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General Assembly

STUDY GUIDE

THE CONVERSION FUNNEL


There are two key frameworks for understanding a customer's "path to purchase" :

» The Marketing Funnel


Used to align marketing teams on objectives and track customers on an individual level.

» The Customer Decision Journey


Used to analyze customers' psychological and emotional reasons for making buying decisions.

The Conversion Funnel Then and Now


The marketing funnel originated in 1898 with the "AIDA" model:

» Awareness
» Interest
» Desire
» Action

The modern marketing funnel recognizes that the customer journey doesn't end with the sale.
While you may incorporate more or less phases to the funnel based on your business model, this is a good
model to use as a starting point:

» Awareness : AKA Reach, Brand, "Top of Funnel" or TOFU.


» Interest: AKA Consideration, Engagement, Intent, "Middle of Funnel" or MOFU.
» Conversion: AKA Action, Acquisition, Direct Response, Revenue, "Bottom of Funnel" or BOFU.
» Retention: AKA Loyalty, Post-Purchase Experience.
» Referral: AKA Advocacy.
The Customer Decision Journey Then and Now
This originated in 1968 with the Buyer Decision Process, which helped marketers analyze emotional,
psychological and social factors on purchase decisions:
In 2011, McKinsey published a new version of the Customer Decision Journey that has been widely
adopted by the marketing community. Notable differences include:

» While historically customers whittled down your choices during the "Evaluation" stage, today they
often introduce new choices at this moment, thanks to digital channels and tactics like search and
retargeted ads.
» The post-purchase experience has historically been less of a focus for marketers (remember how St.
Elmo’s funnel ended with the sale?). but it’s more and more critical today due to social media and
reviews.
» Loyalty is not a given once someone likes your product. You have to continuously engage, entice, and
bond with them in what is known as the "loyalty loop".

Image: McKinsey

While the Customer Decision Journey is essential for understanding the customer mindset and activities
as they solve their needs, the funnel still plays a critical role in any modern marketer's work. Marketers use
the funnel to articulate their marketing objectives and track customers' progress through the funnel.

You will hear these models referenced time and time again as you continue your digital marketing journey.
They serve as an invaluable shared understanding for marketing teams, agencies, and other business
parties to:

» Align on objectives of marketing campaigns and activities.


» Identify moments in the customer decision process where you are losing prospects.
» Optimize conversion rates from one stage of the funnel to the next.
» Automate messaging to prospects based on where they are in the funnel.
» Ensure you have balanced your marketing efforts between getting new prospects into the funnel,
converting those who you have reached, and retaining existing customers.