Neil Patel

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Marketing Funnel: What They Are, Why They Matter, and How to Create One

What is a marketing funnel and why does it matter

If you’ve spent any time learning about marketing analytics, you’ve probably come across the term “funnels.” What exactly are marketing funnels and why do they matter?

Marketing funnels are a useful tool to help you visualize the path customers take from first finding out about your brand to converting. Understanding them provides useful insight into why some customers convert — and some don’t.

What Are Marketing Funnels?

A marketing funnel is a visual representation of the steps a visitor takes from first finding out about your brand until they convert. The most common type of marketing funnel is four steps:

  1. Attention: A prospective customer sees your ad, social media post, or hear about you from a friend.
  2. Interest: They think you can solve a problem and wants to learn more.
  3. Desire: The prospect has done their research and wants to convert.
  4. Action: The prospect takes action — they buy your item, schedule a demo, or take whatever other action you want them to take.

The action can vary based on customer and industry — maybe you want them to make a purchase, sign up, or fill out a form. When someone does something you want them to do, it’s known as a conversion. The visitor converts from browsing to taking the action you want them to take.

Think about the Amazon purchase funnel. There are several steps a visitor has to go through before they can purchase a product. Here’s how it looks:

  • They visit Amazon.com
  • They view a product
  • They decide to add a product to the cart
  • They complete the purchase

There are additional steps/actions that can be taken in between each of these steps, but they don’t matter in the marketing funnel unless they contribute to the final action. For example, a visitor may view Amazon’s Careers page, but we don’t need to count these in the funnel because they aren’t necessary steps.

Why is the set of steps to conversion called a “funnel”? Because at the beginning of the process, there are a lot of people who take the first step.

As the people continue along and take the next steps, some of them drop out, and the size of the crowd thins or narrows. (Even further along in the process, your sales team gets involved to help close the deal.)

marketing-funnel-example

Losing customers might sound like a bad thing — but it’s not. The truth is, not everyone in your funnel will convert. The top of the funnel is where everyone goes in (visiting your site or viewing a marketing campaign). Only the most interested buyers will move further down your funnel.

So when you hear people say “widen the funnel,” you now know what they are referring to.

They want to cast a larger net by advertising to new audiences, increasing their brand awareness, or adding inbound marketing to drive more people to their site, thus widening their funnel. The more people there are in a funnel, the wider it is.

What Are the Different Types of Funnels?

In this article, we’re focusing on marketing funnels, that is funnels that start with some sort of marketing campaign. That might be a PPC ad, content marketing campaign, white paper download, video ad, social media ad, or even an IRL ad. The point is the first step in the funnel is a marketing campaign of some sort.

Other types of funnels you might hear about include:

  • Sales funnels
  • Webinar funnels
  • Email funnels
  • Video marketing funnels
  • Lead magnet funnels
  • Home page funnels

Despite the different names, these all track the same exact thing — the steps a prospective customer takes to conversion. (Sometimes they are even called conversion funnels!)

What Can You Use a Marketing Funnel For?

You aren’t limited to using a marketing funnel strictly for signing up and/or purchasing. You can put funnels all over your website to see how visitors move through a specific website flow.

You may want to track newsletter signup (Viewing newsletter signup form > Submitting form > Confirming email) or a simple page conversion (Viewing a signup page > Submitting signup).

Figure out what your goals are and what you want visitors to do on your site, and you can create a funnel for it.

Once you have the data, you’ll be able to see where roadblocks are and optimize your funnel. Let’s dig a little deeper into that.

Why Are Marketing Funnels Are Beneficial?

Marketing funnels provide access to data, called a marketing funnel report, which lets you can see where you are losing customers. This is sometimes called a “leaky” funnel because it allows customers you want to keep to escape the funnel.

Let’s take your average SaaS business as an example. Here’s how a funnel may look for them:

  • Visited site
  • Signed up for a trial
  • Used product
  • Upgraded to paying

Do people have to use the product before paying? They don’t, but it’s a good idea to track it so you can see if it’s a roadblock.

For example, if you are losing a lot of conversions after the trial stage, you might need to update your onboarding process so people understand how to use the tool or even adjust the top of your funnel so you aren’t attracting people outside of your target audience.

A Real-Life Marketing Funnel Example

Let’s look at a funnel process for a retail store and see the corresponding steps in an e-commerce store. We’ll be tracking a purchase funnel.

marketing funnel comparison-retail-store-ecommerce

The e-commerce store has the fortune of being able to see a funnel because they can track clicks, time on page, and other metrics. Their marketing would look something like this:

ecommerce marketing funnel

Okay, so now we have an understanding of what a funnel is and why it helps. Let’s take a look at a product that offers funnels – Google Analytics.

How Google Analytics Marketing Funnels Work

Google Analytics offers funnels, and I’ve written extensively about it in the past. This is an incredibly simple way to track the path prospects take before they convert. Sign in, then head to Admin > Goals > +New Goal > Choose a Goal to create a Google Analytics goal.

Here are a couple of things you’ll need to know when creating funnels in Google Analytics:

  • It’s a pretty basic funnel: If you don’t want to dive deep into the data and optimize, you can go with this.
  • You cannot go back and retroactively view data: Once you create your funnel, you’ll only be able to the funnel going forward as the data comes in.

Overall, if you are just getting started with marketing funnels, Google Analytics is a solid place to start. Learn how to set up a conversion funnel in Google Analytics.

What is a marketing funnel?

A marketing funnel is a visual representation of the steps a visitor takes from first finding out about your brand until they convert.

What are the different types of marketing funnels?

Sales funnels
Webinar funnels
Email funnels
Video marketing funnels
Lead magnet funnels
Home page funnels

Why do marketing funnels matter?

Marketing funnels provide access to data, called a marketing funnel report, which lets you can see where you are losing customers.

What is an example of a marketing funnel?

Visited site > Signed up for a trial > Used product > Upgraded to paying customers

How to use Google Analytics to create a funnel

Sign in, then head to Admin > Goals > +New Goal > Choose a Goal to create a Google Analytics goal.

Conclusion

We’ve covered just about everything you need to know about marketing funnels. Here’s a quick recap:

  • When someone on your website does something you want them to do (i.e., sign up, make a purchase, fill out a form, etc.), it is known as a conversion.
  • A funnel tracks the steps that lead up to that conversion. For example, e-commerce companies want people to purchase products on their website. Their funnel may have these steps: visited site > viewed product > placed product in cart > purchased.
  • A funnel report shows you where people are dropping off in the path to conversion so you can optimize your conversion path and drive revenue.
  • Google Analytics provides funnels as part of the free Google Analytics software. It’s a simple and free way to get started with marketing funnels.

Have you created a marketing funnel in Google Analytics? What did you learn?

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