What Is a Marketing Funnel?

A marketing funnel is a way of breaking down the customer journey all the way from the “awareness” stage (when they first learn about your business) to the “purchase” stage (when they’re ready to buy your product or service). Often funnels can also include post-purchase follow-ups which increase retention as well as cross- and up-sells.

The first step is, of course, getting traffic to your site. You can do this by creating SEO-friendly content, publishing white papers and getting backlinks. As leads progress through your funnel, your outreach methods will get more and more personalized (sometimes involving a product demo or a phone call) until the sale takes place.

Here are two example funnels – one that is effective and one that is not effective.

Example 1: A Not-so-Effective Marketing Funnel

Norman Newbie owns a software company with ten salespeople and one product. He’s not a very savvy marketer, so his sales process currently involves handing his salespeople lists of leads that he purchased online and having them “dial for dollars.”

His salespeople frequently get frustrated since the leads aren’t always good quality. Because they’re usually calling on people who A) aren’t interested in his services and B) are not a good fit for them, the salespeople close less than 1% of the prospects they initially reach out to.

Example 2: An Effective Marketing Funnel

Molly Marketer has a similar-sized company, but instead of taking Norman’s traditional outbound marketing approach, she’s created a marketing funnel that helps her three salespeople close more sales with less effort.

Molly started by building a series of attention-grabbing content marketing that are tied to landing pages on her website. Potential customers can engage with her content (blog posts, infographics, videos) and learn about her company and its services without a cold call from a salesperson.

When these would-be buyers become interested enough in her products, they request an online demonstration by filling out the form on her landing pages. These requests are routed directly to her salespeople, who, because they’re dealing with warm leads, close roughly 50% of the customers to whom they demo. Molly’s company closes more sales than Norman’s, with fewer salespeople and no time spent on cold calling.

Obviously, these are simplified examples, and most businesses will fall somewhere in the middle of this spectrum. Even if you’ve never heard the phrase “marketing funnel” before, make no mistake about it: you have one.

Stages in the Sales Funnel

No matter what kind of purchase we’re making or how much we intend to spend, all of us follow a relatively similar path when it comes to deciding what to buy. This buying process, or stages, was first introduced by John Dewey in 1910, but even now — more than 100 years later — it’s still the foundation of understanding buyer behavior and marketing funnel creation.

Here are the five stages of the marketing funnel.

Stage #1 – Problem/Need Recognition (TOFU)

Understandably, if a person doesn’t recognize that she has a need that must be filled, she’s not going to make a purchase. That said, these needs can range from easily solved problems to issues without clear solutions.

Suppose your furnace goes out in the middle of winter. Your problem is obvious: you need a new furnace. And the solution is easy — you need to call HVAC providers in your area for quotes. But say you need a new car. Should you look for an SUV, a compact car or a mid-size sedan? Even vaguer still, if you’re frustrated with how much your accountant is charging you to do your business’ taxes, you might not even be familiar with all the different solutions, like cloud-based accounting services.

For different types of businesses, buyer needs at the problem/need recognition stage – top of the funnel (TOFU) – are different. If you’re running a consulting business, for example, then your clients already realize that they’re having certain problems around your service area – like a high cost per lead (if you’re in marketing) or disorganized spending (if you’re in accounting).

Stage #2 – Information Search (MOFU)

Recognizing a problem or need that you have is the step that triggers a search for more information.

The strategies used to gather information tend to vary based on the size and scope of the purchase. Recognizing that you’re hungry, for example, might result in a quick Yelp search for restaurants in your area. Deciding which provider to use to install a new inground pool at your home, on the other hand, will involve calling around, reading company reviews, visiting showrooms, and talking with salespeople.

According to Pardot, 70% of buyers turn to Google at least 2-3 times during their search to find out more about their problems, potential solutions, relevant businesses, etc. Many people also turn to social media and forums for recommendations. At this point, they aren’t looking for promotional content; they’re looking to learn more about potential solutions for their need.

Here’s where you can position yourself as the helpful industry expert with content that helps them, no strings attached. Let’s say you’re a marketing platform or agency. You could create content around link building, SEO, Facebook advertising, or any other strategy that your customers would be searching for.

If you’re an accounting software company, you might create content around helping solopreneurs figure out their finances for the first time.