What is Funnel?
TL;DR
A funnel is the step-by-step journey potential customers take from first hearing about you to making a purchase.
Example
A typical marketing funnel:
Top of Funnel (TOFU) - Awareness: 10,000 people see your ad
Middle of Funnel (MOFU) - Consideration: 1,000 people click to your website 200 people sign up for your newsletter
Bottom of Funnel (BOFU) - Decision: 50 people request a demo 10 people become customers
The funnel gets narrower at each stage. That's why it's shaped like a funnel. You lose people at each step, but the ones who remain are more interested.
Funnel math:
- 10,000 → 1,000 = 10% click rate
- 1,000 → 200 = 20% signup rate
- 200 → 10 = 5% purchase rate
- Overall: 0.1% of ad viewers became customers
Explanation
Types of Funnels
Marketing Funnel: From awareness to interest Sales Funnel: From interest to purchase Conversion Funnel: Website-specific journey Onboarding Funnel: From signup to active user
Different names, similar concept: guiding people through stages.
The AIDA Model
A classic funnel framework:
- Attention: Get noticed
- Interest: Spark curiosity
- Desire: Build want
- Action: Close the sale
Each stage needs different content and messaging.
Funnel Optimization
Look for the biggest drops:
- If 80% of website visitors leave immediately → fix your landing page
- If people sign up but never return → fix your onboarding
- If demos don't convert → fix your sales process
Small improvements at any stage compound significantly.
Why It Matters
For Business Owners
Funnels help you see where you're losing customers. Without tracking the funnel, you don't know if the problem is awareness, interest, or closing.
Each funnel stage needs different tactics:
- Top: Content marketing, ads, SEO
- Middle: Email nurture, case studies, webinars
- Bottom: Demos, trials, sales calls
Funnel metrics guide investment. If you have plenty of leads but low conversion, invest in sales. If conversion is high but leads are few, invest in marketing.
Funnels reveal true CAC. By tracking cost at each stage, you see exactly where money goes and where it's wasted.
Leaky Funnels
Every funnel leaks. People drop off. The question is whether your leak is normal or excessive. Benchmark against industry standards and continuously work to plug the biggest holes.
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