Marketing Funnels Explained: How To Use a Marketing Funnel

Customers might discover your business in a variety of ways: through word of mouth, search engines, advertisements, or content marketing. Turning these initial interactions into sales is complicated. In fact, ecommerce brands have an average conversion rate of just 2% to 3%.

To boost yours, you’ll need an effective marketing funnel strategy to guide potential customers from awareness of your brand to purchase and beyond, turning potential buyers into loyal customers.

Ahead, learn the different marketing funnel stages, discover how to create your own funnel, and dive into the marketing tactics you can use at each stage.

What is a marketing funnel? 

A marketing funnel is a visual representation of the customer journey that businesses use to inform marketing campaigns. A marketing funnel helps you match your marketing strategy to where potential customers are in their journeys. That’s because what works for customers just learning about your business might not work for existing customers.

Marketing funnel vs. sales funnel

The terms “marketing funnel” and “sales funnel” are often used interchangeably, though they aren’t exactly the same. Sometimes, marketing funnels end with lead capture, whereas sales funnels always end with a purchase. 

Companies with distinct marketing and sales teams might use both types of funnels. The marketing team could usher potential marketing funnel leads toward a sales call, for example. Then the sales team could funnel those leads toward making a purchase. 

Why is the marketing funnel important?

Customers at different points in their journey need different things. The marketing funnel provides a framework to tailor your marketing efforts to different customer stages.

Someone at the awareness stage might need to learn about your brand values before deciding to explore your products. Someone who has purchased from you previously, on the other hand, might need to learn about the technical specifications of your newest product before making a purchase.

Organizing consumers into a marketing funnel can also help you understand where customers drop off, which can improve your marketing strategies in the future. 

Stages of the marketing funnel

1. Top of funnel (TOFU)
2. Middle of funnel (MOFU)
3. Bottom of funnel (BOFU)

Customers fall into three main stages of the marketing funnel:

1. Top of funnel (TOFU)

The top and broadest part of the funnel represents anyone who’s heard about your product or business, whether through your own marketing efforts, a recommendation from a friend, a Google search, or a social media post. These folks are aware that your business exists—that’s why TOFU is also known as the awareness stage—but may not have identified a need for your products. 

2. Middle of funnel (MOFU)

The middle of the funnel—also known as the consideration stage—is all about developing and nurturing the relationships you have with the people you engaged with during the awareness phase. 

By the time a prospect reaches the consideration stage, they’re aware of your business, what you do, and the types of products you sell. They might be on an email list or follow you on social media. They’ve also identified a need for your product, whether to solve a problem, spark joy, or give as a gift.

3. Bottom of funnel (BOFU)

This is the big moment: the conversion stage. You’ve posted some great social media content, sent emails that were on point, maybe even worked with an influencer or two, and customers are almost ready to make a purchase. Now, it’s time to drive home your product benefits and unique value proposition, overcome sales objections, and get prospects to click Buy Now. 

The BOFU stage of the ecommerce funnel is two-pronged, which means you aren’t quite done once the customer makes their purchase. In addition to the conversion stage, it also involves a post-purchase loyalty phase. The goal during this last stage is to keep customers coming back and encourage them to recommend your products.

Marketing funnel tactics

• Top-of-funnel marketing tactics
• Middle-of-funnel marketing tactics
• Bottom-of-funnel marketing tactics

The ideal strategy for each marketing funnel stage depends on your target audience and business goals, but there are techniques that tend to work best at specific stages. 

Top-of-funnel marketing tactics

• Instagram advertising

• SEO

• Influencer marketing

Top-of-funnel awareness campaigns are all about getting consumers familiar with your brand and communicating your brand personality. You can do this in a few different ways:

Instagram advertising

“For creative, awareness is going to be brand storytelling—the fun, feel-good, emotional creative,” says growth strategy expert Jaclyn VanSloten, who runs the marketing firm Femra Consulting. If you’re using an Instagram advertising strategy for this stage, Jaclyn recommends using immersive formats like Instagram Story and Instagram Reel ads that take up the viewer’s full screen. 

Here’s an example from cookware brand Made In. In this Instagram Story ad featuring user-generated content, creator Morgan Rhodes captures Made In’s brand aesthetics before even showcasing its product. This helps TOFU consumers associate Made In with beautiful interior design. 

SEO

You can reach TOFU consumers through other marketing channels, too. For example, adding search engine optimization (SEO) features to your website can promote your business by helping you increase web traffic. 

Influencer marketing 

Influencer marketing is another strategy. “It’s getting very expensive to acquire new audiences through paid search and social platforms,” says Amanda Tallon, demand generation manager at performance marketing agency Directive. “What I recommend to brands right now is to work with micro-influencers or use the audience that they already have built out.” 

