Reading time: 7 minutes

Have you wondered why new potential customers who have browsed your website or liked your Facebook page never turn into customers? Or why some only use your service once? Among many challenges business owners and marketers face is the need to drive revenue. The ‘marketing funnel’ allows you to investigate these questions and in turn, bring in more revenue for your business. Below, we explain the marketing funnel, how it works, why it’s important and how you can leverage the funnel to drive engagement.

What is the Marketing Funnel?

The marketing funnel is one of the many ‘funnels’ currently operating in a business. For example, you may also have heard of the sales funnel or website conversion funnel thrown around in this context.

A funnel in business works as you would imagine a kitchen funnel does – the top is purposely broad to capture as much liquid as possible and becomes narrower as you reach the bottom. Similarly, a business has a broad potential pool of customers that shrinks as you move further down the process of steps that lead them to your goal.

The marketing funnel uses this analogy to describe the buyer’s journey – it is a visualisation of the steps someone takes before they become a happy customer. It recognises that although there may be people who have heard of your brand, there are far fewer people interested and would consider purchasing your product.

What are the Different Stages of the Marketing Funnel?

No marketing funnel is the same. Depending on your business, marketing funnels can be in all shapes and sizes – short, long, broad, narrow and may be intertwined with other funnels in your business.

Most, however, have four key components – from the top to the bottom of the funnel, these are:

  1. Awareness
  2. Consideration
  3. Conversion; and
  4. Retention

Top of Funnel: Awareness

People may have heard of your brand and are discovering more about your products and services for the first time. Your goal is to build brand awareness – not engage in active selling. At the top of the funnel, you want your potential client to:

  • Discover what your company is all about;
  • Establish yourself as a thought leader;
  • Build trust; and
  • Build a relationship for the future.

Remember, your prospect is unlikely to know much about what you do, and may not have even considered your product. What you should be doing is educating users and demonstrating value – you want them to remember you. Some content you might distribute to help you in this goal includes:

  • Blogs
  • Webinars
  • E-books
  • Videos
  • Guides, and
  • Worksheets.

This is the widest part of the funnel, and you want to draw in as many prospects as possible. The awareness stage is where lead generation becomes important.

Middle of Funnel: Consideration

The middle of the funnel is where the prospect will engage your brand and see if there is a potential fit with their needs. At this stage, your goal is to build a deeper relationship and nurture your leads. The best way to do so is by delivering contextual or targeted content that is specific and addresses your prospect’s pain points. Take care to avoid seeming too sales-like as your prospects are only considering your business. Some content you could distribute to help includes:

  • Case studies
  • Product or service demonstration videos, and
  • “How-to” content such as blogs which showcase your product or service.

A good way to ensure you can deliver targeted content is by collecting as many details throughout the marketing funnel. For example, you might provide e-books or guides in exchange for them filling out a form.

Part of this form might include information related to:

  • Age
  • Gender
  • Position titles, or
  • Industry.

Remember to state what you will do with the information you collect (on your website or otherwise) so you remain compliant with the Australian Privacy Principles.

Bottom of Funnel: Conversion

The conversion stage is where a prospect becomes a customer. Here, your goal is to make a transaction and push the sale. After your efforts in the above stages, you know that the prospect is engaged and interested in what you have to offer.

Your content at this point in the funnel should clearly identify the benefits of your business and how you can help them, for example:

  • Testimonials and reviews;
  • Offering free trials;
  • Inviting the prospect for a call with your sales representatives;
  • Offering discounts, coupons or promotions; and
  • Creating a sense of urgency.

Beyond the Funnel: Retention

It’s easy for businesses to forget the retention stage of the marketing funnel. As the name suggests, the goal is to retain your customers and turn them into advocates for your business. Don’t forget about your customers – you need to keep interacting with them and adding value. After all, you want these customers to return and promote your business. To achieve this goal, you might send content such as:

  • Special offers
  • Surveys, and
  • Customer support documents.

Why is the Marketing Funnel Important?

The marketing funnel is important for two main reasons. Firstly, you should understand the marketing funnel conceptually. It’s like dating. Would you ask someone you had just met to marry you? Probably not, but you might increase your chances by spending more time with them – maybe inviting them out for coffee or dinner, or introducing them to your friends and family. Likewise, that is how you should approach your marketing. Understand that it’s also common for many top-of-funnel prospects to become disengaged with your business after your marketing efforts – don’t take this personally and let it dampen your spirits.

Secondly, the marketing funnel is a great way to plan ahead. For example, imagine your funnel looks like this:

  1. You spend $5,000 on online advertising like Google Adwords to promote your product;
  2. 3,000 people filled out a contact form asking about your product;
  3. 500 of these prospects returned to sign up for a trial after seeing an email;
  4. 100 of these became paying customers.

Roughly speaking, you now know exactly how much money to spend in the future to bring in the same amount of new customers.

What Next?

In an ideal world, your goal as a marketer or a business owner is not to create a marketing funnel, but to create a marketing cylinder. What this means is that you should be asking one question: Why.

  • Why do I have a drop-off from the awareness stage to the consideration stage?
  • Why is there a drop-off from the consideration stage to the conversion stage?
  • Why are people not coming back to use our business?

Aim to reduce the percentage of people leaving your funnel – identify the reasons and diagnose these problems by considering the following:

  • The type of content distributed;
  • The capacity of your team (for example, you might be able to service the enquiries leading to less engaged prospects);
  • The price; and
  • The features of your product or service compared to competitors.

Where you cannot control the people leaving the funnel, you need to increase the number of prospects that enter the top of the funnel to increase your bottom line. What’s imperative is that you continually track, measure, and act on results.


What does your marketing funnel look like? Let us know your thoughts on LegalVision’s Twitter page.


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards