As business owners, we spend a lot of time and money on our marketing. And rightfully so, we want our businesses to stand out from the competition and marketing plays a significant role in doing that.
The question is, do you know how effectively you are spending your marketing budget? And could you be using it differently to get you better results? Where are your areas of strength and areas of improvement?
What is a marketing funnel?
A marketing funnel is a graphical representation of how your business is performing at each stage of the customer journey.
Every person who purchases a product or service from you follows a customer journey from the point where they didn’t know your company to purchase, and hopefully onto recommending you to others.
What does the customer journey look like?
Every customer that passes through your doors or visits your site will follow this journey and ultimately it is our job to guide them from the beginning through to the final stage of becoming loyal to our brands.
Stage 1: Awareness
As customers become aware of the need for a particular product or service, they begin to research the options available to them. This research may involve time spent online visiting a number of websites such as brand-specific sites, review sites, forums and the like, or visiting physical showrooms, stores or offices. As they explore the various products available, they become aware of the businesses in the market and the products they offer. At this early stage, there may be no preference towards any particular product or brand.
Stage 2: Consideration
As the customer continues to research the products and services available on the market that may serve their need, they start to delve into the details of the options and create a long list of products. They discard those which they feel are not relevant, cost too much, aren’t available in a timely manner etc. At the same time, they keep note of the ones which are ticking boxes in their search for the right solution for them.
Stage 3: Preference
Once a long list of products has been created by the customer, they begin to find products that keep “rising to the top”. This may be a product that comes highly recommended, has the best value proposition, the right price or availability at the right time and manner. Whatever the criteria used by each customer to determine their new shortlist, these products become their preferred options. At this stage, they will begin to request quotations or begin a trial of the product to see if it really does suit their needs.
Stage 4: Purchase
After completing their research of available products, creating a long list of potential solutions and finalising a short list based on their priorities, customers are ready to purchase the one product that suits them best. During the purchase stage, it is important to make the sales process is as easy as possible for the customer to encourage the final conversion from preference to sale.
Stage 5: Loyalty
After the sale has been completed and the product delivered, the process of creating a loyal customer truly begins. As much as businesses strive to turn leads into customers, it is fundamentally important to ensure that your existing customers are so satisfied with their purchases that they come straight back to you the next time they need your product and services. Repeat customers are significantly cheaper for businesses to market to than new customers as they skip the first few steps of the customer journey by placing you in the preference stage from the get go.
MARKETING FUNNEL ANALYSIS
Understanding your marketing funnel helps you pinpoint areas where you are losing potential sales and identify the areas of marketing you should be focusing on.
How can marketing funnels help your business?
So, now that there is clarity around what the customer journey looks like, it is important to understand how you can use it to market your business better.
If you have a clear understanding of how many people your business currently has in each of these stages, you will have a much better idea of what marketing and sales activities you should be undertaking to convert them along the funnel towards making a purchase.
For example, if you have a large number of people sitting within the consideration stage but few in the preferencing stage, you may find that you are not articulating your value proposition well enough to encourage them to ask for a quotation. Conversely, if you have a small number sitting within the awareness stage but those that do move down the path towards purchase are doing so at a high rate of conversion, you may need to focus on brand awareness and acquisition activities to bolster your sales.
The important aspect of the marketing funnel to understand is where you are losing your potential sales. For some companies, it may be at the top of the funnel and for others it may be at the last step before purchase. It may also be the case that your business has optimised the marketing funnel all the way through to purchase but are not converting your existing clients into repeat purchasers.
Creating your own marketing funnel
To create your own marketing funnel you will need to have sight of a number of different metrics including the size of your market, website visitors, subscribers, sales, repeat purchasers etc. Each business will be different depending on how they operate. Online only businesses will have easy access to most metrics while businesses with physical locations may not have access to their footfall numbers leaving a gap in the funnel. All of these metrics are achievable though and can make a huge difference to how you view your marketings effectiveness.
At the top of the funnel is the market size which is the total number of clients available in the market regardless of whether they are currently purchasing from you or not.
This is followed by the number of people who have knowledge of your brand. Brand awareness is normally represented as a percentage e.g. 18% of the whole market who know of your company or brand. This can be ascertained via research projects.
The consideration phase represents those who have shown some interaction with the brand whether that be through visiting the website or visiting a physical store. Website visitors can be easily found using website analytics such as Google Analytics. It is possible to get accurate footfall numbers using technology that count the number of people entering and leaving the premises.
People show their preference for products by engaging with the business on a deeper level. This can take the form of telephone enquiries, website enquiries, email quotation request and sales consultations in person. Website enquiries and email quotations can be easily tracked via analytics and CRM systems. Telephone enquiries can be tracked via software such as ResponseTap and personal sales consultants recorded in a CRM system.
The purchase phase of the funnel is easily completed by collating all sales made within a particular period, whether they were conducted online, over the phone or in person.
One of the best ways to identify loyal customers is by implementing a customer relationship management system to record your customer journey as a whole. Properly managed, it will allow you to have a single customer view of every person interacting with your business thereby reducing duplicate records and showing you when multiple purchases are made by the same people over time. Repeat purchasers are a value asset in any business as they are typically much cheaper to service than gaining a new customer.
While it may not be possible to represent a marketing funnel with 100% accuracy, the more information that is available at each stage will give businesses a clearer view of how effective your marketing is, where you are losing potential customers along the way and, most importantly, where you can make improvements. Furthermore, when you begin to focus on creating your marketing funnel you will also find out those areas that need better measurement so you can put the right systems in place to improve your results.
Set up a call with me to discuss where your marketing is and I can help you plot a path to building and improving your marketing funnel.