Businesses can only survive for so long with an uncoordinated marketing strategy. “Growth hacks” aren’t sustainable. And while they may yield some fruit at first, spray and pray experiments, and mismanaged resources won’t help you reach the endgame either.
Eventually, most businesses realize that what they’re currently doing – even if they’ve started using inbound marketing tactics – just won’t get them to the level of growth they want. After all, growing your business is much different than launching it. Growth takes a coordinated strategy that is repeatable, but most importantly testable.
One of the most important mechanisms for achieving scalable growth is the marketing and sales funnel. Possibly dating all the way back to the 1800s, this model is old as dirt. But it’s also one of the most tried and tested frameworks for mapping the customer journey.
There are many variations to the marketing funnel, but you probably already recognize it in some form:
Since the old days, marketers have adapted and expanded upon the original model to account for new channels, new technologies, and new buying behaviors. This has kept it relevant and useful in the digital age. Nonetheless, the funnel model has fallen out of favor with some, to the point that many consider it dead in the water.
After all, the customer journey just isn’t as linear as it once was. Even in B2B buying, a customer may switch channels repeatedly, reach one stage of the funnel only to fall back to another, or jump in and out of the funnel over the course of several months, even years.
But although it seems overly simplified these days, the sales and marketing funnel is still an essential tool for developing marketing strategies and targeting specific tactics. Every business needs a framework or blueprint for their marketing efforts in order to optimize them.
At Ladder, we still use the funnel as a model for identifying opportunities for improvement, doing strategic ideation, and testing tactics. Our clients have seen a lot of success with our methods. Below, you’ll learn everything you need to know about the sales and marketing funnel, how you can use it to optimize the buying journey, and what metrics you can use to gauge your progress.
As a useful tool for marketing efforts, the marketing funnel is primarily a blueprint for the journey your customer takes with you. In other words, it’s not necessarily a tool to help your business earn new revenue. Instead, it’s a tool for mapping and understanding the customer’s journey so you can better serve them.
After all, every stage of the funnel is defined by the customer’s perspective and, in particular, their mindset at that stage of their buyer’s journey.
It details the initial stages of the customer journey, from when they first learn about your business, to the end stages of their customer journey, when they decide to make a purchase. Sometimes, a customer can go through these stages rather quickly. This is especially true of B2C eCommerce transactions, as consumers often already know what they’re looking for when they go online to shop.
There are many variations of the marketing funnel (we have our own here at Ladder), and some companies create their own stages, but generally, the stages break out like this:
At the top, the Awareness stage is where you implement your lead generation efforts. This is where the customer first learns of your business, either through your content marketing efforts, a social media post, an advertisement, or even by word of mouth.
The Interest, Consideration, and Intent stages are where you nurture your leads and weed out those that aren’t qualified or truly interested in buying from you. Most marketers use a mix of engagement methods to nurture leads. The classic example is email marketing.
And finally, the Intent, Evaluation, and Purchase stages are where you move from lead nurturing to sales prospecting and selling itself. Generally, marketers will hand leads over to the sales team after they are qualified through lead nurturing. The sales team will then listen to the customer to understand their challenges and offer them solutions.
The funnel can also extend beyond the purchasing stage to cover other aspects of the customer journey, like your business’s ongoing relationship with your customer and the process they go through to buy again or become a lifelong customer. For example, SaaS companies which generate revenue through subscriptions might add additional stages like the “Retention” stage to measure this, and an “Advocacy” stage to measure which customers have turned into promoters and how.
This turns the funnel into an hourglass:
But a marketing funnel can also be more than just a blueprint. Put into practice, a marketing funnel is an actual process by which a potential customer becomes a customer, and beyond. It’s something you implement, and you can have more than one marketing funnel.
