Marketing Funnel: What It Is, How It Works, How to Build One, & Key Metrics to Track Your Growth

Imagine you're opening a new coffee shop in your neighborhood. You want people to know about your shop, visit it, and eventually become loyal customers who keep coming back. But how do you get them from hearing about your coffee shop to becoming regulars? This is where the marketing funnel comes in.

1 What is a Marketing Funnel?

A marketing funnel is like a roadmap that guides potential customers through a journey from the moment they first hear about your business to the point where they make a purchase and beyond. It’s called a "funnel" because it starts wide—reaching a broad audience—and narrows down as only a fraction of those people move closer to making a purchase.

Think of it like this: At the top of the funnel, you have people who are just discovering your coffee shop, maybe through a flyer, social media, or word of mouth. As they move down the funnel, some might stop by for a quick look, others might try your coffee, and a few will keep coming back regularly.

2 How Does the Marketing Funnel Work?

The marketing funnel is divided into three main parts: 

• Top of the Funnel (TOFU), 
• Middle of the Funnel (MOFU),
• Bottom of the Funnel (BOFU). 

These segments represent the different stages that potential customers go through as they move from first learning about your brand to becoming loyal advocates.

TOFU (Top of the Funnel): This is where you focus on Awareness and Interest. The goal at this stage is to attract as many people as possible and make them aware of your brand. Content here should be broad and engaging, aiming to spark curiosity and drive traffic. Typical examples include blog posts, social media campaigns, and videos.

MOFU (Middle of the Funnel): At this stage, you move into Consideration and Intent. The audience here is already aware of your brand and shows interest, but they need more information to make a decision. Content should be more detailed and targeted, providing valuable insights that help potential customers consider your product or service seriously. Examples include case studies, product comparisons, and email newsletters.

BOFU (Bottom of the Funnel): The focus here is on Purchase, Loyalty, and Advocacy. This is where you aim to convert leads into customers and then turn those customers into repeat buyers and advocates. Content should facilitate easy purchasing and encourage long-term loyalty, with examples including personalized offers, loyalty programs, and customer testimonials.

The Marketing funnel typically has several stages, each representing a step in the customer’s journey:

1. Awareness

This is where potential customers first hear about your coffee shop. You might put up eye-catching posters in the area, run a social media campaign, or even offer free samples outside your shop. The goal here is to get noticed.

2. Interest

This is where potential customers first hear about your coffee shop. You might put up eye-catching posters in the area, run a social media campaign, or even offer free samples outside your shop. The goal here is to get noticed.

3. Consideration 

At this stage, people are seriously considering stopping by your coffee shop. They might compare your shop to others in the area, look up reviews, or ask friends if they’ve been there.

4. Intent

Here, customers are almost ready to make a purchase. They might be browsing your menu online or checking your shop's opening hours. They're looking for a final nudge.

5. Purchase

This is where they actually make the purchase—buying a coffee, maybe trying one of your famous croissants, or even grabbing a loyalty card.

6. Loyalty

The funnel doesn’t stop at the purchase. You want these customers to keep coming back and become loyal to your brand. You might offer a loyalty card, where every tenth coffee is free, or send personalized offers to your regular customers.

7. Advocacy

In the advocacy stage, your most loyal customers become champions of your brand, actively promoting it to their networks. For a coffee shop, this can mean customers sharing their love for your shop on social media, leaving glowing reviews online, or personally recommending your coffee to friends and family.

By focusing on advocacy, you can transform your customers into powerful marketing allies who help grow your business organically.

3 Why are marketing funnels important?

Marketing funnels are essential because they offer a clear, organized pathway for turning potential customers into loyal advocates. By understanding the different stages of the funnel, businesses can tailor their strategies to address the specific needs and behaviors of customers at each point in their journey. This targeted approach not only improves conversion rates but also ensures that marketing efforts are efficient and effective, leading to a higher return on investment (ROI).

Moreover, marketing funnels help businesses identify and address any gaps in their customer acquisition process. For example, if a significant number of potential customers are dropping off at the consideration stage, it may indicate a need for more persuasive content, such as testimonials or detailed product information.

