The Digital Sales Funnel

Also named as purchasing funnel (wikipedia included), digital marketers usually  call it “marketing funnel”, “sales funnel” or “sales & marketing funnel”.

It does not matter so much how you call it, but this is a “must have” tool at any marketing plan to define user journeys and to connect marketing and sales activities

According to YourBusiness, a marketing funnel is defined as system that tracks the stages consumers/users travel through to a buying (or target) decision, in other words, a user/client/customer journey along your marketing & sales process.

Below we are consolidating some of the most common funnels, drafting a list of general steps for each of them and adding some comments about the Digital Transformation challenges Digital Marketers and Analytics teams may face on ROI tracking and monitoring activities.

Different Industries, different funnels

Funnels are directly linked to the purchase decision process each product and the user journeys our customers will have available. Every industry and market has its general funnel depending on the total value, distribution system and market location. In digital marketing, it is essential to understand these funnels to link your traffic to specific actions, monitor its performance and define optimization processes.

On this list we are presenting a first list of the most common journeys we will face. Each industry and market have different number of steps which will affect the costs (CPI, CPC, CPA) and to the conversion rates along the journey.

Lets see some digital marketing funnels across different industries

  1. Online-offline funnels: Education, construction, automobile, health & care and other high value services or products that requires consulting tend to use this funnel, where “leads generation” is the key step.  You may find this funnel labelled as D2D (direct to distribution).
    • The digital marketing goals is usually to generate registrations (leads) by driving traffic (impressions + clicks) to specific landing pages
    • The leads database is transferred to distribution teams (sales departments, partners) generally via CRM/ERP. The distribution teams may receive these leads in specific Aps or back-end systems.
    • Teams in charge of manage leads (Telesales dept, Agents or re-sellers) will try to arrange consultation meetings (can be online but offline are more popular). CRM-ERP should be used to track the number of calls, lead status, etc.
    • Ideally the systems in charge of handling the leads to the Sales Team should send back the management info to the CRM/ERP for monitoring processes.
    • Afterwards, users can be re-approached with re-targeting campaigns through different channels: SMS or E-Mail marketing, etc..

Example: The education industry in Thailand and Vietnam has an average CPL – cost per lead (user registration) of 8 – 6 USD and an average CR of 3% to 10% depending of the channels.

funnel 1
Common in companies that need personal consultation: Real State, Auto, Education, etc…

Digital Transformation effort to track & optimize: These funnels are perhaps the hardest one to monitor and track ROI (Return on investment) since require the consolidation of off-line & online data sources. Moreover, we will require to ‘capture’ and ‘carry out’ IDs from our external touchpoints when the lead or interest confirmation is submitted in our touchpoint.

Those business that have to differentiate among their customers VS non-customers activities may have extra workloads as well.

2. Most of FMCG and brand awareness plans in general are mostly focused in impressions (and clicks/engagement eventually) only.

    • Marketing plans are based mostly on communication plans to introduce products, trends or promotions
    • On-line communication materials are focused on providing phone numbers or distributors information to convert engagement into Sales, usually off-line
    • Is also possible to connect this funnel with e-commerce platforms (3 case)
      Funnel 2

        FMCG Funnel – Companies like Unilever, Nestle or L’Oreal tend to use this funnel on their branding campaigns

      These funnels are the easiest ones to track since sales-tracking is usually not a requirement.  If offline & online data consolidation efforts are required, data integration among these sources will be needed and increase the complexity of the monitoring processes.

3. Airlines, E-commerce product sales, NGO’s, crowdfunding, retailers and Tourist packages can have a 100% direct sales oriented funnel.

    • Digital Marketing plans can be focused on driving traffic to purchase product pages (Ex: Lazada Thailand), distributors contact page  (EX: Alibaba Thailand) or to custom researches focus on drive traffic to landing pages where where people move from seeing to buying.
    • Leads (or users generation) can also be introduced as a part of the funnels
    • Example: USD crowdfunding  pages have an average CR of 1.5% (Wedidit source)
      amazon

        Amazon, Lazada and big E-commer portals hold a 100% online funnel

      Digital Transformation effort to track & optimize: These processes are usually simpler to track (from Digital Transformation perspective) since the whole funnel occurs online.

      Nevertheless tracking and optimization processes will have to consider events like ‘cancellation’, ‘wrong orders’ or ‘stock depletion’ or other reasons that may force your business to cancel the order. Once that happens, we’ll be forced to review some of the “sales” counted that need to be reviewed.

