Welcome to our blog on how to create a customer acquisition funnel. It’s never been so important for businesses to know how to build and optimise their acquisition strategies. After all, the average customer acquisition cost (CAC) continues to rise and all-time low consumer trust and confidence often results in high customer churn.
So it comes as no surprise that optimised acquisition strategies are needed more than ever! And a good place to start improving your odds of successful acquisition is your funnel. In this blog post, we’ll take you through everything; from what a customer acquisition funnel is, its various stages, how to use data to optimise it, and everything else to do with funnel marketing!
Contents:
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Tips for Aligning the Funnel with Your Brand’s Unique Value Proposition
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Using Data to Refine and Improve your Funnel Strategies
What is a Customer Acquisition Funnel?
A customer acquisition funnel is the method with which businesses attract, convert and retain the ideal customer. It’s divided into phases or stages:
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Awareness stage
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Consideration stage
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Conversion stage
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Retention stage
The job of the first three stages is to transition leads or prospects into paying customers. The retention stage ensures the customer stays with the business and by doing so, improves the customer’s lifetime value.
All stages of the funnel have strategies that you can use to maximise their impact. In addition, all the strategies are deployed via channels – otherwise known as acquisition channels.
Stages of the Customer Acquisition Funnel
Let’s dig deeper into each stage of the customer acquisition funnel. We’ll look at what each phase means for your customers (coming from a behavioural perspective) and how each stage shapes the strategies you use.
Awareness stage
This component of the customer acquisition funnel attracts leads. The tasks of strategies used at this stage vary. Building brand awareness helps consumers discover your business. Content marketing across different channels piques the consumer’s curiosity to learn more.
Consideration stage
Once the lead is interested the job of the consideration stage is to offer educational content, demonstrate expertise, and establish the foundations of trust by offering examples of social proof.
The strategies you use should educate the lead about your products or services. Where the awareness stage tells leads what you do, content at the consideration stage should tell them how you do it. This demonstrates your expertise and should always be backed up by testimonials and reviews. That way you incentivise the lead to act on their purchase intent.
Purchase stage
At this stage the lead should convert into a paying customer after their first purchase. The purchase (and consideration) stage may play out a little differently for B2B and B2C businesses. Your funnel will reflect the path to purchase if you’re B2B or the customer journey if you’re B2C.
Some differences may arise. For example, a B2B prospect may contact sales team at the consideration stage. Whereas a B2C lead will most likely make their first purchase without talking to anyone. If they do, it might be a comment on social media or asking your existing customers online.
Retention stage
Now we get to the retention stage. Preferably you want to retain customers. That means earning their loyalty through various strategies designed to keep them satisfied, delighted, and possibly pushing them towards brand advocacy.
Nurturing brand champions gets more out of your funnel’s retention stage. As your retained customers (or brand advocates) become a source of lead generation. Your retention stage will feed directly back into the awareness or possibly even the consideration stage.
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Tips for Aligning the Funnel with Your Brand’s Unique Value Proposition
Before you get brand advocates on side, you need to stand out from competitors and attract leads from your target audience. The best way to do this is to advertise your unique value proposition using your customer acquisition funnel as a platform to demonstrate what makes you better than competitors.
Here’s what to do.
Clearly define your value proposition
Your mission statement is a useful guide for determining your value proposition. You need to make your unique value proposition very clear from the get-go with potential leads. You could focus on what sets your brand apart from competitors, although admittedly, this could be more difficult for businesses that provide similar goods to many other businesses.
Not to worry! Look at what consumers want.
Recent studies and surveys show that self-service is the next rendition of what makes customer experience (CX) truly spectacular for consumers. People prefer to find for themselves the information they need over speaking to a representative on the phone.
By implementing strategies with a philosophy of self-service at every stage of the funnel, you’re communicating to potential leads the benefits of a seamless, convenient and even personalised experience before the first purchase.
Segment your audience
Not all of your customers will resonate with your value proposition in the same way. That’s why it’s important to use analytics tools so that you can implement data-driven insights into effective adjustments. Do away with creating buyer personas. They rely on preconceived notions of demographics that aren’t always accurate.