A marketing funnel, digital marketing funnel, or marketing and sales funnel is a visualized assemblage of strategies and tactics that turns leads into customers. It’s shared by both the marketing and sales teams. While the marketing team is usually in charge of generating leads at the top of the funnel, the sales team handles the bottom, shepherding leads to a purchasing decision.
You can also refer to the marketing funnel as a “conversion funnel.” A conversion occurs when a contact moves from one stage to the next, usually by taking a specific action. A conversion could be something as simple as clicking a button on your advertisement (Awareness to Interest) or requesting a contract proposal (Intent to Evaluation).
While most consumers will navigate the marketing funnel on their own or with the help of their peers, B2B customers tend to act as a group, requiring buy-in from multiple departments and decision-makers.
For example, a consumer interaction with your marketing funnel may go as follows:
Naturally, there could be hiccups in the consumer’s road to a purchase. Consumers shopping on a desktop computer have a 73.1% average shopping cart abandonment rate. That rate is even higher on mobile phones, at 85.6%.
When this happens, the consumer doesn’t convert and move onto the next stage. Instead, they stay in the Interest or Consideration stage. You might send them a lead nurturing email to tell them their items are still in their cart and encourage them to return with a discount coupon.
There are also plenty of other ways a consumer might navigate this process.
Meanwhile, a B2B interaction with your marketing funnel may go as follows:
Because B2B sales cycles tend to be longer, it’s much more common for the Interest and Consideration stages to last much longer. Your leads may look at a great deal of your content before they reach out to one of your sales reps. Or you may reach out to them and have a months-long conversation before they show any real intent to buy.
These are just two examples of marketing funnels that could work in the B2B and B2C spaces. Through customer journey mapping, you can create any number of funnels based on your customers’ favorite channels or based on what types of creative assets they typically convert on.
A funnel strategy is your plan of attack for each stage of the marketing funnel, and for the funnel as a whole. You may have multiple funnels with multiple funnel strategies depending on how many audiences you have.
Your strategy should also involve how you intend to use your marketing assets at each stage of the funnel. For example, many companies map most of your content marketing and social media assets to the Awareness stage of their funnels.
Here’s what a conversion funnel looks like with marketing assets mapped to its stages:
To develop a funnel strategy, you need to map out the stages of your marketing funnel. Specifically, you need to decide which assets (like content) and which conversion and retention tactics you should map to each stage of your funnel or funnels.
Many companies take an ad hoc approach to creating content and other digital marketing assets. Mapping your marketing funnel stages takes this chaos and turns it into a coordinated effort to align your tactical ideation and your editorial calendar with each stage of your marketing funnel.
If you’ve spent any time determining who your ideal customer is, you should already have one or several buyer personas to work with. Use these personas to understand your potential customers wants, needs, and pain points during each stage of their journey.
Your objective should be to map each persona’s journey through your marketing funnel or funnels, making note of each touchpoint along the way.
Let’s look at each stage of a standard marketing funnel.
In the Awareness stage, your customers are aware that they are facing a challenge, but they haven’t found the language to fully understand it. They know they need a solution, but they aren’t certain enough of what that solution will look like to commit to any purchase.
Generally, your customers are just looking for answers in the awareness stage. This works to your advantage because you can get a large pool of users on your website by giving them the answers they need to solve their challenges.
That said, this stage isn’t usually the time to introduce your products or services. Instead, try to come from a place of help. Awareness stage content looks more like a Wikipedia entry than a sales pitch. It’s almost purely educational and informative, aside from the obvious branding on your website, CTA’s, and callouts.
Awareness stage content includes:
Awareness content should provide a great deal of upfront value with no strings attached. It should also be free, always.
At this stage, your customers have identified their problem and are actively searching for solutions to solve it. That solution may come by reading a piece of helpful content, but it may also mean that they need a solution in the form of your product or service.
Although this technically the bottom of the top of the funnel, you still don’t want to push products to forcefully at this stage. You do, however, want to convert your potential customer into a lead. And for that, you need to get their contact information.
