How understanding the marketing funnel can scale your business in a controllable way.

Written By Stewart Ritchie
Posted On October 6, 2015

In our last few posts we’ve looked at why Marketing Funnels are interesting to businesses and how they might effect your website but now lets look at the effects that using one can have on the structure and growth of a business.

Just to recap the marketing funnel has the following stages…

  • People who don’t know you exits
  • People who know you exist
  • People who know what you do
  • People who are interested in what you do
  • People who want to work with you.

For the purposes of tracking and data generation we are interested in stages 1, 3, 4 and 5.

The beauty of a funnel is that you can track the progression through it. You can track the moment from stage one to stage three, people who have been to a page on your website. Stage 3 to stage 4, people who have joined a nurture campaign or a mailing list, and, stage 4 to 5, people who have taken up an offer you’ve made or approached you about a project. With this data you can track the conversion rates between the stages and with the conversion rates you can make predictions about what might happen. For example if 2000 people visit a landing page, 3% of those convert and join your nurture campaign (60 people) Then 20% of people on the nurture list become clients (12 people) then you know that for every 2000 hits to the landing page you’ll be able to generate 12 clients. This gets more interesting if you include paid advertising to drive targeted traffic to the landing page, say up spend £1000 to drive those 2000 hits. You know for that you can acquire a single lead for £83.33. That can seem like a lot of money for a single lead but if you are selling high touch, valuable consulting projects at thousands of pounds a time then £83.33 is a great cost to acquire a lead at – how many hours of cold calling or networking would you have to do otherwise to generate warm leads.

Now you know you cost of acquisition you can also look at the time to project. If it takes 8 weeks for someone to move through your marketing funnel to become a client then you know that if you start advertising 12 weeks before you have a lull of a gap in your schedule you can reliable expect to fill that gap with a new project based on the averages you have set out.

Of course, this isn’t guaranteed. It’s using mathematical averages to make smart decisions and model the potential future it takes no account of changes in the world or your circumstances.

Lets look at how this effects company growth. You know you can acquire leads for £83.33 and that you close 90% of leads. You know that if you double your ad spend, you will double your lead count within 8 weeks. This means that you could look for a new hire to start in eight weeks and have projects already lined up for them to go from the first day they start. Alternatively, if you are booked up for the next 6 months (well done!) the you can stop, or drastically reduce the amount of advertising you are doing until 8 weeks before your quiet phase is starting, saving you resources in the mean time.

Using data in the marketing funnel help you effectively and controllably grow your business by controlling the number of leads that come in month and at what time you advertise to stop the feast and famine cycle. The key is data. You can’t start this process and hope for instant success, it takes months to build up the data profile for the business and your pipeline to effectively make the models to help you in your decisions.

Stewart Ritchie
Lead developer and founder of Powered By Coffee. Stewart has been building websites for 15 years and focusing on WordPress for 5. He founded Powered By Coffee in 2011 after finishing is masters degree. He lives in Guildford Surrey with his wife Sydney and their two cats.

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