Understanding your funnel

 Your journey to find your customers starts at your {Total Market}. These are the people who would benefit from your products everywhere. It is unlikely that you will be able to reach everyone who belongs to the {Total Market} set, perhaps due to physical restrictions like geography, access to media, cultural barriers, etc. Because of these limitations, let’s define a large subset of {Total Market} called {Reachable Market}, i.e. those persons with who you can actually interact in some form, e.g. directly or through some broadcast means.

For the {Reachable Market} set, you would normally create and deploy tactics designed to increase awareness & acquisition. The promotional tactics that you will deploy for your {Reachable Market} aim to maximize the effect and produce two subsets: {Brand Awareness}, i.e. those aware of your brand and/or product and, from those, the {Interested Goal Seekers}, i.e. those currently looking for a product like yours. Once you begin to interact with the {Interested Goal Seekers} group, your goal should be to engage them, i.e. to get the permission to talk to them or to keep them talking to you in order to persuade (convert) them to a {Qualified Lead}, i.e. someone who, under specific circumstances, would become your customer.

Activation happens when a registered user becomes a qualified lead. At this point, you need to evaluate if the specific circumstances that are needed for that person are present and he/she is ready to become a customer. Converting a person from a qualified lead to a {Customer} requires specific tactics that depend on your offering, e.g. B2C vs B2B, services vs hard product, etc. In many cases it will be more like selling (as the prospect would expect this, e.g. from an e-commerce site) and in others it will be more like persuading or participating (as the prospect would prefer to avoid the feeling of “being sold to”, e.g. using a service or a game).

From the above it follows that you should operate by designing your marketing actions and processes in such a way as to enlarge each subset as close as possible to its parent superset.

It is called a funnel because it resembles one as the population in each subset shrinks to the final set {Customer} which is usually a small portion of the {Reachable Market} at the top. Also, under this light, a funnel is not really a funnel because not everyone will complete the journey from {Total Market}  to {Customer} or {Evangelist}. There is a filtering process that occurs when the person is asked (explicitly or implicitly) to decide if he/she will become a part of the next subset. The job of the marketer is to persuade the person to become a member of the next subset. We call effective marketing, those techniques that increase the output of the process (e.g. activation) and thus widen the funnel. The wider the funnel, the more effective the actions were and the more revenue will flow from the bottom of your funnel ({Customers}).

Having a clear understanding of your funnel is crucial to understand where your customers are coming from and where you should direct your efforts in order to get the maximum yield from your digital (and physical) marketing distribution channels.

Your funnel is an abstraction of the states that someone will go through in order to find out about your company and products and, ultimately, become your customer. The sequence of these states defines a flow i.e. a series of interactions between your audience and your company, which alter the set in which a person in your audience belongs. In the table below I have listed the sets or groupings that a person will belong to at one point or another and the action types (or categories) that are generally applicable to each set. It is in decreasing population order, i.e. the groups decrease in size as we move down the table:


{Evangelist} is a subset of {Customer} which is a subset of {Qualified Lead} all the way to the largest set {Total Market}. It is customary when drawing funnels to avoid showing the set/groupings and only display the activities connected with a group when picturing the funnel e.g:


The size of each action category box (e.f. Retention) indicates the size of the set it addresses, i.e. the number of people in the audience for each specific action category. Revenue is not part of the funnel, it is the ultimate KPI and it will be a subset of your customer base (not all customers are paying customers, after all)

The funnel describes a model that should result in revenue generation. So far, we have not seen how to practically move from the abstraction to real life working processes and flows, and a step-by-step guide is shown in the “Your Growth Action Plan” section below. However, before we go there, we need to establish our measurement framework, otherwise we will have no targets or clear-cut success/failure indicators.

Understanding what and how to measure

It is necessary for you to measure your marketing efforts’ effectiveness, or you will have no comparison data and you will not know if your actions worked or not. In other words, the only way to establish cause and effect is by implementing and then measuring.

