Are you designing and measuring your marketing funnel incorrectly?
Well, if you’re a small business who mainly uses digital tools, you may have received a lot of bad advice in the past about marketing funnels
Bad advice based on a 15 year-old mistake made using a 100 year-old marketing model.
However, when you understand this mistake and why marketers make it, a lot of things are going to start making sense. And, hopefully, you’ll become more confident using marketing metrics in a strategic way.
This article is based on an episode of Data Smarties – a video series by Geckoboard that gets smart with data (...and Smarties). Watch the full episode here:
When people design their marketing funnel, they usually start with what you might call the classic funnel. Awareness. Consideration. Decision. (Sometimes, you also see interest or desire included as a stage.)
Then, they ask themselves, how will I measure the stages of this funnel? So they look at their marketing tools, like Google Analytics, Shopify or Facebook Ads, which are good at measuring digital activity and user behavior.
Then they assign the metric they think best fits each stage of the funnel.
- So maybe for Awareness – they might track social media impressions.
- For Consideration – they might track website visitors.
- For Decision – they might track purchases.
However, if you do this, you're making a fundamental mistake, and it’s going to cause problems further down the line.
Because the classic marketing funnel and digital marketing metrics come from completely different marketing approaches - and they don’t actually fit together very well. To understand why the classic funnel isn’t very compatible with digital marketing metrics, we need to go back in time.
The history of the marketing funnel
The classic marketing funnel is exactly that – classic. That’s because it’s been used for over 100 years.
The concept was first proposed at the turn of the 20th century by E St Elmo Lewis who suggested that the job of advertising is to attract attention, awaken the interest and create the conviction.
And over the subsequent century, the classic marketing funnel became widely used by brands and advertisers who wanted to be more strategic in their marketing efforts. By understanding how their brand is received in the market, marketers could determine exactly where to place their efforts in order to generate the biggest return.
They understood that if they wanted a share of customers within a given market, then before those customers purchased you they would first need to be aware your brand exists, and then consider your brand to be relevant to their needs.
Crucially, this funnel has three important features. It’s:
- Sequential, meaning you can’t be part of one stage without also being part of the previous stage
- Customer-oriented - it views your brand from the customer’s perspective, not your own. In other words, you don’t get to decide whether customers are aware of your brand. They do.
- Representative of an entire market or market segment - so if you are a US car brand, your starting point is all drivers in the US, from which you then understand how many are aware of your brand, how many have considered buying from you, and how many have bought.
But what’s really important is the way they measured the middle and top of this funnel. Not with user behavior metrics, but with market research.
They used brand tracking surveys, which were conducted with a representative sample of the wider market.
This meant that annually, or even quarterly, you would receive the latest results from your brand tracking survey. These would provide a host of metrics like brand awareness, unaided awareness, brand preference, price sensitivity. All of which helped you to measure your marketing funnel.
And by understanding where your biggest gaps were, you could plan your marketing tactics accordingly.
Using the marketing funnel today
It’s important to say that for many businesses, this approach hasn’t actually changed that much. Big consumer brands still use brand tracking research to understand awareness, consideration and decision-making within their market at large.
However, fast forward to the age of digital marketing, and something has changed. Because these days, marketers, including many small businesses and startups, have access to a host of digital metrics that measure digital activity and user behavior.
And when people started designing digital marketing funnels, instinctively, almost without really giving it a second thought, they started mapping digital metrics onto the classic marketing funnel.
But when you think about what digital tools measure, and how the funnel has been traditionally used, it becomes obvious that these two things don’t neatly fit together.
Remember the three features of the classic funnel:
- A good funnel should be sequential. However, many digital metrics which are used to track awareness and consideration are often not essential parts of the customer journey. Customers can leapfrog them.
- Customer-orientated. The classic funnel is designed to look at your brand from the customer's point of view. But many digital marketing metrics look at customer behavior from your point of view. And there’s a big difference between 1000 customers saying they are aware of your brand, and Facebook saying that you have surfaced an ad to 1000 customers.
- Your digital metrics don’t describe your relative position within the entire market. So 10,000 website users might be half of your total market segment, or it might be 0.001%
It’s not that the metrics you have available aren’t valuable. They are. But why should you try to make them fit a model that’s designed for bigger brands, with a bigger budget, who are able to run regular market research?
Instead, if you’re a small to medium sized business, you should ignore the classic marketing funnel altogether and design and measure a customer journey which actually makes sense for your business.
Design and measure a funnel that works for you
Here are four pieces of advice for building a useful strategic funnel:
Start at the end of your funnel, with happy paying customers, and work backwards. Eventually you will hit a point where your funnel is no longer sequential. At this point stop.
You should still track the performance of your advertising campaigns, just don’t include them in your strategic marketing funnel. It’s better to separate these metrics out and appreciate where there is ambiguity.
Map and measure as many stages of the funnel as makes sense to your customers' buying journey. Your buying journey might have 15 clear stages, it might have three. It depends on your product and your business.
Don’t name your stages with generic words like “Interest” or “Desire”. Tie them to your customers' actual buying experience:
- “Visited payment page.”
- “Signed up for free trial”
- “Created first report”
- “Left a positive review”
This stops us projecting our own assumptions about our customers' thoughts and feelings onto these metrics.
Be customer-oriented. The classic funnel was all about understanding how your customer perceived you. Not the other way around. And that’s an important discipline to maintain.
Build your funnel around the moments where customers gain value and make genuine progress. Because these are the most important stages to measure.
Discover live marketing KPI dashboards
Once you’ve designed a marketing funnel that works for you, why not keep track of it using Geckoboard. Geckoboard makes it easy to create live KPI dashboards.