Swap instant impact for long-term conversion by utilising the marketing funnel
In the marketing world, we know how difficult it is to manage conversion; we provide so much attention to the quick projects and get distracted by immediate numbers that sometimes we forget to take a step back and look at the bigger picture. As a result, the marketing funnel (the process by which someone moves from having a need through to final conversion) has become the spine of consumer approach and engagement.
The funnel itself has three general themes, which cover all markets and marketing philosophies :
Smart marketers create campaigns which cater for each of these areas in order to educate, convince and persuade. Thus, some will allocate effort and resources to each stage of a funnel, in an inefficient way.
However, the majority of brands are already optimising the bottom of the funnel – where, using last click, you get an instant impact on conversions. Not only does focusing purely on the bottom of the funnel miss opportunities, it can also put off consumers who are positioned higher up the funnel and do not respond well to that type of messaging.
Cost Per Acquisition (CPA)
One metric you should assess the quality of marketing activities on is the Cost Per Acquisition (CPA) blended across all types of visitors. This is the simplest way of understanding the value of your work and allows you to test new tactics. Yet, the higher up the funnel your consumers are, the higher the typical CPA will be, as your conversion rate in a single session will be significantly lower. This can dissuade brands from investing in the middle of the funnel, therefore missing out on the area of greatest opportunity.
The chance to generate long term significant growth is only available when you are able to invest in people (pay a higher CPA) who will convert in the future.
We can start to see where the opportunities are by looking at an example consumer:
A prime example is demonstrated when Brand PPC is the last converting channel. Most companies will have 100% impression share, low CPC’s, low CPAs, high CTRs and well-optimised ad-copy for their brand PPC terms. They have, however, maxed out the volume that is available – and you can’t possibly buy more impressions through PPC bidding without significant investment in increasing brand awareness; what you can do is increase the volume of people who are aware of your brand activities higher up the funnel by capturing consumers before brand preference and search becomes paramount. You need to be present before your potential customers are ready to convert, to naturally increase the impressions you receive on brand terms further down the line.
Where should my company sit on the funnel?
SEO and content marketing should live in the top and middle of funnel. This is where it is around education of the consumer through the art of great content.
While every market’s funnel will be slightly different, the elements on which brands compete with one another will centre around three core themes – price, quality and trust. Targeting users higher up the funnel may have a high blended CPA in the short-term, but over time as it increases the number of people reaching the bottom of your sales funnel, it can also contribute to increasing your conversion rate there too.
When you consider the impact on increasing conversion rate in the conversion segment, and the volume of consumers who will reach the conversion point, it is clear that mid-funnel is exactly where the opportunity for brands now sits. Using attribution modeling, you can apportion a true percentage of the revenue to each activity in the funnel. This allows you to calculate the ROI of activity that has yet to convert, and therefore optimise a true tactical led approach.
Are immediate results worth it?
Investing in people who will not convert is hard to sell to budget holders; the status quo currently dictates that we spend money today and make money today. Those in marketing roles need to be able to justify their strategies to stakeholders, and risk that if they lose the faith of those senior stakeholders while waiting for a return on their investment, they may also risk losing their budgets – or worse, their roles.
This approach works for individuals, but to drive long-term results that puts business at the forefront, the true value of your marketing activities needs to be considered. A very high percentage of your cost today is not driving the returns you make today – there is a lag between cost and converting revenue. By understanding this concept and acknowledging that higher up the funnel your returns simply take longer to be seen, you can take a more intelligent approach to your strategy.
If people aren’t going to convert instantly this is where we look to the middle of funnel. These are people who are researching, comparing you against your competitors or consumers who are just not ready to convert yet. A lot of channels specialise in this type of consumer although are incentivised and have KPIs that focus on converting. Channels such as PPC do very well in a last click scenario. Yet, a lot of the keywords, ad groups and campaigns should actually be targeting and be incentivised for success around the middle of funnel.
The largest opportunity every brand has right now is looking at the middle of funnel –one to two weeks prior to conversion in most cases. Putting a testing budget here to buy users in advance of their converting activity captures a much larger pool, which can then be re-targeted to convert in a short time frame in a cost-efficient manner.
The incentive here is understanding what activity is truly driving future converting activity and this is where attribution really adds significant value.
This article was co-written by Paul Newbury, director of digital agency Yard, and Russell McAthy, CEO of Cubed.
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