Customer Acquisition Funnel

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21 Aug, 2024

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A customer acquisition funnel is a conceptual framework that represents the stages a potential customer goes through to become a loyal buyer. The primary purpose of this funnel is to help businesses use the right resources to acquire new customers from the market.

This customer acquisition funnel template has different layers to attract customers. It helps to register the customer's needs and craft a strategic model. Also, it helps in optimizing their resources to achieve the proper purpose. Thus, a stranger slowly turns into a loyal customer of the brand. As a result, there are potential leads to the product in the later stages.

What Is Customer Acquisition Funnel?

Customer acquisition funnel is an inverted pyramid structure that aims to acquire new customers from the market. The only goal is to convert website visits into effective sales.
The funnel has three layers in total, consisting of top, middle, and bottom layers. And each layer aims for a different purpose.
Here, the top layer aims to spread awareness, the middle layer focuses on purchase decisions, and the last layer aims to generate sales.
The different stages in this funnel include awareness, interest, consideration, evaluation, purchase, and retention.

Customer Acquisition Funnel Explained

Customer acquisition funnel is a set of stages a customer goes through before buying a product. It is a vital business strategy for acquiring customers through a funnel process. It allows firms to create an inverted pyramid that attracts consumers towards their brand. Here, they mainly aim to target those new audiences that have yet to purchase from them. Hence, it is a model used by businesses to understand and optimize the process of converting leads into customers.

The overall structure of this strategy comprises three different layers. And each layer is placed one below the other for an inverted shape. As they pass through every layer, each objective is achieved. Let us look at them for a better understanding:

1 - Top Of The Funnel (TOFU)

It is the topmost layer of the funnel that forms a wide opening. The primary purpose of this layer is to attract potential customers. And it is only possible through advertising and maximum brand reach. Therefore, firms have to give potential reasons as to why people should buy from them.

2 - Middle Of The Funnel (MOFU)

The middle layer of the funnel is the second step in the customer acquisition strategy. This layer concentrates on the leads generated. Once people know the brand, they often need clarification about their purchase decision. And in this jeopardy, they may need to buy products. As a result, firms must make efforts to convert their confusion into sales. Thus, it is only viable through email marketing, constant updates, newsletters, and promotional emails.

3 - Bottom Of The Funnel (BOFU)

The bottom of the funnel is the final step in this strategy. Here, the customer confirms their purchase decision. However, the funnel is only successful when it converts the input to sales. Therefore, firms should send push notifications, limited-period sales, or emails about leftover carts.

Stages

Just like the funnel procedure, there are also different stages in the overall process. Let us look at them:

1 - Awareness

The foremost step in the customer acquisition funnel is to create awareness among people. People need to be made aware of the brand when thinking about purchasing any product. As a result, companies can create brand and marketing strategies for potential brand reach.

Companies can use the power of social media, referral, and content marketing to create that presence. Once the public is aware of the brand, they might show some interest.

2 - Interest

As the brand message reaches the consumers, efforts must be made to create a likely interest within them. However, this interest does not reside in the customers. Instead, people show interest and like the brand. And it is only possible when people find an emotional connection with the brand. Thus, companies can highlight the distinctive features that are not found in other brands. It will create a potential reason why consumers should buy this product. Also, it increases the customer lifetime value (CLV) as they feel connected with the brand itself.

3 - Consideration

Once the consumers show interest in the brand, they may consider purchasing the product. In many cases, firms may offer free trials to give a glimpse of the product and services. For example, Spotify allows a free trial offer for newbies or subscribers for thirty days. It creates a potential space to explore the product experience.

4 - Intent

At this stage, firms may see a buyer's intent on their analytics. By that, the indication is towards the leads and website visits. Similarly, the same graph is visible in email marketing and social media posts enabled. People may interact more with other details of the product.

5 - Evaluation

Until now, consumers have tried the accessible version of the product and enquired about the required details. And their probable next step is to look into the pros and cons related to the product. They may compare the product with peers and reconsider their decision. If they are so impressed with the product, they will definitely purchase it.

6 - Purchase

This stage is the final layer of the customer acquisition funnel template. At this point, the customer may have purchased the product. However, the job continues.

7 - Retention

The next step is to turn the leads into a loyal customer. And it is only possible through gift cards or discounts on the next purchase. As a result, the customer may purchase from the website again.

Examples

Let us look at some real-time and hypothetical examples of customer acquisition funnel to understand the concept better:

Example #1

Suppose Kevin owns a startup that sells eco-friendly and paraben-free skincare products. Now, at present, two firms already sell the products in the same category. But Kevin's brand "Beau Scars" targets acne-related problems. However, he was able to generate effective sales just now. So, he set up a discussion with the marketing team. Some suggested implementing a customer acquisition funnel strategy. In the next week, this strategy was put into action.

As per the plan, they send promotional content all over their social media channels, like Instagram and Facebook. By the first week, the insights on their page increased by 20%. Later, consumers enquired about details regarding their products and shared them with their friends. In no time, the firm saw a considerable rise in website visits. Also, people added items to their carts. But somehow, people exited the page and did not take any action.

Later, when the team recognized it, they released a limited-period offer of up to 30% off the products. As a result, the strategy worked, and the sales rose by 30% in the end.

Example #2

According to a recent news update as of November 2023, the marketing firm Tinuiti has badged the social media platform TikTok's marketing partners program in the same month. Tinuiti has continued to use the latter's creative assets to handle social media optimization (SMO). Also, this firm has successfully used the acquisition funnel strategy to drive e-commerce site traffic. And it is also visible in the TikTok shops as a one-stop destination for shoppers.

Although Tinuiti has selective choices, they have served around ten agencies globally. At the same time, in the United States, they have around two granted agencies.

Frequently Asked Questions (FAQs)

1. Is the customer purchase funnel the same as the customer acquisition funnel?

The customer purchase funnel and customer acquisition funnel are almost the same in all senses. However, the only difference lies in their objectives. As the name suggests, the purchase funnel aims to generate sales. However, the acquisition funnel also wishes customer retention in the end.

2. What are the essential elements of the customer acquisition funnel strategy?

Certain crucial components act as vital to the acquisition strategy. Some of them are listed below:
● Combining the business strategies with the marketing goals.
● Estimating the right channels for acquiring customers from the market.
● Understanding and calculating the customer acquisition costs.

3. Is the customer acquisition funnel a linear process?

While the customer acquisition funnel is often depicted as a linear process, in reality, customers may enter at different stages or move back and forth between stages based on their unique journey and decision-making process.