What is a marketing funnel? How they work, stages and examples
The marketing funnel is a critical piece of the marketing process. It outlines the most straightforward journey customers might take in their path to purchase. Ultimately, the marketing funnel is a helpful framework for connecting and engaging with customers along their journey. Here you’ll find details on every stage of the marketing funnel, and how Amazon Ads can help marketers maximize results with a full-funnel advertising approach.
What is a marketing funnel?
The marketing funnel concept has been around for over 100 years, and its purpose is to easily categorize major milestones along the shopping journey, from awareness to consideration, to decision, then loyalty.
Sometimes called the conversion funnel, it relates to the customer’s journey – but today’s path to purchase is far more complex, and very few customer journeys will mirror the funnel exactly. Effective marketing campaigns use a more comprehensive approach, such as full-funnel marketing, designed to reach shoppers at every stage in the process.
The marketing funnel shape corresponds with the idea that in the early stages of a shopping journey, marketers cast a wide net to engage as many leads as possible before nurturing those leads through each stage of the funnel. The audience narrows as you move down the funnel, and when you get to the bottom, you have shoppers who are most likely to convert, and ideally, become loyal customers.
Why are marketing funnels important?
Though the customer journey may not be as linear as the simplified one expressed in the marketing funnel, the concept is still important. The digital path to purchase is anything but linear, and the digital marketing funnel accounts for the fact that consumers enter and exit and move around the funnel, and their shopping isn’t limited to a single store or geographic area.
With customers’ ability to shop anywhere at any time, brands should think about how they can reach them at all stages of the customer journey. The consideration phase in the digital marketing funnel alone can involve extensive research and comparison online by consumers, and is no longer limited to comparing products in store. Many brands have adjusted to this new way of shopping, and embraced this less-linear path to purchase by connecting with customers in authentic and valuable ways across the funnel.
Marketing funnels are also important for both lead generation and lead nurturing. In the awareness and consideration phases, brands use campaigns to attract new leads. In the decision and loyalty phases, brands use campaigns to nurture current leads and, eventually, help grow customers into brand advocates. Digital marketing and the marketing funnel are critical to connecting the dots between what channels, tactics, and content is driving the most attention, conversations and, ultimately, sales for their brand.
Stages of the marketing funnel
There is no universally accepted version of the funnel, with varied explanations including three, four, or five or more steps consumers go through in their shopping journey. We’ll outline a four-stage marketing funnel below, including the stages of awareness, consideration, conversion and loyalty.
Stage 1: Awareness
Brand awareness is familiarity with a brand, which could include knowledge of its name, messaging, tone and style, values, and culture. Brand awareness begins with consumer research, and involves attracting customers to a brand and helping them recognize and remember it. The goal is to keep the brand top-of-mind by employing relevant customer touch points along the path to purchase.
To drive awareness, brands want to get in front of consumers where they are. This could include television – both linear and streaming TV – digital advertising, audio ads, social media campaigns, content marketing and more. 84% percent of shoppers begin their online product searches on digital channels that aren’t a brand’s owned website, so these touch points have become increasingly important.1
The objective at the end of the awareness phase is for your brand to stay top of mind for customers, so that when the time comes for them to make a purchase, they think of you.
Stage 2: Consideration
The goal of consideration marketing is increasing the likelihood that consumers will consider a certain brand and its products when shopping. Marketing messages should address a pain point, highlight an interest or answer a question for consumers. At this stage, customers are trying to get to know a brand and discover what differentiates it from similar brands. Brands should educate and inform customers in the consideration phase to help them understand how your product or solution meets their need.
Examples of mid-funnel consideration marketing solutions might include positive customer reviews, customer testimonials and case studies and webinars. Amazon Ads offers solutions for this stage like Sponsored Brands and video and display ads through the Amazon DSP. These ad products help create touch points when customers may be actively browsing and researching products to buy.
Stage 3: Conversion
The goal of the conversion stage is to encourage shoppers to purchase a product or service because they believe the brand they’ve chosen is the right solution to their problem or meets their need. Also referred to as the “decision” or “purchase” phase, this step is a brand’s opportunity to invest in a strategy that will help them stand out in their category and differentiate themselves from peer products. This phase is where a well-detailed website product page is important, as well as creating an exceptional customer service experience to inspire customer confidence in their buying decisions.
Conversion can be a relatively easy stage of the funnel to measure, because you can often track which ad click led directly to a purchase. However, it’s important to remember that customer interactions in the previous two stages directly influence whether customers ultimately convert.
Stage 4: Loyalty
Brands can foster loyalty by providing a seamless purchase experience and delivering a quality product or service. By following up and nurturing connections with consumers after purchase, brands can stay top-of-mind for shoppers.
Positive interactions during and after the purchase stage can help influence whether a shopper becomes a repeat customer. Without a plan for fostering customer loyalty, brands may find that many customers make a single purchase and move on. On average, it costs a brand five times more to acquire a new customer than retain an existing one,2 which is why some marketers also call this phase the “engagement” stage. To build loyalty, it’s important to continue engaging with customers who have invested in your brand’s products or services.
