Inverted Marketing Funnel: A New Approach For Small Businesses With Low Budgets
Sy Minh Thang Chu
Master's Student at Warwick Business School | Product Marketing | Digital Marketer | Build customer-centric strategies for sustainable growth
Have you ever wondered why the traditional funnel, which includes awareness, consideration, conversion, and retention, does not work effectively anymore?
The funnel costs a fortune in the beginning without any certain return. We spend heavily on diverse promotional platforms that demand a substantial budget, just in exchange for the public's initial awareness.
At the end of the day, only those who believe in what we do get to the bottom of the funnel and become our customers.
Also, when we look at the current market conditions, which are oversaturated with competition and technological advancements, the traditional funnel is apparently exacerbating the problem.
This drove me to design a new inverted marketing funnel that I'm going to introduce to you in this newsletter. The funnel is built upon the principles of grassroots marketing and the law of diffusion of innovation, which will be an appropriate marketing solution for small businesses with low budgets.
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Current Issues With The Traditional Marketing Funnel
1. It costs us a fortune in literally every stage
The traditional funnel, with its shotgun approach, demands a substantial investment in broad awareness campaigns.
On average, small businesses spend 2-3% of their revenue (~$10.000 - $30.000) on marketing activities, including running ads on different channels, from digital platforms to traditional ones such as TV and print, in exchange for initial awareness.
The investment ends up attracting a small fraction of customers down to the bottom of the funnel, who may further demand costly sales promotion, retargeting ads, personalized offerings, etc. to be converted and retained.
Frankly, what an unreasonable way to do marketing.
2. We are getting so annoyed by mediocre ads
Consumers are becoming increasingly aware of advertisements. Some surveys show we encounter from 1.000 up to 10.000 ads per day. Undoubtedly, the more ads we see, the more annoyed we get.
Advertising is still a great tool to build marketing success. Don't get me wrong. But how many high-quality ads do we actually see among those thousand ones that interrupt us in our lives?
In fact, 70% of customers find ads annoying and mediocre. As a result, ad fatigue is a significant issue, with more people getting better at ignoring or blocking ads altogether.
This phenomenon reduces the effectiveness of traditional ad campaigns, which are a cornerstone of the traditional funnel.
The Principles of New Funnel: Grassroots Marketing and Diffusion of Innovation
Grassroots marketing involves targeting a small, specific group of people and turning them into brand advocates, who are highly satisfied with the product/service and voluntarily help the brand spread the message to the broader public.
This approach has been on the rise recently due to the strong influence of personal recommendations and word-of-mouth in today's consumer market.
A study by Nielsen shows 92% of consumers trust recommendations from their family and friends more than any promotional forms. Around 95% of online customers read reviews before making purchases.
The diffusion of innovation explains how new ideas are adopted and passed through different groups of people over time. The adoption process begins with a small group of innovators and early adopters (~16% of the entire population) who take risks to be the first to try the new concept. As these early users share their positive experiences, the majority start to follow, eventually paving the way for the laggards at the other end, who tend to resist changes.
The new funnel is built upon two given concepts by starting with a small, specific, but influential segment. It then nurtures a genuine and meaningful relationship with this segment, ultimately leveraging their enthusiasm and advocacy to spread the message organically to the broader public or majority.
An Introduction To New Marketing Funnel
1. Target
The initial stage of the funnel revolves around identifying and engaging a niche, highly-targeted group of potential innovators and early adopters.
They are typically opinion formers - industry experts or trustworthy professionals, and opinion leaders - influencers and sometimes celebrities.
These people will likely become enthusiast users and further brand advocates. They are always open to new ideas in the industry, and willing to provide insightful feedback.
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Overall, the brand's value proposition is designed to address these individuals' needs and pain points, eventually motivating them to spread positive word-of-mouth.
Believe it or not, one of the 22 immutable laws of branding posits that the birth of a brand is achieved with publicity, not advertising. It's all about how the public speaks about the brand, not how the brand speaks about it.
Personalized outreach campaigns, including direct marketing, and customized social media messages, help create a sense of exclusivity and personal connection. Exclusive early access or beta testing opportunities can incentivize their participation and foster a feeling of being part of an inner circle.
Core Promotional Strategies:
2. Nurture
Once the early users feel connected to the brand's offerings, it's time to build intimate relationships with them and convert them into genuine advocates.
This stage focuses on providing exceptional and exclusive customer service, gathering and implementing feedback, and creating a sense of community around the brand.
The promotional strategies can include loyalty programs, exclusive content, brand webinars, and community events.
Core Promotional Strategies:
3. Amplify
As Philip Kotler has said, the best marketing is done by satisfied customers. The 'amplify' stage is built upon that statement.
The stage utilizes the enthusiasm and satisfaction of the existing niche, persuading them to share positive experiences with their networks. Since then, it's all about organic growth and word-of-mouth marketing.
User-generated content, referral programs, customer testimonials, and success stories are among the best promotional tools during this period.
We can start by encouraging satisfied customers to share their experiences on social media, using hashtags and branded content to increase visibility.
Highlighting customer testimonials and success stories on the website and social media channels further amplifies positive experiences and builds credibility.
Regularly engaging with and thanking customers for their contributions reinforces their role as brand advocates and encourages ongoing advocacy.
Core Promotional Strategies:
4. Expand
Now, it's time for a pay-off. The 'expand' stage aims to reach a broader audience through existing customer networks, achieving widespread brand recognition and growth.
Promotional strategies include attracting more members to the online communities, collaborating with a broader group of influencers, partnering with other complementary brands through joint promotions or co-branded launches, and utilizing more influential public relations (PR) efforts.
The objective is to achieve a self-sustaining cycle of growth driven by customer relationships and advocacy.
Core Promotional Strategies:
The traditional marketing funnel, despite being a popular one, no longer meets the needs of the modern market. My new inverted funnel, grounded in grassroots marketing and the diffusion of innovation theory, provides a new solution for small businesses with limited budgets.
By focusing on a targeted group of early adopters and nurturing genuine relationships, brands can leverage their advocacy to achieve organic growth.
Building Brands Through Digital Storytelling | Social Media, SEO & Email Campaigns | Content Strategist | Digital Marketing
7 个月Thanks for sharing! The new funnel focuses more on niche selection and working on that, rather than mass level marketing which could result in less ROI. Nowadays, Marketing is all about targeting the right user persona for your product or service.