No matter what anybody says, the funnel is the backbone of any marketing department, and no matter what, you should be laying out your company—its departments, its goals, and its strategies—around a funnel that has been very carefully thought out and is ever evolving.
Your funnel is not just a report or a means to accessing, generating, and reporting data— (yes, we are all at risk right now of obsessing over data, and we need to chill). The fact is, the funnel has been an integral part of marketing since the dawn of time, and it’s not going away simply because robots and AI are marching over the horizon and are awesome. The reliable ol’ funnel is still crucial—it is a living and breathing methodology and a metric of growth.
From the management side—as CMOs, CFOs, and CIOs—we should be prioritizing the ways in which we get our customers to move from one step in the funnel to the next, so that ultimately they make a purchase, and then beyond that—advocate for us. As CMO of Roojoom, I constantly use the funnel as a management methodology.
Unfortunately, I still see many companies, large and small, established and starting up, working according to this outdated model:
- Create product
- Put up pricing page
- Get marketing involved
To this model, which usually results in or creates a static and therefore dysfunctional funnel, I say: No!
To this ailing model, I offer the following dynamic funnel centric cure:
- Find your audience
- Get them interested
- Get them to try and to buy
Build your entire company around these steps so that the funnel dictates to everyone in every department what to do and how to make improvements. The funnel matters to everyone now, not just sales and marketing, because it defines priorities for feature development, product design, customer support and more.
Funnels fundamentally chart the shortest journey each buyer persona takes from awareness to purchase, meaning—you guessed it—you might not have (you should not have!) just one funnel. That is, if you can see the funnel as a process with a whole lot of flexibility, you’ll benefit from being able to more accurately map out who your potential buyers are, track each persona or each prospect, and adjust your funnels accordingly.
You will become the company known for fine tuning its funnels—and blowing competitors out of the water.
Every contact in your marketing automation system needs to be tagged by the funnel step they are in currently in. This tagging process is no longer just about leads—everyone must be tracked, tagged, and followed. For each member of your entire audience, you will need to know what stage of the funnel they are at.
The funnel stage is typically a custom field in your marketing automation system’s customer profile, but it is also synced with your CRM, your customer service software, your analytics software, and any other customer profile you may keep. Having this capability will allow you to run reports that identify the best performing personas, determine the CPA for each funnel stage and set your department’s monthly KPIs .
Step 1 is to create a conceptual list of all your marketing/sales/customer funnel stages, then describe how a customer is expected to take each of these steps.
Different customers might go through different versions and stages of your funnel based on their persona, readiness or current needs. You can do customer journey mapping to figure out the differences between different customers. Ultimately you want to create a seamless experience for each of them to make sure that you funnel the right persona down the right path.Don’t be afraid to break your funnel up into as many as ten or twelve steps. Funnel steps include customer activity inside your product and offline activity (such as a “Speak with Salesperson”) and you need to include these types of steps as well. Don’t stop at the sale! Customers should be funneled throughout their lifecycle. You want them to evangelize your brand, upgrade their plan, and renew their contracts. Different departments may be responsible for different steps, but the customer experience should be seamless. Having one funnel can ensure you provide the ideal experience for everyone.
The purpose of the funnel, from a management perspective is to get your entire team focused on one thing only: How do I get as many individuals in my audience to move to the next funnel stage as fast as possible?
This sounds simple but the reality is that most businesses don’t operate this way. Most email departments obsess about open rates and clicks and most social media departments obsess about engagement. In a funnel focused company, however, the email folks report on how many people they managed to move from “unknown lead to known lead” stage and the social media folks report on how many people they managed to move from “content reader” to “product interest”. They would show that this quarter this process happens in an average of 2 email send-outs for persona A and 4 for persona B. and so on…
Stop trying to explain marketing with jargon: “365,000 people signed up for our newsletter this month,” because frankly, nobody outside of marketing knows how that translates.
In a nutshell, you should hold each department accountable for measuring the distance between one funnel stage and the next in terms of time (minutes, hours, days, or weeks, depending on your product or service), and in terms of the number of actions a person must take to get there.
After you set up all the events and record every step your audience is taking down your funnel, you can get further into the nitty-gritty by assigning Cost of Acquisition (CPA) to each funnel step. Take the entire acquisition cost and allocate the proportionate amount to each stage based on the churn rate.
What do you see here? When breaking down the CPA for each step, we can see the cost invested in a person that has already reached a certain stage. In the example above, moving one person from Stage 4 to 5 is worth $426, which is the equivalent of moving seventy-one people from Stage 1 to 2.
When we look at this in our database—and we do look all the time—we can begin to define people on a very detailed level. We can see what steps they take, and where we lose them. There could be multiple funnels and multiple steps, but the clearer we become about how many steps it takes for somebody to move from one step to the next, the better we become at getting them there—meaning our funnel velocity increases and improves.
Getting a clear picture of your funnel and sharing it with your entire company will make it very easy for your entire team to make decisions and focus their efforts on projects that improve the bottom line.
[Originally posted on OpenView Partners Labs]