Effective engagement marketing, such as email nurture campaigns, social media activations and loyalty programs can be impactful when it comes to building brand loyalty with customers. At the end of this stage, the goal is that you’ve earned loyal, satisfied customers who become brand advocates and lifelong customers.
Caption: There are four stages of the marketing funnel: 1) awareness, 2) consideration, 3) conversion and 4) loyalty. A brand’s goal in each stage is to 1) attract, 2) inform, 3) convert and 4) engage customers.
What is the difference between the marketing and sales funnel?
Some people use the terms “marketing funnel” and “sales funnel” interchangeably; in fact, some combine them into one term: the marketing sales funnel. In reality, they’re two parts of a whole. The marketing and sales functions of a company or organization have their own goals, and their respective funnels support those goals. The marketing function is tasked with creating and managing a brand, generating awareness, and driving sales-qualified leads, whereas the sales function is focused on increasing products or services sold, both initially and repeatedly. Using one to inform the other can help teams stay in sync and create an optimal customer experience.
How to incorporate a full-funnel approach in your marketing
The marketing funnel is a helpful framework for engaging audiences. At the same time, customer journeys and funnels are not interchangeable concepts. Today, customer journeys rarely move directly from awareness to consideration to purchase. Shoppers can enter the funnel at any stage, or seemingly skip stages altogether. In other words, while the funnel is a helpful framework for ensuring you’re reaching customers across potential paths to purchase, few customer journeys will completely mirror the funnel.
You may not be able to predict the steps shoppers take before buying your product, but a full-funnel marketing approach takes into consideration the various ways potential customers can interact with your brand. This can help you recognize opportunities for engagement and reach customers wherever they are.
An example of a successful full-funnel approach is Osmo. The team implemented a full-funnel strategy to stand out in a crowded STEM toy space and reach new and existing customers at different stages of their buying journey. Learn how Osmo helped increased brand awareness with Amazon Ads.
Full-funnel marketing measurement
Without measurement and analysis, it’s impossible to know the effectiveness of a brand’s full-funnel marketing strategy. Here are three approaches for measuring and optimizing your full-funnel strategy.
1. Understand how channels impact each other
A full-funnel approach might include advertising across many channels to reach customers at any stage of the funnel. It’s important to determine benchmarks for success early to adequately measure the impact of each channel on a brand’s key performance indicators (KPIs). Each phase of the funnel includes its own success metrics.
When advertisers need to gain widespread brand awareness among consumers, TOFU metrics measure:
- unique reach
- completion rate
- click-through rate (CTR)
MOFU metrics help demonstrate when consumers have a greater likelihood to purchase. These benchmarks measure:
- detail page views
- new-to-brand percentage
- branded search index
These are the marketing metrics that measure the purchase end of the funnel and calculate:
- return on advertising spend (ROAS)
- advertising cost of sales (ACOS)
- customer acquisition cost (CAC)
- orders or units sold
By comparing TOFU, MOFU and BOFU benchmarks, advertisers can optimize their spend at all stages of the funnel.
One way to optimize channel performance is with Amazon Attribution, which helps brands see how non-Amazon media and marketing channels are contributing to sales on Amazon, which can be used to optimize cross-channel ads.
2. Customize messages to the different stages of the shopping journey
Using an ad server allows brands to ensure they’re serving relevant ads, and reaching audiences with the right message based on where they are in the shopping journey. For example, a brand could use an ad server to create a rule to show audiences who’ve previously viewed its product a different call to action (CTA) or image than to audiences that hadn’t viewed their product before. This allows brands to connect with shoppers no matter where they are in their path to purchase.
3. Compare spend to peers
Various tools allow brands to gain insight into how their advertising spend stacks up against an aggregate set of peers in their product category. This can be helpful information to learn so that marketers are aware of whether they’re over- or under-indexing on sales, branded search and other metrics.
How Amazon Ads helps brands with a full-funnel strategy
At this point, you know that a full-funnel strategy can be a powerful framework for growing your business. Not only does a full-funnel strategy make sense in the context of today’s omnichannel journey, but advertisers who take a full-funnel approach see better results across the funnel, including up to three times more brand awareness, twice the amount of consideration and two times more purchases.3
Amazon Ads is uniquely positioned solutions provider for brands taking a full-funnel marketing approach. We reach customers throughout their daily lives, with solutions that deliver unique reach and relevance. We give advertisers the depth and breadth of insights you need to continually refine and optimize your campaigns both on and off Amazon. Connect with us to learn how Amazon Ads can help you develop a strategy to reach customers no matter where they are in the shopping journey.
1 eMarketer, Oct 2020 – “Where do US consumers begin their product searches?”
2 Invesp Consulting, Customer Acquisition vs. Retention Costs – Statistics and Trends, Nov 2020
3 Amazon internal, 2020