Marketing funnels (or sales funnels) are the backbone of a marketing strategy, but rarely used correctly.
To make funnels effective, you need to ditch the generic Awareness-Consideration-Purchase models and customize them for your company.
A customized marketing funnel lets you:
See where you're losing potential customers
Identify your company's strengths and weaknesses
Help set marketing objectives that increase sales and revenue
Choose marketing tactics that achieve a positive ROI
However, the biggest benefit of customized funnels is that they're a powerful way to sell your strategy to clients and executives. You're going to have hard data to back up your projections and tactical recommendations, presented in a way that non-marketers can easily understand.
So, let's throw away the generic templates and create a custom funnel!
Map the customer journey
Map out the entire customer journey for your company from start to finish. These steps become the sales funnel.
Here's an example of a B2B SaaS business funnel.
Add real data to each stage
To make this useful, populate each stage with actual data for your client or company.
Get the digital data from Google Analytics and platform reports and use quantitative surveys for top-of-funnel awareness.
How to measure awareness
For top-of-funnel awareness, I like to use SurveyMonkey (or any other online survey panel service) to send a quantitative survey to your target market with the question:
Are you aware of <brand>?
Make sure you qualify your survey respondents with a filter question. If you're selling dog food, your first question could be "Do you own a dog?". Anyone who answers 'yes' qualifies for the survey.
If you don't have the budget for a survey, a Share of Search analysis against the category leaders could be used as a proxy for awareness instead.
I explain how to measure awareness in a lot more detail on the podcast below.
Show them the money
You should know the average revenue per new client or sale. This is important because it allows you to estimate revenue/sales at the bottom of the funnel.
For example, if you know that each new client brings in roughly $200,000 per year for your company, then 5 new clients is equal to $1 million in revenue!
Calculate funnel conversion rates
Now, calculate the conversion rates between each funnel stage.
This lets you see where you're losing the most clients in the funnel. Your priority is fixing the biggest holes.
Be careful though...
Low conversion rates shouldn't automatically be seen as priorities. Just because you're losing clients at one funnel stage doesn't necessarily mean there's a problem. You need to compare your conversion rates to your competitors' or use industry averages to understand realistic goals for your category or business.
In the example above, a 2% subscriber opt-in rate is industry standard, and it's incredibly rare to find websites that can push opt-in conversions above 3-4%.
How to calculate conversion rates
Don't panic, all you need is basic multiplication and division skills.
Thanks to your research and data, you already know the total number of people in each stage of the funnel.
All you need to do is divide the number of people in the second stage by the number of people in the previous one.
In the example above, the conversion rate of people who are aware the company exists (125,000) into people who actually visit their website (12,500) is:
12,500 people / 125,000 people = 0.1
0.1 x 100 = 10%
This means that 10% of the 125,000 people who are aware the company exists actually visited the company's website.
To check your maths, just multiply your percentage by the first funnel stage:
125,000 people x 10% = 12,500 people
Bonus: Twitter user @jbk_ham has created a great Excel funnel calculator that does all the maths for you! Just plug-in your funnel data and the calculator will show you the conversion rates and even incremental revenue and sales.
Use the completed funnel to set smart objectives
This is where the power of the custom funnel reveals itself.
You know have the entire consumer journey mapped out with real market data. You have also identified the weakest points in the flow, and can figure out how much money you'll make if you fix them.
The test of marketer who knows what they're doing is setting SMART goals - strategic, measurable objectives that have a clear deadline. You can measure the impact of changing the volume of consumers at each stage of the funnel. How much more revenue do you get if 20,000 people are aware of your business instead of 12,500?
You can also measure the impact of changing conversion rates or customer flows through the funnel.
For example, increasing your email opt-in rate from 2% to 3% gives you 375 subscribers instead of 250.
This means you get an extra 2 clients, ~$400k in incremental revenue!
Using funnels in this way lets you set SMART objectives. They have a clear, defined goal with tactics that support achieving it.
Remember, marketing objectives can be focused on increasing the number of people in a segment, or increasing the conversion rate between a segment.
Use them both to build a strategy that shows your clients ROI.
But don't customers convert in different ways? How do you manage those who subscribe to the newsletter first, or book a sales call without subscribing?
This is a great question! The short answer is: don't worry about it.
The marketing funnel is just a metaphor for how people go through the often random and chaotic process of buying things. In real life, people will skip through stages, move back and forth, or get stuck in different stages at different times.
While individuals will skip around funnel stages, zooming out and looking at group behaviour often reveals patterns or trends. It's these trends that we're measuring - not the individuals!
The funnel is a model of group behaviour, which (like all models) is an oversimplification of reality. No model can capture the full complexity of human behaviour, but they're not meant to.
Its limitations are its strength - a model that accurately represented human behaviour would be far too complicated to use. You are trading accuracy for clarity and simplicity, which in the boardroom is usually a good thing.
If you found this deep dive on custom marketing funnels helpful, why not give it a like on Twitter? It's a small gesture that helps me out a lot!