Funnels also provide valuable insights into customer behavior. By analyzing how customers move through the funnel, businesses can better understand their target audience's preferences and pain points. This data-driven approach allows for continuous optimization of marketing strategies, ensuring that businesses stay competitive in a constantly evolving market.

In addition to guiding customers toward a purchase, marketing funnels play a crucial role in fostering long-term relationships, which directly impacts customer lifetime value (LTV). The latter stages of the funnel, particularly loyalty and advocacy, focus on retaining customers and turning them into repeat buyers and brand ambassadors. This not only reduces the cost of acquiring new customers but also builds a loyal customer base that can drive sustained business growth through word-of-mouth and positive reviews.

Overall, marketing funnels are important because they provide a comprehensive framework for managing and optimizing the customer journey, leading to better marketing performance, higher customer satisfaction, and long-term business success.

4 What is the difference between the marketing and sales funnel?

The marketing funnel and sales funnel are two essential tools that work together to move potential customers from just knowing about your product to actually making a purchase.

The marketing funnel is all about attracting and nurturing potential customers. It focuses on creating awareness and interest through strategies like social media, content marketing, and SEO. Once people are interested, they enter the sales funnel, where the goal shifts to converting that interest into actual sales. Here, the sales team takes over, using tactics like follow-up calls, product demos, and special offers to close the deal.

Both funnels are important because they guide potential customers through different stages of their buying journey. The marketing funnel draws them in, while the sales funnel helps them make a final decision to buy. When these two funnels work together effectively, they not only bring in more customers but also help ensure those customers make a purchase, leading to increased revenue and growth for the business.

In simple terms, the marketing funnel is about getting people interested in your brand, while the sales funnel is about turning that interest into actual sales. The marketing team focuses on drawing in potential customers, and once they show serious interest, the sales team takes over to seal the deal.

5 How to create a marketing funnel

Creating a marketing funnel is crucial for effectively guiding potential customers through their journey with your brand. Whether you're attracting new leads, nurturing their interest, or converting them into loyal advocates, a well-structured funnel ensures that each step of the process is optimized for maximum impact. This guide will walk you through the step-by-step process of building a marketing funnel, with detailed examples to illustrate how each stage — Awareness, Interest, Consideration, Intent, Purchase, Loyalty, and Advocacy — aligns with the top, middle, and bottom of the funnel (TOFU, MOFU, BOFU).

Step 1: Identify your target audience

• What to Do: Start by understanding who your ideal customers are. What are their needs, interests, and pain points? Knowing this helps you create content that attracts the right audience.
• Example: If you’re selling eco-friendly skincare products, your target audience might be environmentally-conscious individuals who care about natural ingredients.

Step 2: Create engaging content (TOFU - Awareness & Interest)

• What to Do: At the top of the funnel (TOFU), focus on creating content that raises awareness and sparks interest. This could be blog posts, social media updates, videos, or infographics that introduce your brand and its values.
• Example: You could write a blog post titled “The Benefits of Using Natural Skincare Products” and share it across social media platforms. This content should be broad and engaging, designed to attract people who might be interested in your products.

Step 3: Develop lead magnets (MOFU - Consideration)

• What to Do: In the middle of the funnel (MOFU), offer something valuable in exchange for your audience's contact information. This is where people start considering your product or service more seriously.
• Example: Offer a free eBook on “How to Choose the Best Skincare Products for Your Skin Type” or a free sample of your product in exchange for an email address. This not only provides value but also moves them closer to purchasing.

Step 4: Nurture leads (MOFU - Intent)

• What to Do: Use email marketing, targeted content, and personalized offers to nurture leads. These efforts should be aimed at guiding potential customers from consideration to intent, where they’re ready to buy.
• Example: Send a series of emails that include customer testimonials, tips for using your products, and a limited-time discount to encourage purchase.

Step 5: Optimize the sales process (BOFU - Purchase)

• What to Do: At the bottom of the funnel (BOFU), make the purchasing process as easy as possible. Ensure that your website is user-friendly, and consider offering incentives like discounts or free shipping to close the deal.
• Example: Streamline your checkout process, making it simple and fast, and offer a 10% discount for first-time buyers to encourage them to make a purchase.

Step 6: Implement a loyalty program (BOFU - Loyalty)

• What to Do: After the purchase, focus on building long-term relationships with your customers. Implement a loyalty program that rewards repeat purchases and keeps customers coming back.
• Example: Offer a points-based loyalty program where customers earn points for every purchase, which can be redeemed for discounts or free products.

