What’s a Marketing Funnel? How Do Its Stages Work?

What’s a Marketing Funnel? How Do Its Stages Work?

Every customer has a journey—and your marketing funnel maps it out for your brand. Not to be confused with conversion funnels (which are for generating sales), marketing funnels are all about lead generation. An effective marketing funnel lets you both plan and measure your marketing efforts as you attract and engage prospects and turn them into qualified leads.

Marketing Funnel Stages

Historically, lead conversion was considered a linear process. The four-stage AIDA model (Awareness, Interest, Desire, and Action) was developed in 1898 by St. Elmo Lewis. In 1910, American philosopher John Dewey introduced the five-stage buyer decision process, and outlined the stages of Need Recognition, Information Research, Evaluation of Alternatives, Purchase Decision, and Post-Purchase Behavior. 

These early concepts have evolved into the modern marketing funnel models used today. Two widely used models include a six-stage sales and marketing funnel often used by B2B marketers and the three-stage content marketing funnel predominant in DTC marketing. 

The three-stage content marketing funnel, which we incorporate into our strategies here at MuteSix, includes Awareness (top of the funnel, or TOFU), Consideration (middle of the funnel, or MOFU), and Conversion (bottom of the funnel, or BOFU). However, the efforts don’t stop there, as it’s still critical to develop and maintain customer retention and loyalty after conversion.

Understanding the role of each stage in the marketing funnel is essential to analyzing the buyer’s journey, achieving consistent messaging, and strengthening your full-funnel performance.

Let’s go through each of the different stages in our typical marketing funnel.

Awareness (TOFU)

Prospects engage with your brand for the first time in the Awareness stage. In this first touchpoint, they are just becoming aware of your brand and product. This is by far the largest cohort in your full-funnel marketing. 

This stage is focused on getting prospects familiar with your brand— a.k.a brand awareness. Content and other marketing materials will attract prospective shoppers with broad messaging that piques their interest into exploring further.

Materials for this stage of the marketing funnel include:

• Content pieces that educate visitors and potential new customers about your product or service (following your brand identity and content marketing/SEO strategies)
• Landing pages and infographics that introduce your brand, product, or service to prospective customers
• Social media posts that highlight your USPs (Unique Selling Propositions)
• Paid ads across digital media platforms that address target audience pain points

Consideration (MOFU)

At the Consideration stage, prospects in the funnel have already had a meaningful engagement with your brand. Maybe they’ve opted into email marketing, or followed your brand on social media. Your brand is on their radar—but now, you’ve got to earn their trust and set your brand apart.

Examples of compelling content for the Consideration stage include:

• Thought-leadership posts or white papers that offer value for potential customers by establishing subject-matter authority and solving problems
• Product comparisons, case studies, and similar content that displays the superiority of your brand within your vertical
• Visitor surveys to help identify the drivers and barriers that they might encounter with your brand
• Landing pages geared to specific customer segments to capture contact information so you can continue marketing to them

Conversion (BOFU)

By the Conversion (BOFU) stage, you have established relationships with the prospects in your funnel and have their attention and trust. Now, you’ll want to focus on customer retention and loyalty by nurturing your prospects and providing relevant reasons why they should choose your brand over competitors.

In this stage, you’ll want to focus on such conversion materials and activities as:

• Free trial or demo of your product or service so the prospect can acquire first-hand experience
• How-to guide or similar collateral that answers questions and addresses any doubts the prospect may have about your brand, product, or service
• Customer reviews and testimonials to build additional trust in the hopes they’ll become repeat customers
• Easy-to-understand price and feature comparisons to contrast your brand, product, or service with competitors
• Segmented email campaigns to ensure conversion messages tailored for each customer type

Common Marketing Strategies Used for Marketing Funnels

Many strategies can be used in a marketing funnel to help it succeed, regardless of the model you’re following. 

Some essential strategies include:

• Content marketing and User-Generated Content (UGC)
• Search Engine Optimization (SEO)
• Online (digital) and traditional advertising
• Direct marketing tactics (for B2B, this is primarily email)
• Loyalty programs, including discounts
• Social media

Measuring Success

Four metrics should be measured and analyzed to effectively assess the success of your campaigns—preferably in real-time like we do at MuteSix. These metrics include Conversion Rates, Conversion Rates Per Channel, Cost Per Acquisition, and Customer Lifetime Value. 