If you’re a small business, you might consider starting with nano-influencers (between 500 and 10,000 followers) or micro-influencers (between 10,000 and 99,999 followers). These creators often charge lower prices than influencers with larger audiences. 

Look for creators who already create content that relates to your industry. This ensures sponsored posts feel genuine and that the audience is already interested in your product category.

Hiring a public relations professional can also help you increase brand awareness by getting your company into the press. Sometimes, influencer seeding (meaning giving products to influencers for free) can get your products into news stories.

Skin care brand Jaxon Lane used micro-influencers to increase brand awareness, and the strategy ended up snowballing into PR. “A lot of the writers writing for magazines were actually following some of these micro-influencers, and then they would reach out to our publicist or to our team directly and say, ’Hey, I just saw this review about the sheet mask. Can you please send me one?’” says Jaxon Lane cofounder Alex Penfold on Shopify Masters. “It grew from there.”

Middle-of-funnel marketing tactics

• Email marketing

• Content marketing

• Organic social posts

Now that consumers have a basic awareness of your brand, it’s time to educate them on your brand and products in more depth and convince them to choose you over your competitors. You can do this with a few types of marketing:

Email marketing

Amanda cites email marketing as the best tactic for engaging prospective customers in the MOFU stage. “You can develop a strong personal story with email marketing,” Amanda says. “You can do quite a bit of brand-building in someone’s personal inbox.” 

If customers are on your email list, they’ve already bought into your brand at some level. You can then push them through the email marketing funnel to encourage purchases and cultivate post-purchase customer loyalty. To encourage email list sign-ups, businesses use lead generation strategies like discount code pop-ups on their websites or promises of compelling content or early access to product drops. 

Here’s an example of a MOFU marketing email from hair and bodycare brand Oribe. In this message, Oribe details the history and benefits of its Supershine Moisturizing Cream with stylized product photos. This educates the consumer on the product while conveying a slice of Oribe’s luxe brand identity.

Content marketing

You can also use content marketing formats like blogs and explainer videos to educate MOFU consumers about your brand, products, or industry and drive targeted traffic to your site. Organic social media marketing is also an effective way to reach consumers at this stage of the marketing funnel: If people have decided to follow you, you know they’re curious to learn more about your company. 

Organic social posts

Organic social media posts can familiarize potential customers with your brand voice and help you develop a relationship with them through direct engagement. To engage customers, try posting questions and asking users to respond in comments or posting polls in your Stories. You can also ask users to share content with their friends.

Whichever marketing formats you use, consider sharing customer testimonials at this stage. They can help convince potential buyers that your products are worth it and that they can trust your brand.

Bottom-of-funnel marketing tactics

• Paid ads

• Abandoned cart emails

• Accessible customer service

• Thank you emails and loyalty programs

• Customer interviews

Now, the customer is almost ready to complete their purchase. Focus on streamlining the checkout process, providing top-notch customer service, and answering any lingering questions on your product pages. Remind customers who’ve visited your website or viewed your products to complete their orders, and consider offering discounts if price is a common sales objection.

Paid ads

“You can run paid ads at any stage of your marketing funnel,” Amanda says. “But if you don’t have a lot of money, run ads at the purchase stage to get the most revenue for your ad spend.”

Your ad creative should be direct. “Conversion formats are going to be what the product is, your offer, and what the benefit is—harder-hitting messages,” says Jaclyn. On Instagram, she recommends feed and carousel ads with clear calls to action. Retargeting ads are particularly effective. This type of ad targets customers who have previously visited your website, reminding them of the specific products they considered.

You can use Instagram and Facebook ads to reach customers who’ve visited your website by adding the Meta pixel to your Shopify site. This piece of code tracks users’ activity on your website. You can easily create retargeting ads on these platforms by installing the Facebook & Instagram app, which imports product data to help you show customers the exact products they left behind, on your Shopify website.

Abandoned cart emails

Similarly, abandoned cart emails and abandoned browse emails let you target customers who left your site without completing their purchases. You can set up customized automation series with Shopify Flow.

Here’s an abandoned cart email from makeup and skin care brand Glossier, with the subject line “Your cart is 15% off.” This discount offers a solution for customers who view price as a barrier to completing their purchases. It also streamlines the checkout process: Customers can just click Shop Now to keep browsing.

Accessible customer service

At the conversion stage, you’ll also want to make your customer service team available to customers if they have any questions. The goal is to remove any obstacles in their path toward purchase and build trust.

Thank you emails and loyalty programs

Once the customer completes their purchase, it’s time to start cultivating loyalty. Thank you emails, which you can automate with Shopify Messaging, show customers you value their business. You can also create a referral program or loyalty program to incentivize buyers to recommend your brand and make future purchases.