      Tracking processes of current customers should be easier than those for non-customers, since full online provides may store most of the info needed for future transactions on their ‘Customer profiles’ after they sign-up/

4.  Mobile marketing plans focused on impressions apps, Music  Services which distribution channel is an app tend to focus their plans on app instals + maintain active customers

    • Digital activities focused on drive traffic to specific landing pages or straight ahead to App’s stores pages (iTunes or Google Play install page
    • This funnel is longer than usually as you have an extra step: Keep your users active. For this channel is extremely important to provide constant value through Inbound Marketing to keep your community active

      mobile funnel
      Mobile Funnels are the largest and hardest to maintain funnels
  • Need to monitor very closely the average cost per Install. Whitin this industry, location and segments offer very different perforances. The e-commerce industry in Thailand and Vietnam is around 1 USD and the CR is around 10%, whereas in developing countries, that prices rises to 40 to 50% more Memeapp cho Phien source

A good example of good mobile funnels is Trip Advisor.

Trip advisor follow their users based on their GPS location and recent researches. When they see that users have moved to other city and have looked for restaurants on the app, they re-approach requesting for reviews. Moreover, they deliver custom reports of how many people viewed their reviews

Screen Shot 2016-06-04 at 3.29.46 PM
Trip Advisor actively encourage users to icrease the weekly / monthly open rates with dedicated E-Mail Marketing Campaigns

Digital Transformation effort to track & optimize: These funnels are usually complex since:

Mobile App implementations are always more difficult that Web implementations and will require tailor solutions for Android and iOS, whereas in Web a single solution is easier to reuse.

The app installation may not be the final objective of the investment and other journeys completion may be required.

User creation and activation may require extra activities like ‘user registration’ or ‘OTP confirmation’ that will increase the complexity of the technical set up.

Overall, the marketing funnel is one of these concepts that every marketer should understand at high level, not only within their industry but also on other third industries.

This knowledge can bring marketers to better partnerships, variants and combinations to optimize each level of the user journey

CPC VS CPM – How to pass from one to the other?

Most ocpc-vs-cpmf publishers and PPC services based their pricing rates on CPM,  for example, the New York Times banner services starts at an $8.00 plus additional targeting layers. However, our digital marketing plans are mostly CPC (or CPA) oriented… given that, a common question is how do I pass from CPM to CPC?
Let’s see an easy example of how to compare CPC and CPM services using Facebook Ads:
1. First of all, lets set the CPM ads option at some of our ads: Open (or create) any Facebook campaign you have already active on your Facebook ads panel

2. Move into (or create a new) advert set. Once there, click edit (pencil logo – first of the top right corner logos).3. Afterwards, click on “Show advanced options”

4. Then, change the pricing option to “Optimized per impressions” (usually this field is set as “optimized per clicks” as default)
5. After this, you will see a proposed price, in my case CPM – 0.69 USD. Which means that I will have to pay 0.69 USD per 1,000 impressions
CPM Example
CPM Example
5. Considering that my CTR on this campaign goes from 0.5% to 2%, it means:
CTR 0.5% -> 1,000 impressions X 0.5 / 100 = 5 clicks
CPM = 0.69 USD, it means I will have 5 clicks per 0.69 USD, in other words, a CPC of 0.69/5 = 0.13 USD
CTR 2% -> 1,000 impressions X 2 / 100 = 2o clicks
CPM=0.69 USD I will get 20 clicks, in other words, a CPC of 0.69/20 = 0.03
On average, I can expect to get clicks from $0.13 to $0.03, which is very good actually.
Given this, you may think… what happens if this is the first time I use this service and I have no reference of my CTR? In that case… just ask  it! Publishers technical teams should have an average CTR of their banners which can make you guess the number of clicks you will have with a certain budget

What does Marketing mean?

Whenever I have the chance to meet a marketer (specially senior level ones), one of the first questions I like to ask them is:

” What does marketing really mean to you?”

It may be a simple question, but it makes sense as most of marketers can’t answer or don’t really have it in mind. In some how is like if you ask to a football player “what is football to you?” or to an artist “What does art mean?”

marketingcloud1

According to Philip Kotler, considered the father of Marketing,  is “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit“. However, I do like much more a simple definition he states on is his personal site: “Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential”, in other words, Marketing satisfies customer needs.

Another great definition he does on his personal site, is the fact that sometimes companies don’t need marketing departments. So the question is, “Do we need Marketing?”

marketing-necessary

Sometimes, my master students tell me: “My company does not need marketing, our product is good enough to promote it”. In this point, my student is right and wrong:

  1. Companies don’t need marketing: Wrong. Every company need to develop marketing activities: understand the market place and your competitors, analyze customer satisfaction and develop short-mid term plans are marketing activities that every company should do
  2. Companies may not need marketing department. Right. According to Porter,  it can be positive to have a marketing department “because it unites a group of trained people who focus on the marketing task” however, he is totally when he states that “It’s also bad because marketing activities should not be carried out in a single department but they should be manifest in all the activities of the organization. 

In other words, companies may not need marketing department, but they need to plan and perform marketing activities, which means that at least one person (marketing manager, CEO or Sales Director) needs to understand “What marketing does mean?” and to design and implement a marketing plan along with the financial and strategic plan of the company