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Long Live the Marketing Funnel

2014-23-May-Marketing-Funnel.jpgContrary to what you might have heard, rumors about the marketing funnel’s demise are greatly exaggerated.

The funnel is alive and well. And it should be leveraged extensively by marketers. It provides a consistent and universally understood (and somewhat accepted) framework. The funnel does come in a variety of shapes and sizes and colors — with different twists and turns. Despite this variety, few marketers really leverage this powerful model.

What the Funnel Provides

The funnel enables marketers to have an almost universally understood visual representation of various customer touch points, and makes it easier to track and score a person’s behavior. The funnel we use at Marketo provides a good (although, not the only) framework and consists of six key stages:

  • Awareness: This is the universe of people who know anything about Marketo, no matter what social network they participate on, what articles they read, etc.
  • Inquiry: This is when we finally know something about the person — we know at least their name and email address.
  • Prospect: This is when the individual has taken some sort of action.
  • Lead: This person is treated as a lead and can be shared with a sales organization.
  • Opportunity: The sales team has accepted these leads and added them to their pipeline.
  • Customer: The person becomes a customer and they are passed on to a new revenue cycle for upsell and retention.

marketing funnel.jpg

Of course, each of these stages include multiple marketing tactics and scoring approaches.

It’s important to understand the difference between a contact (or a prospect) and a true lead (someone who has explicitly engaged with the company). Obviously, the relationship does not end after an individual becomes a customer. At that point, you can upsell or cross sell them.

You can determine the value of a customer based on the different products they purchase, if they adopted your product sooner than others or if they are part of a referral program, etc. As Seth Godin points out - “Customers are traditionally undervalued, and prospects are all treated the same.”

Godin continues:

Once you see the funnel, it's easy to understand how valuable your existing customers are, and easy to think about how you want to spend time and money in promoting and building your site. Most Marketers are running a flat campaign. Embracing the funnel changes the way you treat people. And treating different people differently is what consumers demand.”

Having a model like the funnel and a good marketing automation tool enables you to measure and understand the cost of each interaction. Sharing this information with the rest of your organization helps build a marketer’s credibility in a company, especially with the CFO.

The funnel also provides a learning framework for marketers to test out different messaging and creative at each stage of the funnel. This gives marketers the option to fine-tune their current program.

Addressing 7 Funnel Concerns

Since I started my first big marketing job in American Express in 1992, I have heard lots of critiques of the funnel. Marketers love catchphrases, especially "The Funnel is Dead." I disagree.

Its advantages have evolved since 1898 when E. St. Elmo Lewis developed a model which mapped a theoretical customer journey from the moment a brand or product attracted consumer attention to the point of action or purchase. (St. Elmo Lewis’s idea is often referred to as the AIDA-model — an acronym which stands for Awareness, Interest, Desire and Action). Let's address some of the funnel naysayers’ concerns, most of which apply to any marketing or sales model:

1. It fails to take into account the ‘feedback loop between existing customers and prospects’

Whether it is the funnel or another framework (such as a Life Preserver Ring of unique Awareness, Interest, Desire and Action areas), there always exists the challenge of tracking all the interactions among people (customers and prospects). It’s always difficult to uncover each discussion about your brand online.

2. The funnel is too linear

According to these critics, the primary problem with the funnel is that the buying process is no longer linear. I was always taught that the shortest distance between two points is a straight line. Most of the companies I work with, however, do have the majority of their customers follow more or less a linear process. They can be broken down into the different stages described in the model above.

 

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