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What is the marketing funnel and how does it work?

The phrase "The customer is always right” may have started simply as a department store’s slogan in the early 1900s, but it has evolved into the core motto of the society we live in. You may have put your heart and soul on starting a business and creating a website to offer your services or products, but if the results are not as expected, it’s you, not your customers, who needs to change.

This means you need to be able to identify every pain point of the customer journey to figure out where people are losing interest in your offering. Then, you’ll want to adapt your product based on their feedback and assess whether the problem is solved. The marketing funnel will give you all the tools and data you need to do so. Read on to learn all about this powerful process and why you should implement it across all of your marketing strategies, marketing ideas and marketing channels.

What is the marketing funnel?

The marketing funnel, also known as the purchase funnel, is a visual representation of all the steps a visitor has to go through before they purchase a product or service. Its origins date back to 1910, when American philosopher John Dewey introduced the five stages consumers go through before, during, and after purchasing a good or service.

This buyer decision process included the following stages: Problem/need-recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. Over time, this idea evolved into the contemporary marketing funnel, which focuses on the different stages from the moment people first hear about a business to the moment they make a transaction.

But why is it referred to as a funnel? Marketing efforts don’t involve getting people to buy right away. Instead, they start with capturing leads - potential customers who show interest in the brand. When companies turn anonymous strangers into leads, they’re drawing them into the mouth of the funnel. Then, they continue marketing to these leads with the goal of getting some of them to buy.

Of course, only a fraction of leads will actually purchase the product. As they advance through the different stages of the buyer decision process, some of them will abandon the effort without ever getting to the purchasing stage. Thus, the crowd thins, and the resulting visual representation of this process forms the shape of a funnel.

Benefits of the marketing funnel

Now that you know what the marketing funnel is, you’re probably wondering if you should start using it as part of your small business marketing strategy. Ask yourself the following question: Do I have a service or product I intend customers to purchase? Do I have a stellar go to market strategy for my product? If the answer is yes, then you definitely should.

As a business, your success does not only depend on the quality of your offering, but also on the way in which it’s presented and marketed to consumers. Everything from your website layout and color scheme to the packaging of your products and brand marketing also plays a huge role in your customer’s journey through the marketing funnel. How you choose to promote your website will also impact on this.

Some specific brand and business metrics using the marketing funnel can help improve include, increased brand awareness, increased brand loyalty, higher customer lifetime value, and improved customer satisfaction.

Having a clear view of a customer’s journey will allow you to identify any roadblocks that hinder their progress through the funnel. Based on this data, you can make changes to eliminate these barriers and improve your conversion rate - whether it’s by making your website more user-friendly, creating a social media campaign, opting to use more personalized marketing or promoting on different channels. That’s why funnel marketing is so effective.

The marketing funnel can apply to any type of marketing. From digital marketing, and online advertising, to using landing pages. From referral marketing to mass marketing including viral and influencer marketing. From traditional to disruptive, to super strategic marketing, the funnel is relevant and effective across marketing channels and strategies. That's part of what makes it so impactful across both marketing and entrepreneurship.

Research and the marketing funnel

Research is an essential part of making the marketing funnel work most effectively. Before even working through its different stages you should make sure that your understanding of your target audience, and your user experiences are up to date. Your marketing research should be extensive and comprehensive in order to apply it to the funnel for most impact. Refine your market research, both quantitive and qualitative.

Stages of the marketing funnel

While the overall framework of the marketing funnel has remained mostly unchanged for more than a century, there isn’t a global consensus on the different stages. Here, we’ll discuss the various stages represented in the marketing funnel template above.

These stages include:

01. Awareness

Awareness - located at the top of the marketing funnel - is the first stage. This is the point where customers first learn about your brand, and it’s where lead generation takes place.

To build awareness, develop targeted marketing campaigns that are geared toward people who may need your product. Be sure to use market segmentation to create tailored campaigns for each customer type. Think about writing press releases as part of this step.

Then, use lead capture forms to get their contact information (typically their email address) so that you can continue marketing to them. This is one of the most important lead generation strategies, as you'll be using their contact information to reach out to them and guide them through the rest of the marketing funnel.

02. Interest

Leads who show an interest in your business move onto the next stage of the marketing funnel, aptly known as interest. At this point, lead generation turns into lead nurturing as brands start to establish a connection with all the contacts gathered during the previous stage.

One of the most effective ways to build interest is through email marketing. This allows you to start building relationships with leads by reaching out to them directly with relevant, branded content.

03. Consideration

In the consideration stage of the marketing funnel, the consumer is evaluating the different methods that are available to them to address their needs. At this point, they already know about your offering and are familiar with your brand. Now, it’s your job to convince them that a product like yours presents the best solution to their problems.

To do this, try using marketing automation software to send targeted email campaigns with actionable intent, such as free trials and sales announcements. Another popular funnel marketing technique is to offer them informational content, such as blog posts and webinars, that addresses their needs while gently guiding them toward your product.

04. Intent

Ever left something in your online shopping cart and received an email about it a day or two after? That’s what entering the intent stage feels like.

