CuriousOwl

Before we get into the intricacies of e-commerce and the “e-commerce marketing funnel”, let us understand the concept of a marketing funnel.

What is a “marketing funnel”?

A marketing funnel is a strategic visualization of the customer journey from lead to committed buyer. It shows the various steps that a prospective customer takes to move from one stage of the buying process to the next.

A “marketing funnel” reflects the consumer’s state of mind during the purchase cycle. It is derived from the four stages of a typical buyer journey called AIDA:

1. Attention
2. Interest
3. Desire
4. Action

The marketing funnel could look like this:

Image source: https://influencermarketinghub.com/how-to-build-a-marketing-funnel/

Why is a marketing funnel important?

No one can be sure of where a potential customer is in the buying process. However, the customer needs help to move to the stage. To avoid missing a potential lead or customer, a company has to make sure that it has a map, or a funnel, to channel these potential customers to its website or product.

A marketing funnel is thus an essential tool that allows the marketing team to design marketing plans to attract, engage and convert potential customers through relevant marketing material. It is also important because it is a measurable activity and can help prevent customer leakages, i.e., customers dropping out at different stages before buying.

The growing trend of e-commerce

Massive digitalization, growth of digital and social media channels, and the Covid-19 pandemic have led companies to move or develop an online marketplace that provides a customized, one-to-one shopping experience to customers.

The online shopping journey is different from that of an online purchase. Customers today are more informed, more connected and more empowered.

The growth of digital marketing and growing consumption of content on digital devices has led to modifications in the traditional AIDA model of a marketing funnel.

What are the “tricks” (or tips) of successful e-commerce marketing?

E-commerce relies entirely on defining and optimizing the customer purchase journey through suitable product offers, content and digital channels to drive leads to the website. Any initiative that reduces the friction along the customer journey and engages the customer seamlessly leads to a successful e-commerce marketing gain.

The most successful e-commerce marketing companies follow the following tips to drive their growth:

1. Mobile-optimized website
2. Real-time personalization of offers, products and other touchpoints
3. Reduce “cart abandonment” before checkout
4. Customer benefits such as free shipping, product discounts or a live chat facility
5. Build trust through genuine customer reviews
6. Have a robust email marketing process
7. Reward loyal customers
8. Upsell and cross-sell products on the website
9. Use content marketing and social media as much as possible.
10. Finally, ensure a robust, functioning and adaptable “e-commerce digital marketing funnel” to drive “strangers into becoming friends.”

What is an E-commerce Digital Marketing Funnel?

An e-commerce marketing funnel visualises the journey a customer takes going through the online buying cycle.

The e-commerce marketing funnel has three principal stages covering customer acquisition:

1. Top Of The Funnel (TOFU)
   1. The awareness or lead prospection stage
   2. The potential customer is looking or searching for a solution to a problem they face.
   3. He or she may not necessarily be aware of or interested in a particular company’s product at this stage.
   4. The marketing effort at this stage is to draw in the most significant number of potential customers to the company’s website.
2. Middle Of The Funnel (MOFU)
   1. Also called the consideration or lead generation stage.
   2. At this stage, the customer has possibly found a solution to his or her problem and is searching for brands to implement that solution.
   3. The company’s brand could enter the consideration set of the customer.
   4. At this stage, the marketing effort is to position the brand in the customer’s consideration set, build a connection with the customer and present evidence of why the brand is the best solution to the problem.
3. Bottom Of The Funnel (BOFU)
   1. This stage is also called the conversion stage.
   2. This is where the lead is converted into a proper customer and is ready to buy the company’s brand.
   3. The marketing effort at this stage needs to reinforce the purchase decision and “tip” the customer into the purchase by highlighting the unique selling points of the product and offering an exciting offer with a simple or low threshold.

