If you have not read the first chapter on the basics of digital marketing, you can read it here. It will help prime you for the information that I am going to share below.
What is a Marketing Funnel?
It is the core framework that marketers use to map a customer’s journey.
The marketing funnel has multiple names like
- AIDA model
- Purchase funnel
- Conversion funnel
An ideal consumer travels from the top to the bottom of the marketing funnel. Some of us leave the funnel before reaching the bottom.
Multiple marketing funnels can exist in a single business. There can be a funnel for leads generation and another funnel for product sales.
Reasons for leaving the marketing funnel include the following
- Product not appealing enough to you
- Unable to find what you want
- Attention dropped off due to distractions
- Website issues like speed, UI, and UX
- Too many steps between entering the page and conversion
A marketer’s end goal is to convert as many leads (top of the funnel) into repeating customers (bottom of the funnel) or even better, brand ambassadors to people around them.
Once you understand how the marketing funnel works, you will be primed for what I will cover in future chapters. All of the marketing tactics that I will cover can be linked back to the marketing funnel.
The four parts of the marketing funnel are
- Awareness
- Consideration
- Action
- Post-action
Awareness Phase
The Awareness phase is at the top of the marketing funnel. As a consumer, you will generally need to know about a brand or product existence before even considering, let alone make the purchase.
Based on your profile, marketers will target you and serve ads via various digital and physical channels.
Source: r/LateStageCapitalism
The function of ads served during the awareness phase is for brand awareness and/or what does their product does. An example would be this 15-second ad from Tylenol.
Source: Guardian Singapore
In Singapore, when we get a headache, Panadol is our go-to product. Panadol is actually the brand and the substance that the pill contains is Paracetamol, a common pain killer. So, when Tylenol publishes this ad in the Singapore context, it is to tell consumers that their brand and product exists. More importantly, their product can also relieve your headaches and pain effectively. Next time, when you require some pain relief, hopefully, their brand comes to mind.
Awareness Phase Example
Below is a short paragraph where the awareness phase is in play.
You leave your house and decided to open your letterbox and see a flyer with details about nearby tuition services. You then walk to the bus stop and see a billboard promoting a new financial product by an insurance company. While waiting for your bus, you decided to check your email and you see that your favourite apparel retailer has a new collection this season. You then check your socials and see a promoted post on a piece of software that your profession might need.
At work, listening to your favourite radio channel, you hear a recommendation on a service by a company that gives you cash for your insurance policy that you are thinking of terminating prematurely. At work, you are facing the biggest problem every day. What to eat for lunch? So, you try to search on Google for nice food nearby and the top few results are ads for nearby F&B outlets.
Consideration Phase
The consideration phase generally kicks in when
- the product or brand attracted your attention when an ad is shown to you either voluntarily (organically) or involuntarily (paid ads)
- You want to find out more about the product
- Consumers that start researching solutions to the problems they are facing
Product Education
Now during the consideration phase, they will try to educate you on the features and benefits of their product and how they can solve the problems that you are facing.
When you finally decide to pull the trigger to make the purchase, the brands hope that their product is on the top of your mind.
Social Proof And Authority
Companies will show that their products and services can be trusted by using social proof and authority. This helps to build trust with their potential customers Here are some ways they do it.
- Quantity of products sold
- Number of happy customers
- Partners with well-known brands
- Reviews and testimonials by customers
- Appearing on the media
Organic Sources Of Information
You are interested in the particular item and you will start gathering information via various channels organically.
- Reviews from YouTube/Forums/Blogs/eCommerce Sites/Social Media/Friends and Family
- Follow them on social media
- General searches on search engines
- More information on the company website
- Sign up for a newsletter on their website
- Compare similar products on comparison sites
Inorganic Sources Of Information
When searching on search engines for more information or to a solution to their problem, you will be served ads above the actual search results.
Source: Google
Brands will aim to have their websites in the top 3 results or at least on the first page of the Search Engine Result Page. Buying ad placements is a way they can achieve this.
In the example above, when you are looking for a good vacuum cleaner, keywords that you google to solve your problem could be “best vacuum cleaner”.
In the green and purple boxes, these are paid ads that companies pay for to appear above organic results. For consumers that do not like to do research, they might just click on the advertisements and buy the product.
