In marketing, a funnel is a sales technique that is used to “capture” prospective buyers and customers. The “funnel” will attract people to the store (website, etc.). A low- priced product will be offered to attract the buyer’s attention. When the buyer makes the purchase, the will be led to the next level of the funnel.First Layer of Funnel
Next Layer of FunnelOnce the customer makes the first purchase, they are immediately taken to the nextlayer of the funnel. There, the buyer is offered another good deal. This next offer willenhance the first purchase in terms of add-ons that will make the first product somuch better or easy to use. This product is generally slightly more expensive thanthe first product but not so much so that it scares the customer away.
Funnels Upsell the ProductThe third layer of the funnel will, again, be more costly but will offer the purchaser aproduct that enhances the use of the first two.The first product does what it says it will do without purchasing the next productsbut the “upsell” products just make so much sense and the price doesn’t usually adda whole lot more to the cost.The upsell product(s) may be one-time-purchase products or they may be asubscription or membership type of product where there is an ongoing regularpayment, perhaps monthly or annually.
There can be many levels in theseller’s funnel. If there is amembership or subscriptionfunnel, it may be that the sellerwill add more layers (or moreproducts) to the funnel as timegoes on.
Parallel LevelsOnce inside the funnel, customers may be enticed to go to parallel products. Theseproducts may not necessarily be add-ons to the existing product but may beaccessories to the product.
Example in MarketingPurchasing a MotorcycleA buyer purchases a basic model of a motorcycle. Once the buyer has decided topurchase the bike, the salesman may work to upsell the product – leading thepurchaser further into the funnel. The purchaser may decide to add a windscreen tothe bike. The next add-on may be an upgrade on the seat to allow for a companion toride behind on the bike. Perhaps then, the salesman will show the purchaser acomfortable backrest for the bike or dressier mirrors.
Not All Buyers Move DownThe FunnelNot all buyers will opt to purchase beyond the first layer of the funnel. That’s okay,because they may eventually come back and add to the bike at a later date.They may not add to the bike later but they may come back to purchase the parallelproducts or accessories. These might be riding boots, a helmet, riding gloves orleathers.Once the seller determines how far the purchaser will travel down the funnel, theywill remember this and further advertise to the buyer in future, announcing productsales, new products or whatever. By that time, the buyer may be ready to make otherpurchases.
End of the FunnelThe funnel in marketing often never really has an end. There is likely to be a newproduct, an improvement to the original product, an upgrade, a new style or modeland so on.It is wise for the seller to continue to advertise to their customers on a regular basis.They do not want their customers to forget about them and they do want to keeptheir customers informed about the latest and greatest in their product line.In online marketing, sometimes the buyer will be referred to another seller’sproduct whether or not the seller is still advertising their own product to thecustomer. An example of this would be affiliate marketing, where the referring sellerwill receive a percentage of the sale for the referral.
Watch for the FunnelsNext time you are purchasing, whether it be online or in a regular store, watch forthe “funnel”. Sometimes it is more obvious than others.In a grocery store, watch for the “funnel” as you go through the checkout. Whatabout the magazines and candy for sale. They were not placed there just becausethere wasn’t anywhere else to display them!!