Lead magnets come into play big time at this stage. If you want to use content, these are some of the best options for the Interest stage:
In most cases, you’ll use landing pages and “thank you” pages to capture lead information.
There are also hundreds of other ways to convert leads. You can get conversions on social media just by interacting with people who comment on your posts, for example. If you have a chat tool on your website, you can get a conversion if someone interacts with your chatbot.
Prospects at the Consideration stage have usually researched solutions to their problems and are considering their options. This is often the longest stage of the buying cycle, at least in the B2B space (consumers may skip over this stage entirely).
Here, you should try to learn more about these people so you can qualify them. The Consideration stage is all about personalization. For example, once you have enough information about your leads, you can send them emails with content tailored specifically for them to see if they maintain their interest.
Some of the best types of content to use at this stage are:
Consideration content should show your leads that you not only understand them, but you also have what it takes to solve their problems and add value.
Once they’ve entered the Intent stage your prospects have moved beyond searching for answers and have shown some intent to buy your product or service. This may be the stage where your sales team makes content with them.
At this point, your leads are ready to hear about your company, as well as your products and services. That means they are ready for sales-level content, such as the following:
This may also be a good time to give your leads pricing information. If they ask for it, you know they’re ready for the Evaluation stage.
During the Evaluation stage, your prospect is preparing to make a final decision about whether or not to buy your products or services. They may also be comparing the information you’ve provided them with other offers.
Often, your salespeople will act as your prospect’s go-to liaison for learning about your offering, but your marketing team can also provide your sales team with sales enablement content to make their jobs easier.
These often come in the form of the following:
Empowered with these types of content, your salespeople will be prepared for any questions your leads throw at them.
At this stage, your prospect is at the end of the decision-making process and they are nearing the end of the sales process. They’re ready to make a purchase and become a customer!
Your job isn’t over yet, however. You may have an onboarding process to get through depending on what you sell, and you’ll need to guide them through the transaction process.
There’s still plenty that can go wrong at the purchase stage, but with the right processes in place, your salespeople can provide new customers with an easy and positive experience.
Remember, prospects may enter your funnel at any stage. They may be ready to talk about pricing the moment they discover your website. Or, they may read one of your blog posts, sign up for your email newsletter, and never return to your website for months.
The key is mapping out possible buyer’s journeys for each of your personas. Some may favor certain types of content over others and some may have shorter buying cycles than others.
Once you’ve developed your marketing funnel (or funnels), you’ll start pulling in performance data. From this data, you can begin to draw conclusions about your funnel’s effectiveness, search for opportunities for improvement, then target those areas with new and experimental growth tactics.
Of course, deciding which marketing funnels stage to focus on can sometimes be a challenge — one we’re intimately familiar with.
“How do I choose which marketing funnel stage and tactics to focus on next?”
This is one of the first questions posed by new Ladder hires. As they’re introduced to their first client, they learn a lot about the business and industry they’ll be working on. In that process, they begin to understand the exact goals and needs of their clients.
You’ve probably been there yourself — not sure which levers to pull to make growth happen. It’s not an easy problem to solve, and it requires both a view of the trees and the forest overall. When you’re entrenched in execution or strategy – one side or the other – you tend to miss the other half of the equation.
To make the strategic ideation process easier, we codified some best practices for choosing a funnel stage which then naturally leads to solid, ROI-driven tactic ideas.
It’s been massively helpful in training new hires and is also a useful tool for all our strategists.
And we’ve decided to share it with you — the exact document we give to new hires to help them pick a funnel stage to target using 800+ marketing growth tactics found in the Ladder Playbook.
The value we provide to clients stems largely from our ability to choose the right tactics to test, for the right funnel stage, at the right time.
Done right, funnel analysis saves our clients’ resources, drives faster growth, and prevents a lot of headaches.
Below you’ll find the thought process you should run through when selecting which funnel stage and growth tactics to prioritize.
