Marketing Funnels Explained: How To Use a Marketing Funnel

Marketing funnels represent the journey of a customer from “hi” to “buy.” Here’s why they matter and how to create yours.

Your customers discover your business in a variety of ways—through word of mouth, advertisements, and digital marketing.

Creating effective strategies to turn these initial interactions into sales is complicated. How can you nurture and guide prospects from awareness of your brand through to purchasing your product and becoming loyal customers? You can start by mapping out the interactions a customer has with your business to create an effective marketing funnel strategy.

In this article, we’ll explain the different marketing funnel stages, walk you through 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 used by businesses to inform marketing campaigns. A marketing funnel is important because it matches your marketing strategy to where potential customers are in their journeys. What works for customers learning about your business might not work for existing customers, for example.

Marketers typically think about the marketing funnel in three distinct stages: 

• Top of funnel (TOFU)

• Middle of funnel (MOFU)

• Bottom of funnel (BOFU)

Stages of the marketing funnel

• Top of funnel (TOFU)
• Middle of funnel (MOFU)
• Bottom of funnel (BOFU)

The ideal strategy for each marketing funnel stage depends on your target audience and business goals, but there are techniques that work best at specific stages. Here’s what to know about each stage:

1. Top of funnel (TOFU)

The top and broadest part of the funnel represents anyone who hears about your product or business. This might be 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 a need for one or more of your products. 

Developing organic content for this stage in the funnel sets you up for long-term success. For example, publishing a blog on your site not only helps you get traffic via search engine optimization (SEO), it further nurtures customers who want to learn more about your products, business, or industry. 

A strong social media presence also helps. It allows prospects to learn more about your products, learn your brand’s voice, and engage with you by asking questions, posting comments, or sharing content with friends. 

Inviting someone to join your email list is another great way to engage with consumers and teach them more about your products. Many businesses offer a discount code to persuade people to join; others simply promise compelling content. Whatever you decide, providing the option to subscribe gives you a way to stay in touch with someone, even if they haven’t made a purchase yet.

When you need to expand your reach further, try influencer marketing. 

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

Micro-influencers are creators with between 10,000 and 100,000 followers on social media. 

“If your brand is in line with that micro-influencer, chances are their followers are also going to be in line with your business,” Amanda says.

Though we’re talking about TOFU right now, the methods you use to drive traffic to your site should target prospects you believe will eventually convert. For example, you might drive a lot of traffic to your website via a podcast, but if the listeners aren’t in your target audience, they may never become paying customers. 

2. Middle of funnel (MOFU)

The middle of the funnel, or consideration stage, is all about developing and nurturing the relationships you have with the people you engaged with during the awareness phase. 

When a prospect reaches the consideration stage, they’ve identified a need for your product. They might need it to solve a problem, spark joy, or give as a gift. When someone reaches this 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. 

Amanda cites email marketing as the best tactic for prospective customers in the consideration stage of the marketing funnel. If they are on your email list, then they have already bought into your brand at some level. 

“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.”

3. Bottom of funnel (BOFU)

This is the big moment—you’ve posted some great social media content, sent emails that were on point, maybe even worked with an influencer or two. Now, it’s time to drive home your product benefits, business ethos, and unique value proposition to get prospects to make purchases. 

Two tactics are particularly effective at this stage:

Customer conversations

A customer will likely reach out to you only when they’re actively looking to make a purchase. They’ll look to you to remove any obstacles in their path. Speaking directly to a customer builds trust, gives them a sense of who you are and what you’re like to work with, and can remove any remaining concerns.

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.” 

Paid ads can go farther at this stage in the funnel because prospects already know who you are, what you do, and the products you sell. Ads serve as reminders and should include copy that drives home your unique value proposition.

How to develop a marketing funnel

1. Identify your target audience
2. Use average order value to set a consideration timeline
3. Track attribution

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. Personas help bring your audience to life and allow you to quickly assess whether an idea will resonate. Instead of asking, “Will this messaging resonate with our target demographic?” you can ask, “How would Joe Persona, an individual with real pain points and interests, respond?”

2. Use average order value to set a consideration timeline

Your average order value (AOV) is the average value of your customers’ purchases 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. 

With this in mind, a high AOV tends to mean a long consideration timeline, and you’ll want to spend more money developing content that nurtures people throughout the consideration phase. Low AOV indicates a shorter consideration timeline, so you’ll focus more on the awareness phase, acquiring new customers who will move through the funnel quickly.

This model helps differentiate where you place your budget and the emphasis you put on the different parts of your funnel.

3. Track attribution

Once you’ve created your buyer personas and identified which stage you want to focus on (awareness for low AOV businesses and consideration for high AOV), dive deeper into the customer journey by examining which marketing channels brought the most (or best) customers to the next stage in the funnel. This tells you where to invest your efforts.

Analytics tools typically show you the last action a customer took before making a purchase, but that doesn’t take into consideration content that’s nurtured customers to the point of purchase. Instead of looking just at that “last click,” Amanda recommends setting up post-purchase surveys.

One client, she recalls, 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 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. 

Another way to determine which channels to focus on is to look at customer lifetime value (CLV). 

“Conversions may be a little short-sighted,” Neil Hoyne, chief strategist for data and measurement 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. Once you’ve identified your most valuable, loyal customers (those with the highest CLV), Neil says to find the answers to questions like: Where do they come from? What do they buy? When do they buy? What do they need from me? 

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.”

Marketing funnel FAQ

What is a marketing funnel?

A marketing funnel is a conceptual model that represents the customer journey—from the moment a prospect discovers your business, brand, product, or service to the moment they take a specific action or purchase from you.

What are the stages of a marketing funnel?

1. Top of funnel (TOFU), or acquisition

2. Middle of funnel (MOFU), or consideration

3. Bottom of funnel (BOFU), or conversion

Why are marketing funnels important?

• Helps encourage more meaningful growth
• Helps you better understand your target audience
• Helps you to master your purchase cycle

Is a marketing funnel the same thing as a sales funnel?

The marketing and sales funnel follow the same framework, and these terms are often used interchangeably, since marketing typically drives sales.