Customer interviews

Speaking to customers directly can also encourage them to come back. “No matter how big your direct-to-consumer business is, it is so valuable,” says Debbie Wei Mullin, founder of Copper Cow Coffee, on Shopify Masters. “Something that we’ve always done is call our customers. We ask them if they’re willing to be recorded in the interview, and people are always so excited to be part of a brand that way.”

This shows customers you value their opinions. It can also reveal insights about your products. Debbie, for example, discovered that customers reserved her products for special occasions. She decided to launch a ground coffee line to make it easier for customers to drink Copper Cow Coffee every day.

How to develop a marketing funnel 

1. Identify your target audience
2. Try funnel hacking
3. Use AOV to set a consideration timeline
4. Analyze customer lifetime value
5. Use post-purchase surveys

1. Identify your target audience 

Before you can deploy a marketing funnel strategy, you need to know exactly who you’re marketing to. That’s where buyer personas come in.

Buyer personas are fictional characters that represent your target audience. They help bring your audience to life and allow you to quickly assess whether a marketing idea will resonate with them. It gets more granular than asking, “Will this messaging resonate with our target demographic?” Instead, you can ask, “How would Joe Persona, an individual with real pain points and interests, respond?”

Identifying your target audience and creating buyer personas is part of developing a marketing plan. You can use a free marketing plan template to help you, or you can use a standalone buyer persona template.

2. Try funnel hacking

Funnel hacking is the practice of mimicking competitors’ marketing funnels. This can help you develop a full funnel marketing strategy.

For example, you may notice that competitors target TOFU consumers with paid social media ads, MOFU consumers with email and content marketing, and BOFU consumers with retargeting ads and SMS marketing. You could adopt these strategies for your own target audience.

As you put these strategies into practice, carefully track them to find out if your competitor’s tactics also work for you.

3. Use AOV to set a consideration timeline

Your average order value (AOV) is the average amount your customers spend per transaction. For example, if your shop’s revenue is $2,000 and you’ve had 100 orders, your AOV is $20.

AOV can inform how much focus you put on each part of your marketing funnel because customers tend to think longer about making large purchases than smaller ones. If you sell fine jewelry and your AOV is $1,000, the consideration phase of your funnel will likely be much longer than that of a shop with an AOV of $20. 

If your product has a long consideration timeline, spend more money developing content that nurtures people throughout the consideration phase. Low AOV indicates a shorter consideration timeline, so you should focus more on the awareness phase to acquire new customers who will move through the funnel quickly.

4. Analyze customer lifetime value

Dive deeper into the entire customer journey by examining which marketing channels brought the most (or best) customers to checkout. This tells you where to invest during the BOFU stage. 

Analytics tools like Shopify Analytics show you the last action a customer took before making a purchase. Looking at customer lifetime value (CLV) can paint a more accurate picture of your best customers than the number of conversions alone. 

“Conversions may be a little short-sighted,” Neil Hoyne, chief strategist at Google, says on Shopify Masters. “You lose touch with those customers who may come back multiple times, contribute a lot of value, but are lost in the noise of people who are simply transactional.” 

Instead of focusing your marketing efforts on the channels that bring in the most customers, Neil suggests looking at which channels bring in your best customers. 

Neil says that viewing marketing through a CLV-focused lens allows you to build a more profitable customer base, which in turn “means that your customers are gonna start sticking with you longer, spending more money, and your business is more successful because of them.”

5. Use post-purchase surveys

Analytics tools can show you the last action a customer took before making a purchase, but that data doesn’t take into consideration the longer pathway that brought customers to the point of purchase.

Instead of looking solely at that “last click,” Amanda from Directive recommends setting up post-purchase surveys. Otherwise, you’ll learn what works in BOFU but miss what’s going on in the earlier stages.

One of Amanda’s clients was ready to give up on TikTok marketing after both the platform and Google Analytics showed few conversions. But when they ran a post-purchase survey, TikTok turned out to be a leading platform for introducing the client’s brand to new purchasers. 

“After that, we doubled down on our TikTok ad spend and realized that it was opening up an entirely new market for us,” Amanda says.

If you run a post-purchase survey, include a question about how the customer originally found out about your business. Be sure to leave a comment box alongside your answer options so respondents can provide an accurate response or more context.

You can also pick up the phone, which can add a personal touch to your post-purchase interactions. Take wellness brand Renu Therapy, which specializes in cold plunge tanks. When the company first started making sales, founder Bill Bachand called every customer to thank them. 

“I just got to know a little bit about them,” Bill says on Shopify Masters. Now Renu Therapy has a team that makes those calls, but the goal is the same: getting to know the customer and understanding why they bought the product.