Every small business has a marketing and sales funnel, even if they don’t realise it! Before you embark on a digital marketing campaign, it’s crucial to develop an understanding of yours. Only then can you define your own digital marketing funnel, establish which digital marketing channels to use and build your own digital marketing machine
Other articles in this series
Part 1 – digital Marketing 101
Part 2 – Understanding your digital marketing funnel (this post)
Marketing as a process
Most of us in our small businesses have processes that we follow day to day to get work done, design and build new products, ship products to customers, get our accounts done, etc. We may or may not have these processes written down but they exist. If they didn’t we wouldn’t be able to run our businesses. Over time we learn what works well and what doesn’t and gradually improve our processes.
It’s important to view marketing and sales in the same way, as a process. In order to get a consistent level of sales or achieve sales growth we need to be consistently marketing our business. We also need the mechanisms to learn what works and doesn’t work for our particular business and use that learning to progressively improve our marketing processes.
The digital marketing machine
Digital marketing allows us to take the marketing process one step further and turn it into a reliable, automated, marketing machine that consistently generates new leads and sales, whilst at the same time giving us very detailed data on what is working and what is not. Key to building this digital marketing machine is understanding and defining your digital marketing funnel.
The marketing and sales funnel
The concept of the marketing and sales funnel helps us start to understand and put in place digital (and other) marketing processes that support our specific business, based on some general principles that apply to all businesses and customers.
The marketing and sales funnel refers to the fact that every business has to consistently “engage” with a certain, larger, number of potential customers in order to achieve a smaller, but constant stream of actual customers. It also considers the psychology of “typical customers” and the journey all of us go through before we purchase a product or service.
The diagram above represents a typical marketing and sales funnel, broken down to represent the stages of a potential customer journey through the funnel. In this case, we have chosen to use the common AIDA principal of a potential customer journey. This describes how we all, as potential customers, travel through stages of Awareness, Interest, Desire, and Action before we purchase. As mentioned, a funnel is often used to represent this process because, for most businesses, we have to engage with a large number of potential customers (potential audience) at the top of the funnel in order to get a much smaller number of actual customers pop out of the bottom of the funnel.
Let’s look at this customer journey in more detail and how this starts to define a marketing process that we can implement. Our marketing process needs to address each stage of the customer journey.
Awareness
People don’t buy from businesses they don’t know. No one is going to purchase our products and services if they’re not aware we exist, or they’re not aware of exactly what we offer. As such, step 1 in our marketing process is to build and maintain brand/product/service Awareness.
We could also think of this stage of the process as the lead generation stage where we’re trying to find the people from our potential audience that may have a current interest in our business.
Interest
As a result of our Awareness marketing, some potential customers start to show Interest in our products and services. We now need to ensure that we continue to engage with those potential customers in order to build and reinforce their interest. So step 2 in our marketing process is to nurture and develop that interest, reinforce our reputation, and clearly demonstrate the advantages of purchasing our products or services.
We could also think of this as being the lead nurturing part of the process.
Desire
Based on nurturing interest, certain potential customers reach the stage that they desire to work with us or purchase our products or services. It’s not a done deal yet. At this stage, customers may need price quotations and negotiations, demonstrations of products or services, etc. in order to get them over the line.
Step 3 in our marketing process is to ensure we can engage productively and efficiently with potential customers on the verge of purchase and convert them into actual customers.
Action
Now we have a customer! The potential customer has decided to take action and purchase from us. We just have to deliver!
Defining the goals of your digital marketing funnel
Hopefully, what will have become clear reading through the above, is that you already have somewhat of an established marketing and sales funnel for your business. If you are a shop keeper, your shop window and its position on the high street is building your brand awareness. When someone enters your shop and browses your wares they’re showing interest.
If you’re a tradesperson running small ads in a local newspaper, you’re building brand awareness. You certainly will have processes in place to handle potential customer interest and enquiries, issue quotations and convert those enquiries into purchases.
Understand your current marketing and sales funnel
So, the key is to really think about your existing, overall marketing and sales funnel and try to define how it is currently working. Identify what stages of the process work well and which less well (or don’t exist). Then, based on an understanding of how the various digital marketing channels work, you can identify how to incorporate digital marketing into your marketing and sales process to plug in gaps, improve consistency and ultimately increase sales.
It should be said that, for a lot of business, the lower part of the marketing funnel, i.e. the Desire and Action stages, are already handled well. Where most business can immediately benefit from improving their processes using digital marketing is in the Awareness and Interest leading into Desire stages.
Your potential audience – work backwards (or upwards)
It’s crucial to think about and define what the target market for your business is. Who is an ideal customer? Where are they located? What are the interested in? The better you can define and understand this target market, the more successful (and lower cost) your digital marketing efforts can ultimately be.
