Startup OS #6 | You need to understand this marketing funnel..

For any startup—whether you’re in CPG, tech, or a solopreneur—understanding the marketing funnel is essential for growth.

The funnel maps the customer journey from the initial awareness of your brand to purchase, helping you measure and optimize performance at each stage.

With Black Friday looming, a well-optimized funnel becomes even more critical.

So, what is the Marketing Funnel and How Can It Scale Your Startup?

Top of the Funnel: Building Awareness

The top of the funnel (TOF) is all about awareness. This is where potential customers first encounter your brand, often before they even realize they need your product. For a startup, this stage is crucial. Without awareness, you can't generate interest or sales.

The key metric to focus on here is CPM (Cost per Thousand Impressions). CPM measures how much you’re spending to get your ad in front of 1,000 people. A lower CPM means your ads are cost-effective at getting in front of your audience, but it’s important to ensure you’re targeting the right people, not just any eyeballs.

For example, if you’re spending $10 on CPM and reaching 10,000 people, you’ve spent $100 to get your brand in front of those 10,000. But if your targeting isn’t dialed in, many of those impressions could be wasted.

How to Grow Awareness

1. Content Marketing: Blog posts, videos, and infographics that educate and engage your audience are powerful for building awareness. For instance, a CPG startup selling health supplements might create blog posts on how their ingredients improve well-being.

2. SEO: Organic traffic through Google search can provide cost-effective, long-term awareness. Ranking for relevant keywords like "best natural supplements" helps attract a highly targeted audience.

3. Paid Ads: Facebook and Google Ads are effective for TOF. Set campaigns to focus on impressions or reach, and closely monitor your CPM to ensure you’re staying within budget while getting in front of potential customers. Lower CPMs mean better value at the TOF.

4. Social Media: Platforms like Instagram and TikTok allow you to engage potential customers where they are. Viral Reels, in particular, can provide an immense boost in awareness, often for little cost. Learn how to create effective Reels with our Viral Reels course.

Example: Uber initially built awareness by offering free rides to early adopters in San Francisco. This helped generate word-of-mouth awareness and drastically reduced the CPM cost of their early marketing efforts.

Middle of the Funnel: Turning Awareness into Consideration

Once your potential customers know about your brand, they enter the middle of the funnel (MOF). Here, they start considering whether your product meets their needs. They might compare your offering with competitors or dive deeper into your website for more information.

The most important metrics in this stage are CTR (Click-Through Rate) and CPC (Cost per Click). CTR measures how many people click on your ad or organic content after seeing it, indicating their interest level. CPC tells you how much you’re paying for each click and can help gauge the efficiency of your campaigns.

If your CTR is low, you might not be creating content that resonates with your audience, or your ad copy could be unclear. If your CPC is high, you may need to adjust targeting to lower acquisition costs.

How to Nurture Consideration

1. Email Marketing: Capture email addresses early and nurture leads with personalized campaigns. Drip emails sharing product benefits, user reviews, and limited-time offers can move potential customers closer to conversion.

2. Retargeting Ads: Many customers visit your site and leave without purchasing. Retargeting ads on Facebook or Google remind them of your product, offering another chance to move down the funnel. At this stage, focus on ROAS (Return on Ad Spend)—the higher the ROAS, the more efficient your retargeting campaigns.

3. Educational Content: Product demos, webinars, or comparison videos help customers evaluate your offering more thoroughly. A tech startup, for example, might showcase how its SaaS tool solves a particular pain point for businesses.

Example: A CPG startup selling premium tea could send an email with details on the health benefits of their product, along with customer testimonials and a discount to encourage consideration.

Bottom of the Funnel: Converting Leads into Sales

At the bottom of the funnel (BOF), your leads are ready to make a purchase but might need that final push. This is where the customer conversion happens, and it’s critical to remove any friction in the buying process.

Metrics here are essential for assessing the effectiveness of your funnel. CAC (Customer Acquisition Cost) is the primary metric at this stage, showing how much you’ve spent to acquire each customer. You’ll also want to track CVR (Conversion Rate) to measure how many of your leads are converting into paying customers.

A high CAC might indicate inefficiencies in your marketing spend or that you’re spending too much to convert leads. A low CVR could suggest issues with your website’s user experience or unclear messaging.

How to Enhance Conversions at the BOF

1. Limited-Time Offers and Discounts: Creating urgency through time-sensitive offers can be a game-changer, especially around big events like Black Friday. For instance, offering a 20% discount valid for 24 hours can increase conversion rates.

2. Streamline the Checkout Process: Simplifying your checkout process by offering multiple payment methods, removing unnecessary steps, and providing clear shipping details can significantly improve CVR. Long or complicated checkouts often lead to cart abandonment.

3. Customer Reviews and Social Proof: Displaying real customer reviews and testimonials at this stage helps eliminate any doubts and reinforces trust. If people see others have had a positive experience, they’re more likely to buy.

Example: Glossier, a beauty brand, uses customer reviews, user-generated content, and a frictionless checkout process to boost their CVR, leading to a CAC they can maintain even as they scale.

Why Mastering the Funnel is Key for Black Friday

With Black Friday around the corner, getting your funnel right is more important than ever. Competition is fierce, but a well-optimized funnel allows you to convert more of the surge in traffic into paying customers.

• Top of Funnel: In the weeks leading up to Black Friday, run awareness campaigns to build a large pool of potential customers. Monitor your CPM to ensure you’re getting maximum reach for your spend.

• Middle of Funnel: Retarget those who engage with your content but haven’t yet purchased. Use CTR and CPC as indicators of how well your content is driving consideration. Tease upcoming deals to keep leads engaged.

• Bottom of Funnel: On Black Friday, make it as easy as possible to buy. Implement limited-time discounts, streamline the checkout process, and monitor your CVR and CAC to ensure profitability even at high traffic.

Example: Tech giants like Amazon invest heavily in refining each stage of their funnel for Black Friday, keeping CAC low and CVR high while leveraging millions of impressions to drive massive awareness.

Using Social Media at the Top of the Funnel: The Power of Viral Reels

Social media, particularly Instagram and TikTok, are essential at the top of the funnel, especially for startups with limited budgets. Viral Reels offer an incredible opportunity to boost brand awareness quickly and cost-effectively.

By crafting engaging, shareable content, you can drastically increase your reach without breaking the bank on ads. Plus, organic reach on platforms like TikTok can lead to highly cost-effective impressions.

To learn how to create viral Reels that get noticed, check out our Viral Reels course. It’s packed with tips on how to create content that resonates with your audience and drives TOF performance.

Conclusion

The marketing funnel is the blueprint for startup growth, whether you're in CPG, tech, or working solo. By optimizing every stage—from TOF awareness campaigns that focus on CPM, to BOF efforts aimed at reducing CAC and improving CVR—you can guide potential customers through the buying process with maximum efficiency.

As Black Friday approaches, now is the perfect time to refine your funnel. Ensure that each stage is operating at peak performance to capture the surge in traffic and convert awareness into revenue.

Whether you’re growing a tech company, a CPG startup, or running a solo venture, mastering the marketing funnel is key to scaling your business faster and more profitably.

Thank you for reading. I hope this becomes useful reading before the work week starts again.

Feel free to DM me here.

Have a great week,

Robert