Eli5: Can someone explain me what ‘funnel’ is that gets thrown around on every context in digital marketing?


My understanding of a funnel is a chart that looks like a funnel and has stages and each stage has different people in it. That’s all cool.

My problem is the word being thrown around everywhere in every context ‘sales funnel’ ‘conversion funnel’ ‘lead gen funnel’ ‘nurture funnel’ and then in my mind i try to makes sense of things with that diagram in my head.

Even click funnels has nothing that looks, feels and talks abt tha funnel i know on their site

In: 0

So imagine you’re running an Ecommerce website.

500 people get to your site

250 people click past the first page and look at a product

100 people click ‘add to cart’ on a product

50 people click ‘checkout’

5 people actually fill in all their details and go through the checkout process

2 of them order again in the future to become repeat customers

Effectively the funnel shape simply demonstrates a smaller and smaller share of the original group of people that make it through to the next step of the process.

And by measuring how many people were at the start of the process vs at the end, you determine what the ‘conversion rate’ is. In the example above if you take 500 original people, and 5 that ended up buying something, you’d get a 1% conversion rate.

Where the confusion often appears is that where in case of a real funnel, all of whatever you put into it makes it through, and in the case of any of these funnels for sales/marketing/product, at every stage some % of the people is lost.

A funnel in that context means that there’s a fewer amount of people who end up in the next stage.

A good comparison is like a competition. In the first stage, you have a bunch of competitors. The next stage is just the winners, essentially half of the first stage. By the end of the competition, you are down to 1 winner, which is a fraction of the total amount of competitors. This is the principle of a funnel.

Another example is a job interview. If you are hiring for a job, you might start off with 500 people who applied. Then you phone screen 200 of them. Maybe 50 of them you decide to bring in for a real interview with the manager. After that, maybe 10 of them move on to the 2nd interview with the team. By the end, you may have 1-2 people who you decide to extend an offer for employment.

Essentially a funnel represents stages of a process that are hierarchical in nature, where there are fewer elements/people in each consecutive stage. There can be different kinds of funnels, this is just different names for the different types of process. As long as you have a process, you can create a funnel out of it if you have numerical values.

You could even have a graduation funnel for University. For example, let’s say 1,000 people are enrolled as a 1st year freshmen. 850 Continue on to become Softmores. 600 continue on to Juniors. By the end, maybe 450 continue to become a senior, and 300 end up graduating.

The word funnel is used because, with the rise and spread of the internet & technology, the whole thrust of marketing and advertising has dramatically shifted in the last 35-40 years.

It used to be, newspaper, radio, and television were the only ways to get sales messages across to the buying public. Those methods of communication had limited specificity in the audiences they reached. There simply weren’t sophisticated tools to hone demographic data (gender, age range, HH income, education level, etc).

Marketers and advertisers use demo data to identify and craft profiles of their target market(s). The more precise that data, the more likely it is that marketing and advertising dollars will yield desired outcomes (sales, votes, changes in attitude, etc). That’s the whole idea – to get messages and advertising as close as possible to the desired audience.

The top of the funnel – the widest part – is the general population. The bottom of the funnel – the narrowest part – is the desired audience. Messaging is aimed at the narrowest part.

The internet and technology now allows for the very fine (as in detailed, granular) segmentation of audiences to enable sellers/influencers to speak directly to the people they want to speak to. It’s why I get served up online ads consistent with my interests instead of ads that are for goods, services, and lifestyles irrelevant to me.

The entity creating those ads relevant to me are more likely to have a successful interaction with me than with someone who is not interested in, say, cars or cats or coffee.

Anyone with a message, a product to sell, a service to promote knows the demo profile of the audience most likely to accept their message and buy their widget or widget service. It’s called market segmentation. BF Goodrich tires has sophisticated data about the buyers of its products across its product line. They insert their messaging in places their buyers engage – car enthusiast magazines, car events, OE fitment on vehicles that their buyers are most likely to purchase (big money in replacement tires). But not every car event is a good match for BFG. Grand Prix racing neither matches up tightly with their buying pool nor their product image (hi Michelin!). However, rally does. So BFG sponsors rally events.

Hope that helps. It’s early and I’m still on my first cuppa coffee.

It’s the initially wide bucket of potential customers, that gets smaller each step along the way. As they move further into the funnel they become more likely conversions/more qualified customers.

There are different goals of marketing… the top one is typically getting a sale. Having somebody buy from you. But there are also secondary actions/goals you might also be interested in. All of those are types of conversion funnels.

Sales funnel is getting somebody to come to your site, look at your products, put something in their cart, complete the purchase. Converting a lead to a customer!

Lead Gen funnel is them coming to the site and taking some sort of action that gets your their name, email address, phone #, etc. to be able to follow up with them. Maybe you’re a home builder and can’t sell online, but what to be able to schedule a walk-through of a model home; maybe you sell B2B software and need to get a feel for the company’s size, needs, etc. to get them a price quote; maybe you sell clothing and want to add them to your weekly email sends

A nurture funnel is one where you build the relationship. Maybe they fill out a pop-up for 20% off first order. They buy and you send them sales offers. You get them to sign up for your loyalty program, or refer-a-friend. Other times, the nurture funnel may be pre-sale… going back to that home builder example, you get their info and reach out to schedule a tour. You then send them updates on progress of the subdivision’s construction and sales. As you engage, you learn more about the features they want, the price range they’re looking in an can update your CRM to note they asked about energy efficiency, so you send them an email about why the solar panels all homes get are so great because they cut down on utility bills. As you keep communicating and learning about the customer, you refine how you pitch to them trying to determine the best way to convert them to a sale.