Let’s explore each of these in more detail.

Conversion Rate

The conversion rate is how often you convert a prospect to a qualified lead. Although some marketers only measure the lead conversion rate at the end of the funnel, it’s important to measure your success at each stage to know exactly where things are working—and where they aren’t.

We call these mid-funnel conversions goal conversions. For example, in the Conversion (BOFU) stage of your funnel, this could be the number of prospects that agree to the free trial or sign up for the demo. Tracking goal conversions can help identify gaps or the pain points at which prospects exit the funnel.

There are three primary methods used by DTC brands to calculate the conversion rate, depending on the goal conversion being measured:

Conversion Rate (CR) Formula

Goal: Number of visits

CR = Total # of Conversions ÷ Total # of Sessions x 100

Goal: Number of unique visitors

CR = Total # of Conversions ÷ Total # of Unique Visitors x 100

Goal: Number of leads

CR = Total # of Conversions ÷ Total # of Leads x 100

Conversion Rate Per Channel

It’s also essential to assess the success of each marketing channel employed in your marketing funnel strategy. 

Although there’s no set combination, commonly selected channels include the following:

• Organic search
• Paid advertising in digital media
• Influencers and referrals
• Email marketing

Cost Per Acquisition

Cost Per Acquisition or CPA (also called Cost Per Action) measures the cost of acquiring one customer. Most of the time, a sale is what constitutes aquisition, but you could also calculate using actions like a form submission or an app download.

Calculating the CPA by channel helps brands drill down further and analyze the success of paid advertising, social media, email marketing, or other channels leveraged in the campaign.

Calculating CPA is relatively simple. 

1. How much did you spend on the marketing campaign being analyzed? 
2. How many conversions were there? 
3. Divide the former by the latter, and you have your Cost Per Acquisition.

Customer Lifetime Value

A customer’s lifetime value (CLV) is based around customer retention, which is especially important for subscription-based products and services. CLV takes into account operating costs, product and service pricing, and the success of your long-term marketing efforts.

Customer lifetime value is the total worth of a specific customer over the entire length of their relationship with your brand. Rather than looking at individual transactions, CLV considers all transactions and customer revenue, past or future.

Historic CLV calculates how much each loyal customer has already spent with your brand. Predictive CLV forecasts how much each customer will spend with your brand in the future. Both are useful for tracking brand success.

Considerations

Even though marketing funnels function the same across different market demographics, it’s important to make sure its calibrated to your customer base. 

A B2B customer is going to operate very differently than a DTC customer—and each will have their own set of expectations. For example, B2B customers are often a team made up of more than one person, and expect to interact directly with sales representatives once they reach the lower stages of the marketing funnel, while DTC customers usually navigate the funnel alone and don’t expect to interact with a brand representative.

The MuteSix Difference

At MuteSix, we offer full-funnel marketing solutions for brands by leveraging industry-leading media buying, creative, and growth marketing services. Our real-time measurement capabilities give us the advantage in measuring and securing success across all stages of the funnel.

To help clients achieve record-breaking results, MuteSix provides the following services at no added cost:

• Growth Marketing Models: Cross-channel Paid Media analysis to inform future media strategies while identifying areas of efficiency.
• Reporting and Data Visualization: Custom dashboards for real-time reporting from high-level to granular insights.
• E-Commerce Vertical Insights and Trends: Agency-wide data sets across Paid Social, Paid Search, Programmatic, Email, and Amazon channels.
• Custom-Tailored Customer Analytics: Customer LTV Models, Retention Models, and more to help speed the feedback loop between data and strategy.
• Consultation on Advanced Measurement Strategies: Incrementality Testing, E-Commerce Data Tracking, Multi-Touch Attribution, and Marketing Mix Modeling.

Let’s get started growing your brand. Contact MuteSix today for data-backed full-funnel solutions across all digital channels tailored to meet your needs and goals.