Step 7: Encourage advocacy (BOFU - Advocacy)

• What to Do: Turn your satisfied customers into brand ambassadors. Encourage them to share their experiences, leave reviews, and refer others to your brand.
• Example: Create a referral program where customers get a discount for every friend they refer who makes a purchase. Encourage them to post about your products on social media using a specific hashtag.

Now that you understand the steps involved in creating a marketing funnel, it's time to see how these principles are applied in real-world scenarios. In the next section, we'll explore detailed examples of marketing funnels tailored for different businesses, including a SaaS platform, an online school, and an eco-friendly skincare brand. These examples will help you visualize how to implement each stage of the funnel—Awareness, Interest, Consideration, Intent, Purchase, Loyalty, and Advocacy—effectively in your own business strategy.

6 Practical Examples: marketing funnels

A well-designed marketing funnel is key to guiding potential customers through their journey with your brand, from initial awareness to becoming loyal advocates. By structuring your funnel into Top of the Funnel (TOFU), Middle of the Funnel (MOFU), and Bottom of the Funnel (BOFU), you can effectively target and nurture your audience at each stage. The following examples illustrate how to implement this strategy across different industries.

Example #1: Marketing funnel for a SaaS platform

Imagine you’re a small business owner who’s tired of juggling multiple spreadsheets to manage your customer relationships. You come across an article titled "How to Boost Sales with CRM Tools," which catches your eye. You click the link (TOFU - Awareness & Interest) and end up on a sleek website for a SaaS CRM platform.

The article is engaging, and you’re curious to learn more, so you sign up for a 14-day free trial (MOFU - Consideration). The sign-up process is smooth, and you immediately start receiving helpful emails, including case studies showing how other small businesses have boosted their sales using this CRM (MOFU - Intent).

During the trial, you discover how easy it is to track leads and automate follow-ups, making your sales process much more efficient. By the end of the trial, you decide to subscribe to the monthly plan at $50 per month (BOFU - Purchase). The platform even offers a discount for annual subscriptions, so you opt for the yearly plan, saving 20% (BOFU - Loyalty).

A few months later, you’re so impressed with the CRM that you refer a friend, earning yourself a $50 credit (BOFU - Advocacy). You’ve not only found a tool that simplifies your work but also contributed to its growth by becoming an advocate.

Metrics:

• Awareness & Interest (TOFU): 10,000 visitors → 500 clicks to the landing page.
• Consideration (MOFU): 50 free trial sign-ups (10% conversion from landing page).
• Intent (MOFU): 5 potential customers nurtured through email series.
• Purchase (BOFU): 3 paid subscriptions ($150 monthly revenue).
• Loyalty (BOFU): 2 customers upgrade to annual plans, securing long-term commitment.
• Advocacy (BOFU): 1 referral generates additional $50 credit and a new customer.

Example #2: Marketing funnel for an online school

Let’s say you’re considering a career change and want to learn digital marketing. You stumble upon a free webinar on "Top Skills to Learn in 2024" hosted by an online school (TOFU - Awareness & Interest). The webinar is insightful, and you’re eager to know more, so you sign up for their newsletter and receive a free guide on getting started in digital marketing (MOFU - Consideration).

Over the next few weeks, you receive emails sharing success stories of people who took their courses and landed jobs in the field. You’re convinced, but you’re waiting for the right moment to invest in yourself. One day, you get an email offering a 15% discount on their full digital marketing course if you enroll within 48 hours (MOFU - Intent).

The timing is perfect, and you decide to enroll, paying $499 for the course (BOFU - Purchase). The course is well-structured, and you find it incredibly valuable. After completing it, you’re offered access to an advanced course at a discounted rate as a returning student (BOFU - Loyalty).

Excited about your new skills, you share your experience on LinkedIn, and several of your connections ask about the course. The online school offers you a referral bonus for each person who enrolls through your link, further motivating you to spread the word (BOFU - Advocacy).

