to grasp key points of a company's marketing activities, such as "how many potential customers do we need to gather in order to turn them into sales?" and "how should we approach those potential customers?"
In this article, we will explain what a funnel is, from the basics, to how to use it in B2B marketing. We will also explain the "Flywheel," which can be said to have evolved in line with modern business and takes into account relationships with existing customers.
What is a Marketing Funnel?
A funnel is like a blue map of corporate behavior that is used to define corporate activities by visualizing the step-by-step behavioral process that a customer goes through from becoming aware of a product or service to purchasing it, such as "awareness" → "interest" → "comparison and consideration" → "purchase."
In normal marketing activities, as customers move through each stage from awareness to purchase, the number of customers decreases, and the number of customers who ultimately make a purchase is very small. The first process is wide, and the later stages become narrower, forming an inverted triangle diagram, which resembles a "funnel," so it came to be called a "funnel."
Funnel Model
The later in the funnel a customer is, the more likely they are to purchase a product or service. Therefore, no matter how many people you increase your awareness of a product or service, it is meaningless finland business email list if the number of customers who ultimately purchase is small. On the other hand, if the rate of progression to the next process is constant, it is also true that the more people who are aware of a product, the greater the chance that the number of customers who will make a purchase will increase.
Abandonment rate
(Source: Single Grain )
In the image above, Bounce Rates means the "bounce rate (the percentage of website visitors who leave the page after viewing it at the end)." In order to increase the number of customers who ultimately convert, it is effective to improve the bounce rate at each stage as well as to increase the number of customers.
Background of the importance of funnels
Customers of B2B companies do not immediately purchase a product or service after learning about it. In most cases, they go through a process of researching the product's features and comparing it with other products before making a purchase. If marketing activities are not conducted in line with this customer behavioral process, the efficiency of the process leading up to the purchase will be reduced.
For example, if a potential customer is vaguely aware of issues in their daily work, suddenly explaining your company and introducing specific features will not resonate with them. It is highly likely that they are not yet looking for such features, and the customer themselves is not even aware of any clear issues in the first place.
In order to eliminate this "gap" between customers and companies, it will be necessary to listen to the customer's issues and then propose solutions to those issues. By visualizing the customer's behavioral process, marketing and sales can take appropriate approaches according to the customer's stage.
Types and Shapes of Marketing Funnels
Here are the main types of marketing funnels:
Funnel
A commonly used funnel model is the marketing funnel. As explained above, the funnel is a "company-perspective" model that shows the state a customer goes through from becoming aware of a product or service to purchasing it, as well as what marketing activities the company should carry out.
Funnel Model
This marketing funnel is roughly composed of three types: TOFU, MOFU, and BOFU. However, please note that depending on the company, three categories may not be enough or may not be necessary.
Types of Marketing Funnels
Influence Funnel
The influence funnel is a diagram of customer behavior after purchase, which is represented by a triangle, with three stages: "Continuation → Referral → Transmission." With the spread of social media and subscription/SaaS-type businesses, customer behavior after purchase has come to influence the growth of brands.
Influence funnel diagram(Source: SKYWORD )
For example, according to research by Frederick Reichheld, director emeritus at Bain & Company, a major American consulting firm , a 5% improvement in customer retention rates can lead to a 25% increase in revenue (the 5:25 rule), and the cost of acquiring a new customer is five times the cost of retaining an existing customer (the 1:5 rule).
Furthermore , a survey by G2 revealed that 92.4% of B2B buyers responded that "after seeing a trustworthy review, their motivation to purchase increases." Based on these survey results, you can expect to gain new leads and increase sales by encouraging customers to continue using your product and share information about your company.
Businesses where customer retention is important, such as SaaS and subscription-based businesses, should also focus on influence funnels.
The benefit of understanding the funnel is that it makes it easier to grasp key points of a company's marketing activities, such as "how many potential customers do we need to gather in order to turn them into sales?" and "how should we approach those potential customers?"
In this article, we will explain what a funnel is, from the basics, to how to use it in B2B marketing. We will also explain the "Flywheel," which can be said to have evolved in line with modern business and takes into account relationships with existing customers.
What is a Marketing Funnel?
A funnel is like a blue map of corporate behavior that is used to define corporate activities by visualizing the step-by-step behavioral process that a customer goes through from becoming aware of a product or service to purchasing it, such as "awareness" → "interest" → "comparison and consideration" → "purchase."
In normal marketing activities, as customers move through each stage from awareness to purchase, the number of customers decreases, and the number of customers who ultimately make a purchase is very small. The first process is wide, and the later stages become narrower, forming an inverted triangle diagram, which resembles a "funnel," so it came to be called a "funnel."
Funnel Model
The later in the funnel a customer is, the more likely they are to purchase a product or service. Therefore, no matter how many people you increase your awareness of a product or service, it is meaningless finland business email list if the number of customers who ultimately purchase is small. On the other hand, if the rate of progression to the next process is constant, it is also true that the more people who are aware of a product, the greater the chance that the number of customers who will make a purchase will increase.
Abandonment rate
(Source: Single Grain )
In the image above, Bounce Rates means the "bounce rate (the percentage of website visitors who leave the page after viewing it at the end)." In order to increase the number of customers who ultimately convert, it is effective to improve the bounce rate at each stage as well as to increase the number of customers.
Background of the importance of funnels
Customers of B2B companies do not immediately purchase a product or service after learning about it. In most cases, they go through a process of researching the product's features and comparing it with other products before making a purchase. If marketing activities are not conducted in line with this customer behavioral process, the efficiency of the process leading up to the purchase will be reduced.
For example, if a potential customer is vaguely aware of issues in their daily work, suddenly explaining your company and introducing specific features will not resonate with them. It is highly likely that they are not yet looking for such features, and the customer themselves is not even aware of any clear issues in the first place.
In order to eliminate this "gap" between customers and companies, it will be necessary to listen to the customer's issues and then propose solutions to those issues. By visualizing the customer's behavioral process, marketing and sales can take appropriate approaches according to the customer's stage.
Types and Shapes of Marketing Funnels
Here are the main types of marketing funnels:
Funnel
A commonly used funnel model is the marketing funnel. As explained above, the funnel is a "company-perspective" model that shows the state a customer goes through from becoming aware of a product or service to purchasing it, as well as what marketing activities the company should carry out.
Funnel Model
This marketing funnel is roughly composed of three types: TOFU, MOFU, and BOFU. However, please note that depending on the company, three categories may not be enough or may not be necessary.
Types of Marketing Funnels
Influence Funnel
The influence funnel is a diagram of customer behavior after purchase, which is represented by a triangle, with three stages: "Continuation → Referral → Transmission." With the spread of social media and subscription/SaaS-type businesses, customer behavior after purchase has come to influence the growth of brands.
Influence funnel diagram(Source: SKYWORD )
For example, according to research by Frederick Reichheld, director emeritus at Bain & Company, a major American consulting firm , a 5% improvement in customer retention rates can lead to a 25% increase in revenue (the 5:25 rule), and the cost of acquiring a new customer is five times the cost of retaining an existing customer (the 1:5 rule).
Furthermore , a survey by G2 revealed that 92.4% of B2B buyers responded that "after seeing a trustworthy review, their motivation to purchase increases." Based on these survey results, you can expect to gain new leads and increase sales by encouraging customers to continue using your product and share information about your company.
Businesses where customer retention is important, such as SaaS and subscription-based businesses, should also focus on influence funnels.