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

What does CPC, CPA, CTR or CPI really mean? Digital Marketing Acronyms

abcMost of digital marketing beginners believe they totally understand what CPC, CPA, CTR and other terms mean, but after doing couple of campaigns and after seeing that your results on Google Analytics (or other measurement tools) don’t match with your expectations is when you understand how important is to understand these basics at 100%

Lets review some of the most used acronyms and their importance:

SEM – SEO – SERP – PPC. You may struggle to find 2 webs than agree on the full meaning of these terms. For this post I place myself along with Wikipedia, as these results have been deeply discussed among its publishing community

  • SEM – Search Engine Marketing: includes all the on-line marketing techniques that increase we traffic: SEO, PPC, etc. Most of times though, this term is used to refer PPC activities
  • SERP –  Search Engine Results Pages:  list of websites displayed by a search engine after running a queries.
  • SEO – Search Engine Optimization: SEO is “the quantity and quality of traffic earned from Search Engines”, or in other words, the set of activities needed to increase your rank in Search Engines results. SEO Moz, probably the best SEO portal nowadays, can be a good kick-off point for this area
  • PPC – Pay per click: internet ads that direct traffic to a specific website read more. Banners, Facebook ads and other Social Media ads should be included, however a big part of the web community will refer PPC to Search Engines Paid ads (Google Adwords for example) only like WordStream. Some blogs and communities even compare both approaches: Facebook vs PPC ads
  1. CPI – Cost per Impression. How much do I have to pay to make a digital (or offline) impression of my brand. Directly liked to the CPM below
  2. Cost per Reach. How much I have to pay to reach a user. Reach and Impressions  are usually confused as Reach makes reference to the number of unique users I score. The absolute number of a campaign or banner impressions number will always be higher that its reach as I many of my users may receive more than 1 impression
  3. CPC – Cost per click. Key term in digital marketing. The CPC is a dangerous term. Measurement tools like analytics usually measure “sessions”, not clicks, and these numbers are hardly ever the same which may make clients suspicious about what he buys (clicks) and what he gets (sessions).
  4. CPA – cost per acquisition. Acquisition means a goal, depending of the industry, it can be a user-registration, a purchase, an app download or a Video view. If your campaign has a clear goal, you need to monitor both CPC and CPA and compare it for each channel of your mix
    • CPA’s can have different names like CPL – cost per lead, CPI – Cost per install or CPV – cost per view, depending on you ultimate business goals.
  5. CR – conversion rate. Number of units or % needed of the previous level of the marketing funnel to get a conversion. Example: In terms of Leads generation, the CR can be shown in two ways:
    • Number of clicks  needed to get a lead (conversion)
    • The % of clicks that become leads
  6. CTR – Click through rate. It’s usually a % and it measures the amount of people that see your banner and click on it. Web Banners (like GDN, Admicro or other banner networks) usually offer low CTR’s (0.05%  to 0.1%). Good banners on Facebook or Instagram on the other hand can achieve higher numbers (1.5% to 5%). Anything over 3% is considered as a very good number.
    • CTR values depend not only on the platform we place the banner (Facebook, GDN, On-line Newspapers) but on the quality of banners.
    • To refine CTR marketers need to apply A/B testing. CTR improvements can bring a huge performance difference. If you manage to pass from CTR 0.5% to 2% it means you have 4 times more users for example, a huge difference in PPC plans where you are paying per booking time instead of clicks rate
  7.  CPM – cost per thousand impressions.

 

Instagram Vs Facebook – Reach performance

During the last weeks, some working mates and friends keep asking me about Instagram. Some of them have already opened a profile for their business and post randomly, however they still see no big advantage compared to Facebook, where they spend most of their Digital Marketing time
This post tries to answer all these request and to introduce the real power of Instagram (Reach) and why we should not choose between Facebook or Instagram, but go for both of them

Performance oriented plans. Taget: Sales

If we are looking for Direct Sales, Web Registrations or in general for a performance oriented plan,  Facebook is still clearly ahead Instagram. Comparable to Google Ads, Facebook Ads is a mature traffic generation tool with strong customization tools and a big variety of options (click to website, conversion to website, post-engagement), however Facebook is getting too big, and they are cutting their Reach capacity.

Reach Engagement Oriented plans. Target: Branding 

However, not everything is Sales. Brands need to be permanently in touch with their audiences: introducing new trends, sending messages along with their vision & mission and engaging target users with content.  Here is where Instagram has clearly passed Facebook, specially after Facebook modified its algorithm to cut organic reach several times during 2014 and force brands to pay to keep their boost rates, reaching a point of “organic death” according to many marketers

starbucksLet’s have a look to some examples of big brands to understand the difference. We can see how Facebook profiles with much larger communities have very low reach & engagement compared to their Instagram profiles with a lower amount of followers

Let’s say Starbucks, if we compared the engagement (amount of likes, shares and comments) of the last 3 Facebook post (Starbucks fan page has 35+million fans) with the latest 3 Instagram posts (Starbucks Instagram counts with 5.7 million followers) we see:

Facebook Engagement: 116,009  people

Instagram: 551,193 people

Starbucks Facebook Starbucks Instagram

Which means, that Instagram provided 5 times more engagement with a 7 times lower community. 

If we compared the last couple post, the difference is even greater with almost an almost 25 times largest engagement.

Facebook post – New store in Panama (12 September, 21hr after post): 6,876

Instagram Post – New store in Panama (12 September, 13hr after post): 179,379.

This happens not only to Starbucks, if you compare other big brands in different industries like Zara Facebook Zara VS Istagram Zara or even in Sports with the last 3 post of Man. United Facebook (243,040) against its Instagram pal (473,363 engaged people) more than double with 11 times less followers (6 million Instagram against 65 million in Facebook)

Why Instagram is not Facebook yet?

So, why people are not using Instagram instead of Facebook. There’re several reasons of why we have such a massive differences:

  1. Facebook ads as a product, is far more developed and mature than Instagram:
    1. In terms of markets: (not present at dozens of big markets), allowing marketers to drive traffic in a more effective way
    2. In terms of revenues: Facebook and Instagram, as marketing solutions, are in different production stages. We could say that Facebook is present with 7.8 billion USD in revenues during the first 6 months of 2015 only, compared to the 0.30 billion USD Instagram target (26 times higher), and Instagram is the future with a revenues target of 2.81 billion USD in 2 years .
    3. Expansion difficulties: due to a worse ads product and because of being a mobile platform, to grow in Instagram is always slower than Facebook.
    4. In terms of users: Facebook number of users is 5 times larger than Instagram
Social Media Users comparison 2015
Social Media Users comparison 2015

Conclusion

As an experienced digital marketing professional, I do recommend to keep both networks:

  1. Facebook: for performance oriented plans using their Facebook Ads
  2. Instagram: for brand oriented plans (and thinking in another tool to expand performance oriented plans in the future)