What is a Product Funnel
For any business to succeed, it is essential to understand the importance of attracting and retaining customers. One strategy that successful online businesses use is the creation of a product funnel. What is a product funnel, and how can you create one for your online business?
Consider the funnel you use in your kitchen. We have all used or seen one. It has a wide opening at the top that narrows towards the bottom. Similarly, a product funnel is a step-by-step process that takes potential customers from being aware of your product to purchasing it and becoming loyal advocates.
In this article, we’ll explain what product funnels are and how to craft one for your business, ensuring that you grab the attention of potential customers and guide them toward becoming loyal advocates.
What is a product funnel?
A product funnel describes the steps a potential customer takes to become a paying customer and devoted product advocate, starting from when they learn about the product.
Using a product funnel can be beneficial for marketers seeking to determine what stage customers are in their journey and for product managers seeking methods for tracking, analyzing, and recording these insights. Product funnels provide your product with a spotlight so you can see how to increase revenue, acquisition, and retention.
A product manager could, for instance, use a product funnel to track the number of times a user views a product before making a purchase. They can examine every phase of the product funnel and determine which in-product behaviors result in conversions.
Product funnel vs. marketing funnel vs. sales funnel
There is a strong correlation between product, marketing, and sales funnels. What sets them apart is their focus. The marketing funnel occurs before the sales funnel begins. It is made up of all the things you do to promote your brand and draw customers into the sales funnel. Marketing strategies change depending on where a customer is in the funnel. At the top of the marketing funnel, you differentiate yourself from the competition to attract customers. You can achieve this by being aware of your target audience and using inventive advertising techniques.
Clients at the top of the funnel are either unaware of your brand or unaware of it. To overcome this challenge, conduct market research and produce ads emphasizing your products’ benefits as part of a demand generation campaign.
A sales funnel is an illustration of the purchasing process that a customer goes through. Your potential customers must learn about your company and conduct initial research on your brand before they proceed through the sales funnel. At this point, they consider their options more carefully and know they might require your goods or services. You can employ different techniques to move a prospect closer to a sale once you have identified quality leads from your marketing campaigns and established that they are interested in purchasing.
A sales and marketing funnel differ, but the distinction is more in meaning than in reality. Both are mirror reflections of the same trip, viewed from distinct angles. The product funnel encompasses the marketing and sales funnel and goes beyond it. Its main objectives are account growth, loyalty, and customer retention.
Why are product funnels important?
Understand and initiate effective marketing strategies.
It can be confusing where to start with the different marketing channels and tactics available. The truth is that significant results can be attained without a large marketing budget.
Once you have a productive and successful product funnel, you can see the actual worth of your marketing channels. You can now determine the business model or distinctive marketing techniques that are most effective for your company. This will help you achieve your revenue targets much more quickly by enabling you to tailor your marketing to your audience’s needs. Whatever stage your business is in, you need to have a well-functioning product funnel.
Helps streamline the customer journey
Even though online shopping has become the norm, it can still be difficult for sellers. When your customers range from those actively looking to buy your product to others who have accidentally tapped on your Instagram ad and are only slightly (if at all) interested in what you are selling, how do you provide them with helpful information?
Understanding your funnel can make the customer journey more efficient. It is important to understand your customers’ exact decision-making stages to tailor your offerings and assist them in reaching a decision. For instance, as a mid-funnel strategy, you can use your sales funnel methodology to verify whether a visitor needs specific product information when making a decision or just a push, such as a 10% discount offer or a “you left something in your cart” reminder (at the end of the funnel).
Increased Customer Loyalty
Funnels emphasize the importance of retention and loyalty and attracting new customers. Business owners can use post-purchase techniques to boost repeat business, upsell, and foster customer loyalty.
When a customer buys something from your product funnel, it does not stop there. You should think about retention as well. After a customer has purchased and used your product, you can find ways to retain them as a member of your brand’s family, sell them accessories that go well with it, and follow up with them to know they are satisfied. Gaining new customers can be as tricky as retaining existing ones, so it helps to know what points during the product funnel customers experience friction.
What are the different stages of the product funnel?
Awareness stage
A potential customer has just discovered your business and product offer at this stage. Most prospects find you through one or more channels because they are actively looking for solutions to a particular issue or have run into a challenge that points them in your direction.
This can be accomplished through outbound marketing campaigns managed by your business, word-of-mouth marketing, cold calling, cold email templates, social media viral content, podcasts, and outbound marketing campaigns. The objective at this stage is to pique the target audience’s curiosity and persuade them to know more about the product.
Interest stage
Arguably, this is one of the most crucial stages in your sales process. How you handle a prospective customer will determine how you interact with them in the future.
Prospects enter the interest stage as they proceed from the awareness stage down the funnel. Comparing prices, conducting in-depth research, and considering their options are all signs of interest. Prospects interested in what you offer will indicate their intent by contacting you via message, phone, or form completion on your website.
Delivering the best content possible will help you succeed during the interest stage.
Consideration stage
Inevitably, prospects will reach the consideration stage as they continue to descend the funnel. Now that you have their interest, they want to learn everything they can to make an informed purchase.
Pose a few qualifying questions to determine whether the prospect fits your product well. Guide the prospect towards a purchase decision; address any questions they may have.
Making your best offer is the best course of action when dealing with customers in the consideration stage. Promote features and provide benefits. Provide benefits like extra products, free shipping, and coupon codes. Make it too good to resist.
If you are successful in the consideration stage, they will proceed to the next stage. Otherwise, they will return to the interest stage and continue their investigation. In the worst-case scenario, they’ll go to a competitor, and you don’t want that, so don’t risk it!