Once you have your target market defined, the next step is to establish the rough, minimum size of potential audience, from that target market, that you need to reach at the top of your digital marketing funnel in order to achieve your sales goals.
To do this we always recommend clients to start at the bottom of the funnel and establish how many customers (or sales) they need to achieve on an ongoing basis, e.g. monthly, to represent success.
Let’s consider a client that runs a service business that wants to achieve a result of 10 new customers per month, or in funnel terminology, we want 10 customers to take Action each month.
Based on this objective, we investigate how successful, on average, the client is in terms of lead conversion to sales? Lets say this client is very successful when issuing quotations and gets an acceptance rate of 50%, this means we need to issue 20 quotations each month in order to generate 10 new customers. Again, in funnel parlance, we need 20 people at the Desire stage each month.
The next questions as we move up the funnel are how many potential customers do we need at the Awareness and Interest stage to result in 20 people at the Desire stage each month.
These are questions that most business coming to digital marketing are unable to answer. Using traditional marketing and advertising, the data just doesn’t exist.
So, in the first instance, we have to make some informed guesses based on the client’s actual business and the market that business serves. For example, we could estimate that 10% of potential customers that enter the Interest stage ultimately reach the Desire stage and request a quotation. Based on this, in order to issue 20 quotations a month, we need 200 potential customers to enter the Interest stage each month.
In order to generate initial interest we need to do Awareness marketing at the very top of our funnel focussed on our target market. At the beginning, we might expect only 1% or less of our target market to immediately show an initial interest in our business each month. On this basis, to achieve our target of 10 new customers per month our top level brand awareness marketing would need to be targeting a potential audience of at least 20,000.
Because we’re working off informed guess work here, we may be wrong. Fortunately, one of the major advantages of using digital marketing channels to support our Awareness and Interest marketing is that, configured correctly, we can get a lot of actionable data on what is working and not working. A key aspect of any successful digital marketing funnel is how we use that data to optimise our marketing as quickly as possible. More on this in future articles.
The marketing rule of 7
Another thing to consider is the marketing rule of 7. This rule is one of the oldest in the book. Basically, it recognises that your chance of converting someone from your target market potential audience into a customer, based on their very first interaction with your brand, is extremely low. The rule of 7 reflects the fact that it takes an average of at least seven interactions with your brand before a purchase will take place.
In digital marketing terms, an interaction could be any of the following:
- An advert on social media, YouTube, etc.
- An email from you
- An online review
- A recommendation from a colleague or friend
- An article or blog post you’ve written
- A direct message on social media
How does the rule of 7 apply to the digital marketing funnel?
It’s best to consider the rule of 14! We recommend that the rule of 7 is applied to each of the lead generation (Awareness) and lead nurturing (Interest) stages. In other words, based on your Awareness marketing, it might take 7 interactions for someone to show an initial interest in your business. It may then take a further 7 interactions during the Interest stage to nurture that lead to the point where they are close to becoming a customer.
Not everyone enters the funnel at the top?
Not every potential customer is going to enter your digital marketing funnel at the top as a cold prospect. You may have existing leads at various stages of development that you want to include in your ongoing digital marketing efforts. You may have existing customers that you want to keep marketing to. You may find potential customers coming to you based on recommendation from other customers, etc.
So, you need to maintain some flexibility in how your digital marketing funnel works. You need to ensure that leads coming from other sources, can be added into the appropriate stage of the digital marketing funnel.
What’s next?
You now have an initial definition of what your digital marketing funnel needs to achieve.
- You have an understanding of your business’ current marketing and sales funnel. You know what works, what doesn’t work and what is missing.
- You know who your target market is.
- You know the initial, minimum size of potential audience that you need to target with your Awareness marketing in order to achieve your sales goals.
- You know you need to put in place a digital marketing content/message strategy that supports at least 7 interactions at the Awareness stage and at least 7 interactions at the Interest stage.
- You appreciate that some of your assumptions at this initial stage may be wrong. As such, you need to take advantage of the monitoring and reporting features offered by digital marketing channels to refine these assumptions and optimise your digital marketing funnel as quickly as possible.
In our next article, we’ll start to look more closely at using digital marketing channels for Awareness marketing and how you might use those channels.
Need help with digital marketing?
aento can work with you to define your marketing goals and establish a sensible digital marketing plan for your business. We can fully implement and mange your digital marketing or undertake specific marketing tasks. We can provide you with an online monitoring and reporting dashboard that brings together all of your channels and provides you with results and analytics on how your campaign is running. We can continually optimise your marketing to ensure your budget is maximised and generating the greatest return on investment. For more information and an informal chat please contact us.