To find the right path to growth, we first need to chart the territory. Mapping funnel stages tells us a surprising amount about a business, how it makes money and how to improve the equation.
A Ladder-style marketing funnel, modified from Dave McClure’s ‘Startup Metrics for Pirates’ version, works like this:
To understand the return on investment (ROI), you also need to know how much an average transaction is worth to the business you’re growing, and how much you spent on marketing. You also need to know how these metrics are related so that you can figure out the value of improving one of the metrics.
Here is an example marketing funnel breakdown:
From here, you can calculate some key values that will help you make valid, data-driven decisions about which tactics to choose next.
Customer Lifetime Value (LTV) = $30,000 / 200 = $150
Customer Acquisition Cost (CAC) = $10,000 / 200 = $50
And you’ll also be able to figure out how much your ads will cost and how much revenue each ad click brings in.
Cost per Click (CPC) = $10 / 1000 / 1% = $1
Revenue per Click (RPC) = $150 * 20% * 10% + ($12 * 1%) = $3.12
Finally, you can also calculate your ROI — the gain or loss in relation to your marketing spend and efforts.
Return on Investment (ROI) = $150 / $50 = 300%
⚠️ Bookmark this post to refer back to whenever you’re not sure which formula you need to use.
Expected revenue / # of Conversions
Budget / # of Conversions
CPM / 1000 / CTR
LTV * Conversion rate * Activation rate + (Referral value * % of referrals per visitor)
RPC / CPC
The above calculations aren’t hard and fast rules. They’re adaptable based on the needs of your business/client. Some businesses won’t be as far ahead or have as much data as you need. So remember the following 3 rules:
Use our free ROI calculator to map and ‘play’ with YOUR funnel economics 😉
You should always segment your final funnel by marketing channel (as described in this Marketing Funnel Analysis guide).
It’s very common to see differences in conversion and retention rates depending on which paid channel a user comes through.
A healthy business will typically break even (on a last-click basis) on the paid marketing channels they can influence and make up the margin through organic / word of mouth channels.
Your advertising is likely to be more effective than you can measure due to the ‘halo effect’ that’s hard to attribute. Last-click attribution – the default attribution model for Google Analytics – tends to overvalue retargeting and undervalue awareness generation campaigns at the top of the funnel.
To choose the right channel, it’s helpful to have a few baselines on what is considered good and bad performance. It’s hard to find this information online – every business either hides their data or isn’t very detailed.
So, we set out our own ideal baselines.
These are global variables that we use to determine good vs. bad performance. Obviously, these will largely change by sector/industry, but just knowing how your metrics compare to the average gives you an idea of the strengths and weaknesses in your funnel.
Ideal baseline CPM: $10
Ideal baseline CTR: 1%
Ideal baseline Activation %:
Ideal baseline CVR:
Ideal CPC to RPC ratio: 1:1 (paid channels)
Ideal LTV to CAC ratio: 3:1 (blended)
40% of view-through retargeting conversions are incremental
Revenue and retention for paid channels vs organic: 10%-20% lower
Revenue and retention from direct / brand traffic: 50% higher
Ideal revenue from primary channel: 80% (as % of all revenue driven)
Ideal revenue from secondary channel: 15% (as % of all revenue driven)
Mobile CPMs: 30% lower than Desktop
Mobile CVR: 50% lower than Desktop
*Note: if the average numbers for your metrics don’t seem to make sense, it’s very possible that your competitors are running unprofitable marketing campaigns. This is a huge opportunity to take advantage of.
Once you have your marketing funnel mapped out and your baselines estimated, you can spot the biggest differences between your numbers and the average. This will highlight where opportunities lie. This is where you should target your efforts to improve your performance.
*NOTE: This mindset is the foundation for a strategically successful growth marketing audit.
You can calculate the size of the opportunity by dividing the baseline by your client’s metric for each funnel stage and subtract 1.