Purchase stage
Your prospect has reached the top of the product funnel at this point and has made their decision. Make it as simple as possible for them to say yes during the purchase phase. It should feel very natural at this point. Simplify the checkout process, ensure that all shipping or processing times are disclosed, and give instructions that correspond with their purchase so they do not have to jump through hoops to purchase.
Retention stage
The real work starts here, so do not assume the funnel stops because you have closed the deal.
They may decide to leave after making a purchase. In fact, according to one study, only 71% of customers who had a positive experience with a brand are likely to recommend it to others. This indicates that 29% of consumers who have had a good experience with your brand are unlikely to tell others about it.
This is the moment to concentrate on keeping customers and ensuring their satisfaction with their purchases. You can accomplish this by following up with them after they purchase or using a customer service platform.
Loyalty stage
Ironically, while this stage requires the least time, it has the most significant potential for expanding your marketing funnel. The reward for all of your hard work in the previous stage is the loyalty stage.
When you satisfy your clients, they will stick with you and your brand and refer you to friends and contacts in the business who have problems similar to the ones you resolved. The outcome is an expanded marketing funnel plus the opportunity to outperform your rivals.
Your company will be at the forefront of their minds when they start looking for a solution to their issue because of their friend’s recommendation. Therefore, even though it might be the end of the funnel, this stage starts a new cycle since word-of-mouth and referrals help you attract new clients.
Important metrics to track at key product funnel stages
Every stage of the product funnel has distinct metrics to monitor because each has different goals. Let’s examine a few examples of marketing funnel metrics.
Awareness stage
Impressions and reach: The number of people you contact or the frequency with which users see your ads or other content from your marketing campaigns—such as sponsored advertisements, social media posts, articles, etc.
Social media mentions and engagement: In this situation, you can monitor mentions, likes, shares, and comments to get a sense of how active each of your social media marketing channels is.
Interest stage
Email list sign-ups: You can monitor the number of sign-ups you receive and the lead velocity of your traffic if you have an opt-in form set up for inquiries or email list subscriptions. This will make it easier for you to understand the form’s placement, design, and layout.
Product demo requests or downloads: As users proceed through the funnel, you might receive increased requests for product demos or lead magnet downloads. You should monitor these to ensure that your promotional efforts for conversions are effective.
Consideration stage
Cart abandonment rate: An abandoned cart is a common problem for all e-commerce sites. You can monitor the rate at which carts are abandoned to determine the frequency of last-minute checkout abandonments. This will assist you in determining whether there are any problems with the checkout process. If the rate is high, you should streamline the checkout process to lower it.
Wishlist: Monitor which products are being added to the wishlist to determine which ones should receive more attention in marketing, retargeting, and restocking.
Purchase stage
Conversion rates: The percentage of visitors who become actual customers is known as the conversion rate. A higher conversion rate suggests that you are excellently persuading visitors to buy something from your website or sales funnel.
Average order value (AOV): The average amount that your customers spend on orders is what is known as the average order value. Knowing your AOV will enable you to make strategic plans to enhance your customers’ average spending limits.
Retention stage
Customer satisfaction: Pay attention to customer reviews and ratings to determine which products are performing well and which ones should be promoted more.
Repeat purchase rate: Track which products are more favored by monitoring their repeat purchase rates. Track each customer’s rate of repeat purchases to identify devoted clients to whom you might extend extra benefits to increase sales.
Loyalty stage
Referrals: The total number of times customers have recommended new users. Here, your customers start actively promoting your product to their friends and network, as well as using it themselves.
Net Promoter Score (NPS): A measure of customer trust that shows how likely customers are to refer the product to others. A high NPS suggests that your customers will recommend and stick with your business.
How to create a product funnel
Understand the customer journey.
Every marketing funnel differs based on the business and user goals because real-life user behavior is unpredictable. To build a successful marketing funnel, follow the customer’s journey from initial awareness to conversion. Understanding how customer personas interact with your brand, product, or website across multiple touchpoints and channels is crucial, as each prospect uniquely experiences your marketing funnel.
Blend information from social media, face-to-face conversations, website analytics, and various departments, such as marketing, sales, customer success, and customer service. To maintain alignment, ensure that teams from different departments have access to the same reporting software.
Map out the stages of the customer journey.
A customer journey map aids in your understanding of your customers and helps you pinpoint the problems they face by illustrating the behaviors, ideas, and feelings they go through. This is necessary if you want to optimize your website with the knowledge and needs of your customers in mind.
Whatever their purpose, the most effective customer journey maps have one thing in common: they are made using actual client data gathered and examined. Typically, the insights are arranged during a group workshop into a map (hence the name), diagram, or flowchart.
Capture your audience’s attention.
Your sales funnel will only be effective if you can attract potential customers. This entails convincingly presenting your material to your target audience. Experiment with various content formats, such as flipbooks, videos, infographics, and other kinds of content on social media. Organic traffic includes:
- SEO
- Social media traffic (non-paid)
- Referral traffic (from other sites linking to you)
- Direct traffic (from people who know about your brand and have visited your website before)
Create early awareness
Promoting your service or product through outbound marketing strategies is the key to increasing brand awareness. In the awareness stage, your prospect is probably not actively looking for a solution, even though they may be dimly aware that they have a problem. You can guide potential customers by identifying user pain points and using different channels to demonstrate that a solution is available.
Promote yourself by running sponsored ads on YouTube, Instagram, Google, Facebook, influencer marketing, radio, live events, billboards, or television. Ensure your product positioning addresses the most pressing needs of your target audience. Listen to your audience and use their feedback to position your brand creatively to generate early awareness based on identifying user pains.
Craft your front-end offer (FE)
The first product you want your target audience to purchase is known as a front-end offer. Giving a customer an offer involves more than just putting your product in front of them; it also involves thinking ahead and coming up with the ideal solution. Because of this, the customer