Consumers themselves tell us more than we could ever hope to guess from made up personas. With datasets at hand, you can see which strategies and channels work best for different segments. Helping you to choose channels that appeal to certain demographics and craft compelling content that communicates your value propositions in marketing campaigns.
Personalise your messaging
Tailor content and messaging around the lead. With analytical tools in use you can find out information about leads, such as their name, age and behavioural patterns. Identifying what content they interact with at every stage of the acquisition funnel will give you insights into their preferences. This will help you optimise your strategies and customer acquisition efforts.
At the consideration stage for example, you could send a personalised email that shows you’ve noticed them looking at a particular item or service tier. This would be a great opportunity to send them a case study of another customer that fits into the same segment or demographic as them. Or you could give them a taster. Say they signed up to a free trial; this will pave the way for even more personalised content, tailored to them specifically.
The future is personalisation.
A report by McKinsey found that 76% of consumers will buy from brands with a personalised touch.
That’s a statistic you want to tap into with your own customer acquisition funnel!
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Analytics and Data-Driven Insights
Metrics are essential to measure the effectiveness of your customer acquisition funnel. Remember those channels we mentioned earlier? This is where they come into play. As you need to consider which acquisition channels you want to use.
This will vary and their effectiveness is highly reliant on the demographic of the target audience. A good example is social media. It’s a great acquisition channel but it's nuanced. Or at least the way you approach it should be.
X (Twitter), Instagram and Facebook suit B2C businesses when creating a customer acquisition strategy. B2B business on the other hand, would do well to prioritise LinkedIn as an acquisition channel, as it’s the perfect platform to network with professionals.
Channels are single parts of a whole
By understanding where, why and how your customers engage with your brand the most, you begin to see how channels work together and affect one another at different stages of the funnel. This holistic view allows you to assess various channels and coagulate them into a single cohesive strategic framework.
You’re not mistaken to think this framework is the acquisition funnel. However, we need to see it in a different way by placing the phases into three distinctive categories:
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Top-of-funnel (TOFU)
Create awareness and boost brand reach.
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Middle-of-funnel (MOFU)
Nurture prospects via educational content, personalised communications and social proof.
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Bottom-of-funnel (BOFU)
Give the potential customer one final push towards conversion.
Channels that work best in TOFU, MOFU & BOFU
This helps you to pick the right channels at the right stage of the funnel.
| Channel | Funnel Category |
| Content syndication | TOFU, MOFU & BOFU |
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SEO |
TOFU |
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PPC |
MOFU & BOFU |
| Loyalty programmes | BOFU & Post Purchase |
| Email marketing | MOFU |
| Influencer marketing | TOFU |
| Referral programmes | MOFU & BOFU |
| Social media | TOFU |
| Mobile apps | MOFU & BOFU |
| Affiliate marketing | TOFU |
| Cold calling | TOFU, BOFU |
| Brand partnerships | TOFU, MOFU & BOFU |
| Account-based marketing | TOFU, MOFU & BOFU |
| Direct sales | TOFU & MOFU |
| Virtual events, webinars & networking events | MOFU & BOFU |
| Television and radio | TOFU |
| Pop up shops | TOFU |
| Print advertising | TOFU |
| Direct mail | MOFU |
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Using Data to Refine and Improve Your Funnel Strategies
Once you’ve placed channels into their respective phases of the customer acquisition funnel, nominate which analytics you want to focus on. These should yield information that allows you to make data-driven insights. Here’s some examples of analytics and KPIs you should focus on to refine and improve the strategies you deploy in the funnel.
TOFU analytics & strategies
Since the goal of this stage is to attract new leads, build brand awareness and introduce your value proposition with a bang, you need analytics surrounding your initial outreach.
Website analysis
Start by monitoring overall traffic to your website. You want to identify where sources of traffic originate. Are visitors landing on your website as a result of organic search? Social media? Paid ads?