Metrics:

• Awareness & Interest (TOFU): 5,000 webinar attendees → 250 sign-ups for the newsletter.
• Consideration (MOFU): 100 downloads of the free guide.
• Intent (MOFU): 20 potential students nurtured through email series.
• Purchase (BOFU): 10 course enrollments ($4,990 total revenue).
• Loyalty (BOFU): 5 students sign up for the advanced course, generating more revenue.
• Advocacy (BOFU): 2 referrals lead to new enrollments and more bonuses for the original student.

Example #3: Marketing funnel for eco-friendly skincare products

Step 1: Identify audience (TOFU - Awareness & Interest)

Imagine you're passionate about natural skincare and find a blog post titled "Why Natural Ingredients Are Better for Your Skin" from an eco-friendly skincare brand. This sparks your interest (TOFU - Awareness & Interest).

Step 2: Create engaging content (TOFU - Awareness & Interest)

The brand offers you a free eBook on "The Ultimate Guide to Natural Skincare" if you sign up for their newsletter. You decide to sign up and download the eBook (TOFU - Interest).

Step 3: Develop lead magnets (MOFU - Consideration)

Over the next few weeks, you receive personalized emails introducing their best-selling products, highlighting benefits like being cruelty-free and sustainably sourced (MOFU - Consideration).

Step 4: Nurture leads (MOFU - Intent)

You’re now considering purchasing, but you’re waiting for the right time. Then, you receive an email with a 15% discount code on your first purchase (MOFU - Intent).

Step 5: Optimize sales (BOFU - Purchase)

You decide to buy a starter kit for $60. The purchase process is seamless, with clear instructions and multiple payment options (BOFU - Purchase).

Step 6: Implement loyalty program (BOFU - Loyalty)

A few weeks later, you receive another email inviting you to join their loyalty program, where you earn points for every purchase that can be redeemed for discounts (BOFU - Loyalty).

Step 7: Encourage advocacy (BOFU - Advocacy)

After trying the products and loving them, you share your experience on Instagram, tagging the brand. They thank you with a personalized discount code for your followers, encouraging them to try the products as well (BOFU - Advocacy).

Metrics:

• Awareness & Interest (TOFU): 10,000 blog readers → 1,000 sign-ups for the eBook.
• Consideration (MOFU): 200 people open and engage with the emails.
• Intent (MOFU): 50 use the discount code to make a purchase.
• Purchase (BOFU): $60 average purchase value → $3,000 in revenue.
• Loyalty (BOFU): 20 customers join the loyalty program, increasing their lifetime value.
• Advocacy (BOFU): 10 customers share their experiences, bringing in 5 new customers through referrals.

These three examples—SaaS platform, online school, and eco-friendly skincare products—demonstrate how a well-structured marketing funnel can effectively guide potential customers from the first point of contact to becoming loyal advocates. By carefully crafting each stage of the funnel (TOFU, MOFU, BOFU), businesses can attract the right audience, nurture their interest, and encourage long-term engagement.

Each stage plays a vital role in converting interest into action, increasing ROI, and maximizing customer lifetime value (LTV). By understanding the unique journey of your target audience and implementing targeted strategies, you can build a marketing funnel that drives sustainable growth, turns customers into repeat buyers, and even inspires them to advocate for your brand.

This structured approach not only enhances the efficiency of your marketing efforts but also ensures that your brand consistently delivers value at every step of the customer journey, ultimately leading to long-term success.

7 Key metrics across the Marketing Funnel

To get the most out of your marketing funnel, you need to track the right metrics at each stage. These metrics help you see what's working, where you're losing people, and how you can improve. Below is a simple breakdown of the funnel stages, key metrics to track, and examples to make it all clear.

By tracking these metrics across the marketing funnel, you gain valuable insights into how effectively you’re attracting, engaging, and converting your audience. Each metric offers specific insights that can inform your strategy and help you optimize each stage of the funnel. Whether you're working on boosting awareness, nurturing leads, or driving loyalty, understanding these metrics allows you to make data-driven decisions that enhance your marketing performance and ultimately lead to greater business success.

8 Bringing it all together

The marketing funnel is a powerful tool that guides potential customers through their journey with your brand. By understanding each stage and what your customers need, you can create a seamless experience that transforms casual visitors into loyal fans. Just like the coffee shop example we discussed earlier, it's all about making the journey from awareness to loyalty as smooth and enjoyable as possible.