Initially, you must first establish a baseline, before you begin implementing any action that will affect your funnel. The baseline is a set of metrics of your performance. For instance, when discussing about websites, the number of visitors, bounce rates, cart abandonment rates, sign-ups, session lengths, etc. are essential in analysing the behaviour of your visitors and customers, and you should be collecting as much data about of them as possible. There are a number of good tools and articles on what and how to collect these operational data.

At some point, you should have created a business plan that would contain your business outlook for your offering. You should look there for your success KPIs and add/link them to your previous list. Prioritize your goals, this is very important! Accept that you do not have unlimited resources and that you will have to pick your battles.

Now, with your baseline established, list your prioritized medium and long term targets. Each target should be associated with an action category in your funnel. E.g. 50K visitors to your website each month → acquisition/awareness, 50 bookings each day → conversion/retention, 5K new customers per quarter → acquisition, conversion, referrals

The next step is to calculate the target vs. performance gap and analyze/correlate to your funnel for pain-points. For instance, the number of visitors to your website is a result of your awareness and acquisition actions. If there is a significant gap between where you should be and where you are, you have a pain-point in your funnel. The same process with the other targets will produce a list of pain-points.

Prioritize. Decide on which pain-points you should deal with first, then second, and so on down the list. Always start with those that have the most significant impact at the bottom of your funnel. Work your way up the funnel to discover your hot pain-points.

With your pain-points now defined and prioritized, you have the categories on which you should focus your actions. It is now time to start the Growth Action Plan.

Your Growth Action Plan

  1. Decide on the 2 or 3 metrics that you wish to grow. They should correspond directly to your pain-points.
  2. Decide on your plan’s duration. Shoot for somewhere between 6 to 18 months. Many results lag your efforts by months (e.g. SEO), make sure you understand when you should expect to see results from each traction channel.
  3. Define your success target figures per metric. E.g. 1000 bookings per month by Dec 2015.
  4. Decide on the monthly grow target that will get you to the desired end figure. E.g. 200 additional bookings per month.
  5. Go to your funnel and calculate the figures backwards, i.e. in order to get 1000 bookings, we need 30000 visitors to our website. Analyze the impact of these numbers on your budget, it may be that the targets you set are unrealistic.
  6. Using the figures calculated above, decide on a list of which traction channels you can use per funnel action category (acquisition, conversion, referral, etc). For example, for acquisition, you can use viral loops, paid advertising, partnerships, etc.
  7. Decide on what you feel are the most promising ones and design a specific action and duration for each traction channel. Make sure you have designed the correct way to measure the result!
  8. Implement.
  9. Analyze the results. Is the monthly target achievable? If not, design changes and test (implement & measure). Go to 9. until the allotted duration is exhausted.
  10. If the duration is exhausted and the target was not achieved, switch to the next traction channel from your list and go to 8.
  11. If all channels were tried without successfully finding one that brings in your targets, you need a deep analysis of the product/market fit, your perceived market, your marketing plan and your growth plan in order to identify the reasons behind the unsuccessful attempt.

Do you Have Growth as a mindset?

While the flow of the Growth Action Plan above is easy to understand, its execution is difficult for a variety of factors. First of all, it is not a one-time project. It is a mindset that drives sales; keeping its momentum requires commitment, effort and constant planning. Those involved also live in a world of restrictions: from limited budgets to a lack of a good measurement plan and to time allocated to the plan, there are many areas one can fall behind. In addition to all the above, there is significant creative effort involved and it may be by far the most important element of the equation. Add to all of the above the required internal communication effort to keep things synchronized and the Growth Plan could easily become the most resource consuming project in the company or department.

If your company can have a growth driver in its marketing department, I highly recommend that you hire and train such a person. If your budget is constrained or your business model is based on outsourcing, you could parcel out your growth to specialized professionals that can consult with you and off-load much or all of the implementation of your Growth Action Plan.