This also works backwards:
Here’s a more direct example for you to follow:
Average acquisition rate is 0.95%
Average activation rate is 20%
Acquisition rate (CTR) of 1%
Activation rate (visitor to email) of 10%
Size of opportunity on Acquisition = 0.01 / 0.0095 – 1 = 10% (it’s 5%, which is <10%, so 10%)
Size of opportunity on Activation = 0.2 / 0.1 = 50%
The above case shows that any tactics that help with Activation should be the primary focus for this example client until we hit upon a few successful tests that change the economics of the business.
We have an enormous database of all the different marketing tactics that have been tested. All our clients feed into this central database to report how well a tactic has performed in aggregate.
Conceptually it might look like this:
Tactic 1 – avg 8.3% ROI on acquisition
Tactic 2 – avg 3% ROI on activation
Tactic 3 – avg 14% ROI on activation
Tactic 4 – avg 20% ROI on acquisition
Now, we have everything we need to prioritize our marketing tests for the client/business that we built the funnel for. We simply need to multiply the size of the opportunity by the expected return from the tactic. This ensures we’re always taking into account the weakest part of the funnel and selecting the most promising tests.
Always filter through your best judgment to downweight or upweight these scores base on contextual relevance.
Tactic 1 – 10% x 3% = 0.3 (acquisition)
Tactic 2 – 50% x 3% = 1.5 (revenue)
Tactic 3 – 50% x 14% = 7 (activation)
Tactic 4 – 10% x 20% = 2 (activation)
Even though the funnel stage isn’t as big of an opportunity, the average performance of Tactic 4 means it will be recommended ahead of Tactic 2 (but not ahead of Tactic 3).
As you can see, it’s both ROI-driven and data-driven, requires a lot of research, and results in data-backed decisions on which tactics to prioritize.
There are a ton of marketing tools out there — so many that it can make your head spin deciding which ones to invest in and spend your time using. We’ve used hundreds of marketing tools, but we’re selective about which marketing tools we use to grow businesses.
Here are just a few must-have tools and resources you can use to improve your marketing funnel.
Okay, so this is obviously a hefty post (nearly 5,000 words) with more information than you might be able to realistically put into practice. The good news is that we’ve codified all this – from mapping your funnel economics to analysis, to strategy and tactical sprints.
The Ladder Growth Blueprint is the most important document in marketing, and you can get the interactive template for free.
Once you’ve added your inputs to the interactive template, whether estimates or actuals, you’ll find a plethora of super valuable information about your business automatically calculated and translated to help you direct your growth/marketing strategy.
The Ladder Playbook has 850+ tactics for you to search through and build your next marketing sprint. Search by funnel goal (Traffic, Conversion, Retention) and by keyword to easily find new ideas worth testing to hit your growth targets.
Each tactic includes a description of how/why to implement, a visual representation, learn more links, and often a report on the average success rate we’ve seen.
This 100-page growth audit handbook walks you through step-by-step how to perform a full-funnel audit across every channel. The guide details exactly how to gain a comprehensive understanding of your business. It tells you where to look, what to look for, and how to turn insights into tactical next steps.
It’s absolutely killer for uncovering hidden opportunities and prioritizing which growth levers you need to pull ASAP.
Spotlight uses machine learning to read and understand your ad creative assets and tie granular creative variables to performance trends. For example, once you connect your Facebook ad account Spotlight will automatically pull all performance data as well as all images and copy assets. It will then tag all assets with descriptors such as sentiment, keywords, colors, and more (e.g. “many people” vs “no people”, “outside”, “woman”, “smiling”, “product shot”, “joy”, etc.) AND will give you performance reports by tag!
Unlike other automated analytics tools, ours understands your creative by automatically tagging them in your ads — you’ll never need to do any manual tagging or deal with tedious naming conventions again. And you’ll be able to see what facets IN your ads are actually driving performance.
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