At first glance, the result in the red box is organic. When you click into it, it is a page that lists the 9 best vacuums for 2021. However, you need to know that this page engages in affiliate marketing. They earn a small commission for every purchase that goes through their referral links.
There is nothing wrong with affiliate marketing as this is how a lot of websites monetize their content. You need to ask yourself whether to trust the reviews and also visit multiple sites to cross-reference. Nonetheless, as a consumer, you need to be aware of this and make your purchase judgments accordingly.
Consideration Phase Example
Below is a short paragraph where the consideration phase is in play.
Last week, you were searching for a new vacuum cleaner on Google as your current one is breaking down. You see both familiar and unfamiliar brands on the top of the Google results page as ads and decide to do some research. You searched for
- Difference between wired and wireless vacuum
- The battery life of the wireless vacuum
- Best wireless vacuum
After looking at some sites and videos for ideas, you didn’t pull the trigger as nothing attracted your attention. After 2 days, you have already forgotten about having to purchase a new vacuum. You are surfing through Instagram and you see a post on XXX brand vacuum. It highlights that it is wireless, has sold 200,000 units, one year warranty, and other features and benefits. You decided to do more research and search for reviews online for XXX brand vacuum and on e-commerce platforms.
Action Phase
The consumer has decided to take action e.g., make a purchase, subscribe to the newsletter. The Action Phase is the phase that turns potential customers into actual customers.
The easier it is to take action, the smoother the experience, the higher the chance of a conversion. A positive experience at this stage will lead to repeat customers and word-of-mouth advertising.
Sometimes consumers just need a little push to make the conversion. Businesses will then undertake some tactics to push them over the edge. They include
- Limited time discount/free gift/
- Free trial
- Limited items left
- Money-back guarantee
- Happy customer testimonials
Upsell, Cross-Sell, And Bundles
During the action phase, businesses have the opportunity to increase the average basket order.
Upsell
Introducing the consumer to a higher-grade item at a higher price. Some customers will make the switch to the higher-priced item.
Cross-Sell
When we choose a certain product, the business will recommend complementary products for purchase. For example, if you are buying a mobile phone, businesses will show you items like phone covers, screen protectors, or car phone mounts.
Bundles
Bundles will include a package of products at a lower price vs buying them individually to encourage purchasing. The consumer will feel that the deal has greater value. If placed separately, most customers will not buy all items in the bundle.
Action Phase Example
Below is a short paragraph where the action phase is in play.
You did some research and you decided to go for either AAA or BBB mobile phone. Visiting AAA’s site first, you see that there is a 24-hour countdown for a 15% discount with a free tempered glass protector. Next to the add to cart button, it shows that there are only 10 sets left. You FOMO into an impulse buy and quickly add it to your cart. When you are checking out, they introduce a bundle with a fast charger and a car phone mount at a discount. You decided that since you have saved some money from the 10% off the mobile phone, so you decided to add on the bundle too.
Post Action Phase
This phase is where consumers become repeat customers or share products with our social circle. Businesses want to both retain their customer base and increase their customer base. If consumers are really satisfied with a product, we are more likely to be repeat customers and share it with our social circle. However, consumers usually need some reason to encourage us to become repeat customers and do sharing.
In this case, businesses will have to motivate consumers to take part in the post action phase via incentives.
Retaining Customer Base
- Direct marketing on clearances or new product offering
- Discounts to be used next visit
- Loyalty points
- Subscription package
- Amazon prime
Increasing Customer Base
- Referral programs
- Ambassadorship
Combination of Retaining And Increasing Customer Base
Businesses can also combine the two strategies into one. A very good example is Lazada’s Slash It campaign. They managed to ingeniously attain both goals.
Source: Lazada
Part 1: Existing consumers see a deal where they can purchase a product at a huge discount if they can get enough people to help “slash” the price of the product.
Source: Lazada
Part 2: You receive an invitation to help your friend “slash” the price of the deal. It then invites you to start your own “slash it session” with a prompt to sign in (spread the word) or download the app (new sign-ups).
Post Action Phase Example
Below is a short paragraph where the post-action phase is in play.
