However, in a survey of B2B marketers conducted by Innova Co., Ltd. , about 70% of respondents said they had not yet created or utilized a funnel. Although the funnel is an important model for promoting customer understanding and optimizing customer experience, many people are concerned that they do not understand the meaning of the funnel or are not able to utilize the funnel in their initiatives.
In this article, we will explain, with the help of illustrations, why understanding funnels is important, their main types and structures, and funnel analysis.
What does funnel mean?
A funnel is a model that visualizes the flow from customer awareness to purchase. The name funnel comes from the fact that its shape resembles a funnel, with a wide top and a narrow bottom.
Funnel illustration
(Source: Sprout Social )
In a typical prospect distribution, the number of leads decreases finland business email list as they move from awareness to interest and consideration, with only a small percentage of leads eventually converting into customers. This results in a wide funnel at the top and a narrower one as you move down.
From here, let's take a look at the background to the development of funnels and their importance.
Background of the development of funnels
In 1898, advertising and sales pioneer St Elmo Lewis developed the "AIDA" model to explain how sales work.
AIDA is an abbreviation of "Awareness, Interest, Desire, Action" and is a model that explains the process that consumers go through before making a purchase.
AIDA was originally developed for the purpose of educating salesmen, but William Townsend created a funnel-shaped AIDA model and introduced the concept of the sales funnel in 1924. Since then, scholars and consultants have developed the idea of the funnel in line with changes in consumer behavior.
For example, over 100 years ago, funnels were based on the assumption of a one-time purchase, but in today's world, where business models such as SaaS and subscription-based models are widespread, we must also take into account continued use after purchase.
In addition, according to the Edelman Trust Barometer research study , it has been found that for Gen Z, the starting point of a relationship with a brand is "purchase" rather than "awareness." In fact, 78% of Gen Z responded that they "find or discover information about a brand after purchasing," meaning that purchase is not the goal like in the traditional funnel, but the start.
Additionally, in B2C, where the unit price of products is low, sudden purchases occur, as typified by the " pulse-type consumption behavior " advocated by Google, so it is highly likely that a funnel based on awareness will not be able to respond appropriately.
There are many types of funnels, which we'll discuss in more detail later, but every funnel should be unique and tailored to the customer journey of real customers and leads.
Why Understanding Funnels is Important
Understanding the funnel is important in your sales and marketing efforts because it allows you to deliver the right information to your customers at the right time, through the right channel.
Customer needs differ at each stage of the purchasing process, so approaches tailored to each stage are required. For example, customers in the awareness stage do not have a deep interest, so measures that deliver useful information and know-how to make them aware of issues are effective. On the other hand, for customers in the comparison and consideration stage, placing listing ads and exposing them to product review sites are effective.
Understanding the funnel also reduces the risk of losing prospects because you can provide leads with optimal communication and timing to increase their readiness to buy and reduce the chance of being oversold or overly detailed too early.
Thinking about your funnel helps you understand how your leads move through it, which helps you determine how to approach each lead, what products/services to sell them, and what messaging will be most effective.
Common types of funnels and their uses
From here, we will explain the common types of funnels and their usage scenarios.
Purchase Funnel
The purchase funnel is the most basic funnel based on AIDMA. A typical purchase funnel consists of the following stages:
Purchase funnel diagram
(Source: HubSpot )
Awareness: At the top of the funnel, customers become aware of your brand and products/services through various channels such as advertising, social media, word of mouth, search engines, etc. The goal at this stage is to generate interest and capture the attention of potential customers.
Interest: A customer is interested in your product or service and is gathering information to determine whether it meets their needs and challenges.
Consideration: Customers have narrowed down their choices and are now evaluating the remaining options in more detail. They consider the benefits, features, price and value proposition of each product or service, taking into account product features and reputation. The marketer's goal is to address any concerns or objections and provide a compelling reason for the customer to choose the company's product or service.
Purchase: This is the stage where a customer makes a final decision and completes a purchase. This can be product introduction, in-store purchase, or any other form of conversion. To drive conversions, the buying process needs to be smooth and frictionless.
