Traversing the Customer Funnel
By: Abhishek Chakravarty
Tags: Product Management, Startup, Marketing

Traversing the Customer Funnel

What Product Managers need to know about Lead Management

Photo by Shengjun Shi

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Last week, we talked about the first principles behind a Customer Acquisition Funnel, and how you might think about designing and executing your own customer acquisition or lead funnel.

We also discussed the funnel’s underlying concept, AIDA, and introduced its stages — TOFU, MOFU & BOFU. Here’s a quick mental model of how everything connects thus far.

TOFU = Top of the Funnel → The Awareness & Attention Stage.

= Top of the Funnel → The Awareness & Attention Stage. MOFU = Middle of the Funnel → The Interest and Desire Stage.

= Middle of the Funnel → The Interest and Desire Stage. BOFU = Bottom of the Funnel → The “I am sold on this, I’ll pay” Stage.

In this post, we’ll discuss the different stages of the funnel in some detail, and look at how and what activities are typically planned for each stage.

Top of the Funnel (TOFU)

Your customer acquisition funnel is the widest here, which means you’ll have marketing material that will cast a wide but effective net to promote your product.

Wide — because at this point, you’ll want to target people that may be interested in your product — through broad/mass marketing content

Effective — so that you are targeting and generating quality leads — in other words, you are minimizing bringing people into your funnel that have absolutely no interest in your product.

Your marketing materials at the Top of the Funnel are geared towards

Introducing your product Capturing some basic information about the lead (Email, Name) — in a privacy-compliant way (look up GDPR)

Now, capturing at least an email address is important, and here’s why.

Remember in this stage, most leads may be learning about your product for the very first time and it’s highly unlikely people will be convinced right away to buy something that they hardly know enough about.

You’ll have to handhold them and nurture them — showing them the value proposition of your product, answering their questions, piquing their interest, ultimately bringing them to a point where they are compelled to buy your product/ subscription.

To do all this, You’ll need to communicate with them constantly — and hence the need for at least an email address.

Marketing in TOFU

Your marketing materials in this stage generally are Free Blog posts, Social Media content, Free videos & Podcasts, and of course, newsletters are pretty hot these days too. (I didn’t mention TV ads, Super bowl ads, etc. which you can certainly do if you have lots of dough — but returns on marketing investment are hard to measure)

Here are some real-world marketing activities to generate leads at the Top of the lead funnel

Paid ads on Google, FB, or other Social media → Drive traffic to your landing page→ Request to Enter email in exchange for some info, free sign-up

→ Drive traffic to your landing page→ Request to Enter email in exchange for some info, free sign-up Promoting a well-done Video, Podcasts, etc . — Asking them to Like/Subscribe

. — Asking them to Like/Subscribe Promoting eye-catching Blog content, ebooks, infographics, Newsletters around the problem that your product solves, and asking people to voluntarily subscribe in exchange for their email.

The Goal for Marketing Content in TOFU is to make a crisp, but solid first impression to a potential lead — with a clear Call to Action for them.

Middle of the Funnel (MOFU)

Middle of the Funnel marketing strategy is all about nurturing your TOFU leads, qualifying them, and ‘scoring’ your leads to identify the ones that are most likely to convert into customers and subtly nudge them closer to buying your product. As you’ll see in this stage, your Sales team begins to get involved too.

Marketing’s role in the Middle of the Funnel is

Nurture & Evaluate their TOFU leads Find the really high-quality/high scoring ones Get them to buy the product.

To do #1 & #2, Marketing will typically use drip campaigns that deliver periodic and progressive content to their TOFU leads to progress them through the funnel and simultaneously score them on purchase readiness based on their engagement with the marketing Content.

Here Marketing automation company Salesforce shows an overview of a drip campaign. See the full infographic.

The highest-quality/ highest scoring leads are then transferred from Marketing to Sales to execute #3. These leads are called “Marketing Qualified Leads” or MQL.

Let’s trace the journey of a Lead to an MQL with an example below.

My Runner’s World example

After I became a TOFU lead for Runner’s World, their marketing engines roared into action and started sending me these periodic emails about running. Of course, these emails are part of a drip campaign built into their Marketing Automation Software.

