Marketing Funnel for B2C Startups
The majority of marketing funnels you can find online are heavily focused on SaaS products, usually B2B. Although all marketing funnels have a similar concept, we should all do our homework and build a unique funnel for each business, as focusing on the right steps is fundamental for the product growth.
From my experience, there’re quite a lot of similarities between the funnels of most B2C startups and I created the below example, so you can almost immediately apply it to your business.
With consumer apps and B2C digital products, we usually see:
- Users often buy/register impulsively or just to give it a try;
- There’re no demos, e-books and sales people involved in the MOFU;
- The process between Acquisition and Activation could be quite lengthy;
- First monetary transaction is usually much lower than the CAC, especially in the early stages of the business, so retention and the post-purchase flow (BOFU) are massively important;
- There’s usually less research involved before trying the product comparing to B2B products;
- The anchoring effect is stronger — the common human tendency to rely on the first piece of information we hear, which is directly related to point 5.
If you’re not very familiar with the marketing funnel concept, it’s important to keep in mind that no user becomes a customer when they first hear about or come across your product. There’re always a number of touch points before they decide to sign up/purchase/book. Not all of them will go through the full funnel of course, but even the quickest buys will experience at least 2 touch points before they convert into paying customers.
So let’s dive into each section:
Top of the Funnel (TOFU)
Top of the funnel for B2C brands and D2C startups is very similar to all other businesses. This is when a customer hear about your brand for a very first time.
“Awareness” includes all activities that would make a potential customer excited about your brand, before they’re actually looking for your offering. Example activities are viral social media posts, PR publications, offline marketing, guerrilla marketing, TV advertising, media interviews, micro sites, industry reports, etc.
The way you approach TOFU is extremely important, because this could be a breaking point for the consumer. If you get off on the wrong foot with a segment of your potential customers, this might cost you a lot later on. There’s such thing as bad PR, especially for small B2C startups, so make sure you’re in the news for the right reason and all your TOFU marketing activities are well planned and managed. Do not underestimate the consumer, as you might see the consequences reflected on you CAC later in the funnel.
Middle of the Funnel (MOFU)
Middle of the funnel is the moment you have to “grab” them. This is when a user is about to become your customer, but they’re not ready yet and might slip away easily. I split MOFU into 2 main stages — Consideration stage and Conversion stage.
“Consideration” is when a customer has heard about your brand and/or consider buying your goods or services. They might have heard about your brand and are wondering whether to give it a try. Or they might have not consciously remember your product, but are actively looking for your offering and come across your ads. This is the home of all performance marketing campaigns, SEO, strong content pieces and online reviews. This is the golden moment when the user considers whether you’re the right product for them. Now imagine if you had done your Awareness stage (TOFU) wrong — it would be so much more expensive in terms of CAC and welcome offers in order to win the attention of someone who’s heard negative things about your brand.
Online reviews are extremely important for B2C brands and I can’t stress enough how crucial it is to invest in those. No PPC campaign converts as strong as positive online reviews across different channels, so if your budget is limited, spend it on online reviews. Nielsen reports that 84% of people trust recommendations over marketing campaigns. Positive online reviews are also directly related to Robert Cialdini’s third principle of persuasion — social proof. People pay attention to what other like-minded people are doing and saying and unconsciously trust their opinion without having another proof. Use it!
“Conversion” in a B2C marketing funnel is usually when you get a user’s email. They gave you their email address and trusted you with their personal data, you’re half way there. Unlike B2B products where they invest quite a lot in e-books and free consultations here, B2C brands rarely have this opportunity. You have to be brilliant and extremely relevant! You’ve been given this chance and you’re one click away from unsubscribing and losing them forever, so there’s no place for spammy emails and annoying nudges. You must invest in smart drip campaigns, engaging welcome offers, specific re-marketing campaigns and freebies — anything that will make them try your product.
Getting to the next stage could be very lengthy for some brands, depending on the price point of your product, whether if it’s a need or a nice-to-have product, how much you’re ready to invest here, etc. Oftentimes, brands have spent too much to get here and have little budget left from their CAC for the actual activation, relying mainly on automated email campaigns from now on. Mistake! What’s this email worth it if you don’t convert them into paying customers? All costs and campaigns from Conversation to Activation must be included in your CAC estimation if you want to stay on the top of your marketing ROI (freebies, generous welcome offers, etc). The more you have left for this stage, the bigger your chance of converting them into paying customers.
Bottom of the Funnel (BOFU)
Most B2B marketing funnels would have only Activation and Loyalty stages here, but I believe that in today’s business dynamic a B2C startup must include a final stage — Advocacy. Why? There’re plenty of reasons, but the most important one is that (luckily) we’re past the MVP times and consumers use only brands they feel passionate about, so you must find a way to use their passion and voice to get more traction.
“Activation” is the sweet moment when a user reaches for their payment card and makes a purchase/subscribes/books a service. How exciting! The good news — you’ve got a new customer! The bad news — if they don’t move down the funnel to Loyalty and Advocacy you’re most probably still losing money from them. Depending on the business model, the payback period for most B2C products is 3 months, but this of course varies enormously depending on the business. Another popular rule to keep in mind is that you CAC (everything from the funnels so far!) shouldn’t be more than 1/3rd of your LTV.
“Loyalty” is pure retention. How many of the people you “activated” are coming back for more? This includes repeat purchases, subscriptions, up-selling, etc. Your marketing effort must never end at the point of activation/purchase. This is a common mistake that many traditional marketers do and cost them a lot, mainly coming from the inherited structure of splitting marketing into Acquisition and Retention, without an overall growth strategy. It’s always much more cost efficient to sell to someone who’s already a customer as opposed to acquiring new people. Email marketing and fresh frequent offers are only a small part of what you could be doing here. Today’s consumer would also look at your values and ethos (yes, even if you’re just a startup!), the overall brand voice, engaging and touching content, impressive customer service and generally is your brand something they’d like to be associated with? Do you delight them and make them feel good about their choice? Forget about MVPs and promising you’ll fix this soon, there’s so much choice out there, that only a really outstanding product will get you to the Loyalty stage and will stop them from deleting the app shortly after giving it a try. And again — it’s only now when you start making money, so if they don’t come to this stage of the funnel, you have a serious business issue.
“Advocacy” is when your customers are bringing new customers. Hello to the good old “word of mouth” which you have to do your absolute best to digitalise. Incentivising online reviews and a generous Refer a Friend programme are a good start, but you can also go a step further and think about an Ambassador programme, treating your VIP customers with special surprises and investing in quality content that will resonate well with your audience and they’d like to share it with their friends.
The funnel shape doesn’t actually illustrate this stage correctly, because you can start attracting advocates even at the Conversion stage and in some cases the number of people in Advocacy could be larger than your Loyalty pool. For this reason some marketers prefer the bowtie shape, but I thought it’s better to keep it simple so you can focus on the right customer flow rather than the shape of the illustration.
I hope this recaps how a marketing funnel for B2C startups should look like and it will help you build a strong marketing plan.