In e-commerce, the funnel goes beyond the customer acquisition journey described above and adds in two more stages for customer retention and repeat business:

1. Loyalty or Repeat business
   1. It is cheaper to retain an existing customer than get a new one.
   2. Loyal customers know what to expect from their company or brand and do not need to go through the earlier stages of the funnel.
   3. The marketing effort at this stage should incentivize the customer to visit the website or engage with the company again and again.
2. Advocacy or Referrals
   1. Recommendations by existing customers drive new customers directly to the consideration stage, leading to faster conversions.
   2. Advocacy works only when an existing customer is sufficiently engaged and convinced enough of the product quality and company reliability, and purpose.
   3. The marketing effort at this stage is to encourage existing customers to recommend the product or brand to others and create new customers.

Visually, the e-commerce marketing funnel can be represented as follows:

Image source: https://sproutsocial.com/glossary/marketing-funnel/

Minimum elements of any e-commerce marketing funnel

The following elements are a must-have for any e-commerce marketing funnel:

1. Lead magnets to drive customers to the company landing page
2. Paid ads on social media and other channels to drive leads
3. The sales lead page captures all the relevant information from the lead and pushes them further into the funnel.
4. Checkout page to complete and pay for the purchase
5. “Thank You” or “Congratulations” page to validate the customer’s decision to act on the lead magnet and progress further along the purchase cycle.
6. Email follow up to continue engaging the customer even after purchase and drive to repeat purchase or refer the company/product to other potential customers.

How can a company measure the success of its e-commerce marketing funnel?

A marketing funnel is not a static “build it and forget it” mechanism. It is a real-time representation of how the marketplace perceives products and brands and reflects the changes and evolutions in the customer purchase cycle over time.

It is, therefore, essential to integrate the following metrics and tools into the e-commerce marketing funnel to ensure that it is delivering as per expectations:

1. Track website traffic
2. Calculate the conversion rate
3. Measure redemption rates of offers and promotions
4. Track cart abandonment and cart recovery rates
5. Personalize content at every stage
6. Use A/B testing to ensure the website delivers a smooth and enjoyable customer experience.

Examples of e-commerce marketing channels

There are several helpful e-commerce marketing channels, including:

1. Social media marketing (ads on social media channels)
2. Content marketing (blogs, videos, white papers, case studies)
3. Search engine marketing (this includes both SEO and paid advertising)
4. Email marketing (to cover every stage of the funnel described above)
5. Affiliate marketing (to drive customers to the website)
6. Influencer marketing (to build customer communities around trust-worthy or “influential” people such as celebrities)
7. Local area marketing channels to engage customers in specific localities or areas

Four points to boost growth with an e-commerce marketing funnel:

1. Ensure each stage of the funnel has its own clearly defined marketing and content plan
2. Time taken for a sale is longer at the TOFU stage than at the BOFU stage.
3. Measurable ROI is faster at the BOFU stage, but marketing at this stage can also be more expensive.
4. Use maximum marketing effort at the TOFU stage.

Conclusion

According to experts, only 10-15% of all leads collected convert into actual customers. E-commerce marketing companies need to have an effective and dynamic marketing funnel that can help boost this conversion ratio.

An e-commerce site cannot function without a well-designed and flexible marketing funnel, primarily because the customer engagement is not face-to-face, and the risk of a potential customer dropping out is very big. An e-commerce website has a lot to gain by choosing or building the proper marketing funnel:

1. Higher productivity to reduce time on unqualified leads and improve overall productivity
2. Better forecasting to reduce funnel leakage and predict the success of a marketing or sales action
3. Stronger customer relations will help the company understand the customer’s motivations, their needs and what prevents them from moving to the next stage of the customer journey.
4. Better customer insights for product development that will help the company improve the product or service offered
5. Higher ROI because the proper funnel can help a company run many processes automatically and can also help increase product or service sales

All potential e-commerce customers will go through the funnel stages described above. However, not all customers are the same or follow the same trajectory. Different customers have different needs; some will move quickly through the various stages, and some will take longer at one or more funnel stages.

The best way to ensure the e-commerce marketing funnel works properly is to understand the buyer’s journey and design content and marketing tools to optimize each funnel stage.