Prospective customers (known as prospects) move to the intent stage once they demonstrate a clear intent to purchase a product, such as by contacting a customer service representative, trying out a product demo, or adding an item to their shopping cart. This doesn’t mean that they are going to buy right away, but it does indicate that they are primed for the purchase.

With that in mind, the intent stage is the time to prove why your offering is the number one option for the prospective customer. You’ll need to target them with marketing materials that make a strong case for why your product is better than your competitors’.

05. Evaluation

The evaluation stage of the marketing funnel is where lead nurture meets sales. Here, the prospective customer is making the final decision about whether or not to buy your product.

In this stage, marketing and sales teams must work together to convince prospective buyers to take the leap and make a purchase. Much like the previous stage, the focus is kept on positioning your business’s offering as the ideal choice.

06. Purchase

The pot of gold at the end of the marketing funnel rainbow is known as the purchase stage. This is where prospects finally decide to buy the service or product. At this point, sales teams take over to manage transactions. Be sure to use various sales psychology techniques to get inside your customer’s head and close the deal.

Additional representations of the marketing funnel

As we've discussed, the six stages above represent one of the most popular ways of dividing up the marketing funnel. Still, it isn't the only version. Other common variations of the marketing funnel include:

  • AIDA: Awareness, Interest, Desire, Action

  • TOFU-MOFU-BOFU: Top of the funnel (generating leads), Middle of the funnel (generating prospects), Bottom of the funnel (generating sales)

Below, we'll also talk about how the marketing funnel differs slightly between B2B and B2C companies, as well as a variation known as the nonlinear marketing funnel.

B2B vs. B2C marketing funnel

The main difference between the B2B and B2C marketing funnel is the amount of people involved in the process and the level of interaction between businesses and consumers.

In the majority of cases, B2C consumers navigate through the funnel alone with little to no direct interaction with the business. Customer outreach efforts are conducted by targeting large buying groups or by using marketing automation tools, and very few customers actually interact with a representative.

On the other hand B2B consumers usually include more than five people from different departments. While the uppermost stages of the marketing funnel follow the same pattern as that of B2C consumers, in lower stages sales representatives establish direct communication with B2B consumers.

Nonlinear marketing funnel

The marketing funnel template above represents the nonlinear marketing funnel. While the cone-shaped marketing funnel has been the default for many decades, some experts argue that the market has evolved beyond linear buying processes.

As a result, many businesses have started to leave behind the traditional cone in favor of one resembling a bowtie or hourglass. This type of marketing funnel aims to tackle the fifth and last stage of Dewey’s consumer decision processes: Post-purchase behavior.

The upside-down cone shape starts with the few buyers who made a purchase and journeyed to the end of the traditional marketing funnel. From there, businesses look at the post-purchase customer journey, taking into account factors such as satisfaction, testimonials and feedback.

The goal of this new funnel approach is to create strong relationships with customers, not only to ensure they don’t move to your competitors’ services, but also so they’ll become repeat buyers and loyal advocates of your brand.

While there isn’t a consensus about the different stages of the nonlinear marketing funnel, it nonetheless remains a valuable way to gauge consumer behavior and optimize your marketing efforts. Whichever model of the marketing funnel you use, the most important factor is that your marketing plan strongly aligns with each stage of the buyer’s journey.

Specific marketing methods to implement the marketing funnel

There are many marketing strategies that can be applied to different stages of the marketing funnel in order to help it elevate your marketing efforts. Here are some of the most popular or impactful, in no particular order.

  • Content marketing as well as user generated content

  • SEO

  • Online and traditional advertising

  • Direct marketing

  • Loyalty programs, including coupons and discounts

  • Social media marketing and channels

Testing and the marketing funnel

Testing is an essential part of the marketing funnel and it should take place through every stage of the funnel. Here are a few examples of what that could look like,

  1. Awareness stage: At this stage, customers should be becoming aware of your product or service. Track metrics such as website traffic, social media engagement, and email open rates to understand this better.

  2. Consideration stage: Here, customers are considering your product or service and comparing it to competitors. Test the effectiveness of your marketing efforts at this specific stage of the funnel by tracking metrics such as click-through rates, conversion rates, and bounce rates.

  3. Decision-making stage: If they've reached this stage, customers are making a final decision to purchase your product or service. At this stage you'll need to focus on metrics such as sales conversion rates and return on investment, as well as customer acqiusition cost.

To effectively test the marketing funnel, it's important to use different types of testing, including A/B testing, multivariate testing, and user testing.

A/B testing involves testing two versions of a marketing element to see which one performs better, such as testing two different headlines in an email campaign.

Multivariate testing involves testing multiple elements at once to see which combination is most effective, such as testing different images and headlines in a website landing page. User testing involves gathering feedback from actual customers to see how they interact with your product or service.

Overall, testing is a critical component of the marketing funnel, helping you to identify what works and what doesn't, while being able to make data-driven decisions to improve your marketing strategies and increase sales.

Frequently Asked Questions (FAQ)

What are the different stages of the marketing funnel?

Awareness, interest, desire, action and intention are the key stages of the funnel. Each one represents a step in a potential customers journey.

How can I use the marketing funnel for my business?

How do I track my marketing funnel performance?

What are some marketing funnel best practices?

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