If certain channels outperform others you need to understand why. It could be that the majority of your customers prefer a particular channel. In that case, prioritise this one over others at the awareness stage. Or perhaps there’s something that needs improving on an underperforming channel.
Page views and bounce rate
With page views and bounce rate, you can identify whether the issue of underperforming channels is caused by consumer preferences or issues with content.
For example, advertisements might pull in a decent amount of click-through-rates yet leads bounce from the landing page. This would indicate that the landing page’s content is failing to capture your visitors’ attention.
A bounce rate of 40% or below is considered good.
Content engagement
Similarly, you should definitely consider tracking metrics like: time spent on page and scroll depth. Third party software such as HotJar provide heat maps that show how far someone has scrolled down the page. That’s always a good indication that you’ve piqued their interest, which is of paramount importance at the awareness stage.
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MOFU analytics & strategies
As we know, strategies and channels at the consideration stage are designed to educate and nurture, demonstrate and reassure (the last comes under BOFU). Here’s the analytics to consider for optimised MOFU acquisition.
Lead generation and conversion rates
Always measure the conversion rate of any channel that generates leads. Referring back to our landing page example above; any visitor that fills in the form and downloads the educational content tells you they’re at the consideration stage. One step closer to newly acquired customers!
Email marketing
At this stage at the MOFU, your strategy should be focussed on nurturing the lead. By downloading educational content the lead shows their interest in learning more about your business. They know what they need, now they’re asking why they should get it from you.
That’s why a MOFU channel like email marketing is a brilliant pre-conversion choice at the consideration stage. It’s highly personalised, easily measured and allows you to drip promotional materials and social proof.
Consider:
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Clickthrough rate
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Conversion rate
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Bounce rate
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Open rate
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Unsubscribe rate
Content performance
As the lead progresses down your acquisition funnel the refinement process of your overall strategy grows more precise. Creating a customer acquisition strategy takes patience and trial and error. But if the content seems to resonate at this stage keep everything the same. Look for around 10-15% of leads at this stage converting into paying customers. If you don’t hit those percentages…
Lead segmentation
You could for example try segmenting your audience based on past datasets acquired at the TOFU awareness stage. Indeed, you could even split your entire audience and try A/B testing.
Also, revert back to what this stage of the funnel requires. That way you can refocus the acquisition strategies:
1) Content to educate about your business and industry (blogs, webinars, downloads, FAQs etc.) basically everything the lead needs to conduct their research.
2) Content to nurture positive relationships with leads (personalised comms, recommendations, asking questions, content tailored to them) to help your value proposition stand out.
3) Content to demonstrate you’re good at what you do (testimonials, feedback, reviews, customer successes) to invigorate intent.
Although it might prove frustrating that certain content isn’t up to scratch, at this stage you’re so close. Stick with it. Even if the above doesn’t work out the way you wanted, there’s still changes that can reverse downward trends.
4) Content to reassure (comes under BOFU but can be introduced earlier at the consideration stage).
Should everything go to plan you’ll find yourself at BOFU with lots of highly qualified leads. And if it doesn’t, you can simply introduce certain strategies earlier that reassure leads at the conversion stage.
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BOFU analytics & strategies
BOFU is the place between consideration and purchase. The moment where you give the soon-to-be customer an incentive to act on their intent. It’s the lead asking why should I buy now? All the funnel needs to do here is give the lead a little push. But before we get ahead of ourselves, let's consider the following analytics:
Funnel drop-offs
At this stage, you should have planned out your acquisition strategies and the channels to deliver them on at every stage of the funnel. Once the plan is in motion it’s time to consider analytics that look at the funnel as a whole.
Analysing the conversion rates at every stage of the acquisition funnel gives you an idea of where leads are dropping off. This is particularly useful at the bottom of the funnel as the number of leads drops dramatically compared to top of the funnel. This is perfectly normal but it’s good to know what a normal drop off rate looks like in the last phase of the funnel.
Leads at the BOFU stage should be highly motivated to purchase your product or service. However, if you find your customer acquisition rate (that’s the amount of leads converted into paying customers as a result of your acquisition funnel) isn’t between 3.1-5%, introduce strategies that reassure the lead:
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User generated content (UGC) as social proof.
