Marketing Funnel Explained: Stages, Strategies & Metrics

An effective way to get a deeper understanding of the customer journey in your small business is to segment it into key funnel stages. This can reveal where potential customers are dropping off and help you direct your (likely limited) marketing spend more effectively. In this guide, we will go over all of the key funnel stages, as well as strategies and tactics to convert at each stage and metrics to track.

A marketing funnel is a framework that represents the journey prospects take from first learning about your business to becoming a repeat customer. The funnel model evolved from the AIDA model, which was first conceptualized in 1898 by advertising and marketing expert Elias St. Elmo Lewis. The four-stage AIDA model described awareness, interest, desire and action as the main stages of the buying process.

The reason your marketing funnel is so important is that it clearly shows you exactly where your leads are getting lost. You can then focus your limited marketing budget on the tactics that work best, instead of trying to be all things to all people.

The Core Stages of a Marketing Funnel

A marketing funnel is a useful model for understanding your customer’s journey. While every funnel has four stages, each phase has unique characteristics that require different content and approaches. By understanding what happens in each stage, you can focus your messaging and strategy to connect with prospects rather than broadcasting a generalized brand message. Let’s explore each and the tactics that work best for business.

Top of Funnel (TOFU): Awareness

Prospects become aware that your business exists (may have a problem, but they don’t know solutions yet). The goal is to attract potential customers to create awareness for your brand.

TOFU tactics that work for small businesses: creating educational blog content (SEO), staying active on social media, and establishing basic on-page SEO best practices. Say you own a local accounting firm. You could create blog content related to “common tax deductions for small businesses” to rank on Google and reach people searching for tax help.

Middle of Funnel (MOFU): Consideration

Prospects know they need a solution, but they haven’t decided who to buy from yet (actively seeking out information to help them solve their problem). The goal here is to be seen as a trusted resource over your competitors.

Small business MOFU tactics: case studies with real-life results, webinars or workshops, product comparison guides, and lead nurturing through targeted email marketing campaigns. Use this stage to prove you’re an expert. Provide helpful information that sets you apart. The more qualified leads you can capture, the more credibility your business will have.

Bottom of Funnel (BOFU): Conversion

Prospects are now deciding which product or service to buy (potential customers with the most buying intent). The goal is to make it as easy as possible for them to do business with you over your competitors. BOFU tactics: offering free trials or product demos, collecting and displaying customer testimonials & reviews, creating clear calls-to-action, and landing pages that address final objections.

Loyalty & Advocacy Stage

​​The customer journey doesn’t end once someone makes a purchase from you. It’s just the beginning. Converting happy customers into repeat buyers and brand advocates is essential for your business to grow. According to Bain & Company, it costs 5 to 25 times more to acquire a new customer than to retain an existing one, and increasing customer retention by just 5 percent increases profits by 25 percent to 95 percent.

Invest in loyalty programs, world-class customer service, personalized follow-up email sequences, and creating shareable experiences. Your existing customers are your most important marketing asset.

Marketing Funnel Strategies for SMBs

Knowing your funnel stages is only half the battle; the other is implementation when time and resources are short. These three strategies are the foundation of any funnel process: attract the right customer to your funnel, nurture them with helpful content at every stage, and track data to refine your funnel over time. Nail these basics before you take on more advanced techniques.

Know Your Target Customer

Before you start producing content for each funnel stage, you need to have a clear picture of your target customer. Analyze your existing customer base with Google Analytics to understand demographics, behavior patterns, and more. Create comprehensive buyer personas with pain points, goals, and buying behavior. Study your competitors’ audiences to uncover opportunities.

Create Stage-Specific Content

One of the most common mistakes is using the same message at all funnel stages. Your content should be tailored to each stage. If you’re at the TOFU stage, it should be more educational and informational and focus on answering common questions. As you move to MOFU, the content should be more solution-focused and compare various approaches. BOFU is all about product-specific content that will drive conversions. Effective SEO writing will help you target the right audience at each stage.

Implement Full-Funnel Measurement

Making decisions based on data is the only way to distinguish effective marketing strategies from inefficient ones. Measure specific metrics at each funnel stage using Google Analytics, and optimize your approach based on the drop-off points you notice. For example, if you have high traffic but low engagement, it might indicate that your TOFU content is attracting the wrong audience. If you’re not converting enough leads, it’s a sign that your BOFU tactics need refinement.

Key Metrics to Track

Measure the correct metrics at each stage of your funnel. You can use these metrics to help optimize your funnel and prove ROI. At the top of the funnel, keep track of page views, impressions, click-through rates, and social engagement to measure awareness. In the middle of the funnel, track time on page, bounce rate, email open rates, and content downloads to measure consideration. At the bottom of the funnel, focus on conversion rate, cost per acquisition (CPA), and return on ad spend (ROAS).

Remember to track Customer Lifetime Value (LTV), which measures how much revenue a customer can bring over your entire relationship. Each of these KPIs (key performance indicators) can help you decide where to allocate your marketing budget. To learn more about tracking these metrics, check out my article on Share of Voice.

Common Marketing Funnel Mistakes to Avoid

Many small businesses focus exclusively on bottom-funnel tactics, neglecting the awareness and consideration stages that build a sustainable pipeline.

Common mistakes include:

• Not tracking your metrics for each stage of the funnel.
• Messaging everyone the same way regardless of where they are in their buying journey.
• Neglecting your existing customers after the sale is done.
• The budget spread across too many channels.

Choose one or two tactics per funnel stage, and execute them well before expanding.