You are an existing customer and ambassador of brand AAA. Opening an email and you see that a new collection is available and older products are now on clearance sale. You have a current subscription where you get free shipping by just paying a small sum every month. After visiting the website and shopping, you gain loyalty points for you to use during your next purchase. As an ambassador, you share your recent purchases on your socials. When people use your discount code to make a purchase, you get a commission while they get a discount.
Maximizing Profits
To maximize profits by using the marketing funnel model, businesses need to do a few things
- Maximize the number of people at each level of the funnel
- Minimize the number of people leaving the funnel at each level
- Maximize the number of people going to the next component of the funnel
By doing these three things, a high number of consumers will end up in the action and post-action phase.
Looking at a simplified version above, the same advertising budget has very different effects. Points 2 and 3 will maximize the efficiency of the marketing efforts and spending.
For Figure A, each sale costs $10, and each post-action costs $50. As for Figure B, after optimization of the marketing funnel, each sale now costs $6.67 (33.3% cheaper), and each post-action costs $25.64 (48.7% cheaper).
Tactics To Put Consumers Back Into Funnel
Some common tactics that businesses use include
- FOMO (limited quantity/urgency)
- Exit pop-ups
- Loyalty points
- Daily rewards
- Remarketing
- Abandoned cart email
I will focus on a few that are interesting.
Daily Rewards
Businesses will encourage consumers to interact with their brand frequently by giving daily rewards. Once we interact with the brand, this increases the chance of making a purchase. These daily rewards include
- Discount for products
- Rare cash and physical prizes
- Coins to buy vouchers
The overall cost of the marketing campaign has been analyzed by the business. The prizes and discounts given are just a marketing cost to the company.
Source: KFC
An example would be KFC’s “Spin & Sure Win” There is a small chance to win the daily cash prize but the majority of users get vouchers. By “winning” a voucher, the consumer is incentivized to use it even though we did not plan to consume that certain item that period.
Remarketing
After you engage (view or click) with a business’s ads, they can now try to remarket their product to you.
What is Remarketing?
Remarketing or retargeting is a strategy where they target audiences who have previously engaged with their ads, social media pages, or website. Businesses will be able to target people who completed certain actions with their brand and create targeted ads based on those interactions. I have briefly written about how powerful is Google and Facebook in doing this here.
It is a powerful tool as they can craft a marketing message that resonates with the retargeted audience. Here are some examples of remarketing messages using a vacuum cleaner.
Scenario: Consumer searched for “wired vs wireless vacuum”
Retargeting message: Enjoy a powerful cordless vacuuming experience with 30 minutes run time.
Scenario: Consumer searched for “best cheap vacuum”
Retargeting message: Get your vacuum at 15% off this 11.11. While stocks last.
Scenario: Consumer search for “xxx brand reviews”
Retargeting message: 200,000 units sold worldwide. 1-year warranty. Money-back guarantee.
Scenario: Consumer visited product page but did not purchase.
Retargeting message: Here are 5 reasons why you need a cordless vacuum right now.
Abandoned Cart Email
When a consumer adds items to their shopping cart and did not checkout, some websites send them a reminder to check out their items. The consumer has a high chance of leaving the marketing funnel when they do not checkout soon after they add their items to cart.
Source: HubSpot
There are many reasons why a consumer leaves without checking out. They include reasons for both the consumer and business side.
Consumer-Side Reasons
- Distracted by work or life
- Browsing and researching during the consideration process
Business-Side Reasons
- Last-minute additional costs like taxes and shipping
- Forced account creation
- Time-consuming checkout process
- Lack of payment options
Leaving before checkout leads to lost sales. For business-side reasons, businesses will need to optimize their website. For consumer-side reasons, they can send you an automated abandoned cart email.
By sending an automated abandoned cart email, it sends some consumers back into the funnel. They sometimes include free shipping or a discount code to attract you to go back to the shopping cart and complete the checkout.
TL;DR
The marketing funnel is a model where businesses use to map a customer’s journey. You, as a consumer, travel along the marketing funnel. A business can use several tactics to increase the chances of you taking action. Consume based on your needs and wants and not because of a company’s marketing messages. Try not to FOMO and succumb to impulse buys.
Start from Chapter 1 on the Power of Digital Marketing here.
In the next chapter, I will touch on how companies target the perfect customer persona.
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