Anyway, some of these emails are “FREE” — I can read them without a paywall. The free emails provide enough value for me to not unsubscribe from their mailing list but at the same time tell me that I am missing out on a lot of value by not signing up for the “exclusive” membership. Runner’s World at this point is nurturing me, trying to convince me of their value proposition so I make am closer to make a purchase.

That’s classic Middle of the Funnel marketing — subtly trying to progress a FREE subscriber to a paying customer.

Once in awhile, they’ll send me an “Exclusive” email sitting behind a paywall to get me to sign up to their exclusive content — like this one below.

Typically these would be their most compelling stories that have perhaps proven to maximize the probability of converting a free subscriber to a paying one. (Thus far, they’ve been unsuccessful if you are curious). But their marketing machine will keep trying.

Lead Scoring

A Marketing Automation software (e.g. Salesforce, Hubspot, etc.) can track how a lead interacts with every piece of content, what emails were opened/read, what buttons on the webpages were clicked, etc. and based on this engagement the software will assign (pre-determined) scores as well as adjust the delivery of future content.

Here is a basic Lead Scoring Example

The software’s tracking ability enables marketing to understand the quality of the leads they are generating up the funnel and gauge the likelihood of a lead making a favorable purchase decision.

A high Scoring lead becomes an MQL and then handed over to Sales. This strategy ensures that Salespeople are not wasting their time on leads that are not likely to buy.

Bottom of the Funnel (BOFU)

Marketing Qualified Leads (MQLs) now enter the Bottom of the Funnel — the final stage of your customer acquisition plan.

Ideally, your MQLs are very high quality and convert into customers without the need for much more selling. But some products need more handholding than others. So in such cases, Sales takes over these Marketing Qualified leads and further vets them for purchase readiness — all the time trying to get them closer to purchase.

Depending upon the product, industry, and customer expectations, Sales will carry out a number of activities to understand purchase readiness. These activities may be Demos & trials, face to face Consultations, webinars, Customer Events, and more.

Sales Qualified Leads

MQLs that are closest to the end of the funnel (i.e. closest to making a buy decision) are sometimes termed as Sales Qualified Leads or SQLs.

Typically, for an MQL to become an SQL, the lead must have a need for the product or service, the product and service should be meaningfully solving that need, they must have the budget to purchase the product, the infrastructure to use it, and finally at least a tentative timeline to make the purchase.

If a vast majority of MQLs are not converting into SQLs — its time for marketing to take a look at the top half of the funnel, diagnose and adjust the filters and parameters that define a Marketing Qualified Lead.

By the way, just because a lead was tagged as Sales Qualified doesn’t mean it’s guaranteed to close. But if the funnel is designed well and the marketing and sales activities are well thought out and consistent — a vast majority of SQLs will go on to become real paying customers, albeit at different times. Therefore timely and consistent follow-ups are the holy grail of closing a deal successfully.

Customer Retention

BOFU is not the end of your customer acquisition plan. Your customer acquisition plan must also have a robust retention plan. Remember that it’s at least 5x–7x more expensive to acquire a new customer than to retain an existing customer — so treat your customers very very well, delight them. I’ll write about customer retention strategies in another post perhaps.

Conducting the Orchestra — The Product Manager

As you can see, there is a lot that goes on to create and execute a successful Customer Acquisition Strategy. And while a vast majority of these activities are carried out by Marketing & Sales teams — the Product Manager must act as the conductor of this orchestra — bringing everything together to ensure the execution details are aligned to that strategy.

If you are a Product Manager and are new to this process I recommend you to be involved at every step of the way of designing the Lead Management funnel.

Admittedly, the funnel might be a bit different based on the Product (hardware/software, etc.), Industry, Organization Structure (Inside vs. Field Sales) we are talking about, but the overall idea remains the same.

You generate leads → show them the value proposition of your product → get them to become your customers → Retain them as customers.

Alright, that’s all for this post. I hope you enjoyed the post as much as I enjoyed writing it! If you have questions, lets connect on Twitter!

Thank you for reading & take care.