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Free trials.
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Live product demonstration.
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A welcome coupon or reward (a great opportunity to give new customers a taster of potential loyalty and rewards programmes).
Remarketing effectiveness
Your channels can also be used to remarket to lost leads. Some potential customers may be interested in your offer but on second thought are simply not ready to buy. Not following up these leads is basically handing over future opportunities to your competitors.
Emails provide the perfect platform to eventually touch base with leads that are almost ready to buy from you. Open and click through rates of browse abandonment and cart email flows can be found for your industry in this excellent resource.
Customer feedback and reviews
If conversion rates are still well below the average, consider asking for feedback from leads and other industry experts before swapping the channel. Monitoring customer feedback and reviews about their overall experience interacting with your brand helps you optimise the acquisition funnel.
Use surveys (offer an incentive if possible) to understand why leads didn’t make the purchase. Understanding this will guide your improvement efforts more effectively.
Brand partnerships
Brand partnerships are a great strategy for all phases of the acquisition funnel. At the top of the funnel, you need to cast a wide net and attract leads. Partnering with other brands gives you exposure to previously untapped audiences. Plus, the unique nature of co-created value is always a hit when it comes to generating promising leads.
Similarly, brand partnerships also optimise the middle of the funnel too. Establishing trust in your acquisition funnel is important to its success. Especially at the consideration stage. By partnering with well-known and credible brands, you leverage positive brand equity, pushing leads at the consideration stage towards first purchase at the BOFU. 
Referral programmes
After you’ve acquired new customers you want to keep them satisfied with a consistently great service. Customer satisfaction is crucial for successful retention. Delighting your customers raises the bar even more. Satisfying and delighting customers keeps them on the customer journey and builds rapport. This is necessary if you want to turn customers into brand advocates.
Referral programmes provide your brand advocates with a channel to express positive sentiments. Word-of-mouth marketing is the most trusted form of advertisement. Best of all? It’s extremely cost-effective compared to traditional advertising methods. Thanks mainly to its ability to convert a high number of leads.
Incentivising your customers to refer others to your brands solidifies your efforts of leveraging word-of-mouth marketing. Achieving this notches your acquisition funnel up another level. That’s because brand advocates at the post-purchase phase of the funnel will generate or feed new leads at the TOFU and even MOFU phases.
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The acquisition funnel post-purchase
At this stage, the customer acquisition funnel has done its job. Although the real work for businesses is just beginning here. A shift of focus towards customer retention and engagement is needed in order to nurture new customers into loyal brand advocates.
That starts with seamless onboarding, convenient customer support and of course, paving the way for introducing your new customers with a loyalty programme. Together, these ensure that you keep hard-earned new customers on a long term basis.
Loyalty programmes
Where excellent customer service and overall experience with your brand improves overall satisfaction, loyalty programmes will consistently delight your customer base.
Remember when we said to use strategies that reassure leads on the cusp of their first purchase? A customer loyalty programme is another super effective strategy at persuading leads that your brand’s worth their money. An overwhelming majority of consumers say having the ability to earn rewards alters their spending behaviours.
Loyalty programmes tell leads that you value and appreciate your customer base. It reassures leads that once they make that first buy, they’ll be continually looked after in the post purchase. Delighting them at this late stage of the funnel builds their rapport and increases the chance of word-of-mouth marketing.
Create your customer acquisition funnel today
The four stages of the customer acquisition funnel provide a framework for the strategies you should deploy in order to attract new leads. Likewise, TOFU, MOFU and BOFU inform you on the acquisition channels best suited to deliver your chosen acquisition strategies.
Together, these can create a comprehensive acquisition strategy, supported by analytics at every stage of the funnel. You can optimise and improve every phase to boost the amount of leads taking the next step towards their first purchase.
Employing the same philosophy of providing a convenient, stellar-quality service to your new customers at the retention stage, ensures your acquisition funnel becomes a self-sustaining source of highly qualified leads.
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