Funnel identification and Mapping – Handling the Conversion Funnel

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The success of a startup/ business depends on its ability to allure the customers to spend money on your product or service. Every company aims to achieve the goal of sales generation and customer retention. Paying attention to the customer’s journey is advisable; the route which begins from the identification of their requirement to visiting your store/website and buying the product.

Marketing is a contest for people’s attention.

Marketing funnels, similar to an actual funnel, represent a model for a customer’s journey from awareness and need of the product or service to its final purchase. The concept is based on catching a large number of leads and then filters the prospective customers at every passing step. At each level, the probability of converting a lead to a customer gradually decreases due to the selection of different brand or loss of an individual’s interest.

Entrepreneurs are utilizing different marketing channels to gain people’s attention that can give their startup significant traction. It is essential to incorporate innovative measures in the competitive market for the considerable growth of your business. The entrepreneurs should have brainstorming sessions for including experimentation and creativity to improvise the results and growth of their startup. Constant analysis should be performed using digital technologies. 

There are various methodologies & terminologies to explain different aspects of the customer journey, from discovering your company to leading to revenue generation. A few of the examples are growth hacking and pirate funnel. In this article, we focus on the components and various steps required to achieve the goal irrespective of the terminologies.

A marketing funnel is described as different stages of a customer’s journey from the awareness stage to the purchase stage.

The AAARRR framework (sometimes also referred to as A3R3-funnel) in businesses, is utilized to understand and measure the conversion of lead into customers. It stands for Awareness, Acquisition, Activation, Retention, Referral, and Revenue. Each phase of an AAARRR can be analyzed individually to give you several openings for optimization and scalability. The AAARRR framework aids in the identification of gaps and loopholes in your business. It can point out the remedy measures and optimization techniques.

We will now discuss these phases in detail to help you improvise the business performance and promote future growth.


The awareness stage is the topmost stage of the marketing funnel. The buyers at this stage are unaware of your brand and should be educated about your services or products. The potential customers should be made aware of the problem they face and then subsequently introduce your product as a solution. The product and the content are made aware through different channels like videos, blog posts, guides. The goal of gaining potential customers is achieved through effective marketing campaigns, advertising, public relations, thorough consumer research, and other communication approaches. Confidence and trust are developed by different communication approaches like organizing events, trade shows, webinars, social media, media mentions, and likewise.

Additionally, the focus of marketing should be on the quality of the customers, i.e., the right target audience and not the quantity, i.e., the number of customers. It will lead to rapid lead generation and conversion. Awareness of your product/service is followed by lead generation.


For every business at different stages of growth, one singular channel will be the main traffic driver. So find that channel and tweak every part of your communication until you see explosive (or something like it) growth. If every traction channel fails, there’s likely something wrong with your product/market fit


The acquisition stage involves collecting information about your new leads (potential customers) and the channel through which they are coming. The process is also known as lead generation. Potential customers are encouraged to identify themselves by signing up and providing their details like full name, email address, gender, location, and interests. These details will help you build the customer profile with more attributes, leading to your new leads’ personalization and persuasion at every touchpoint. 

The first transactional email to be sent to the acquired leads in the form of a welcome email or a confirmation email should encompass :

  • Downloadable PDF/eBook guide
  • Checklist
  • Case Studies
  • Email course
  • Whitepapers
  • One-time offer coupon code
  • Discounts
  • Webinar
  • Access to a VIP community, etc

The prospective customers are engaged convincingly through advertisements, landing pages, webinars, infographics, product demo videos, or handy checklists.

The acquisition metrics to be taken into account for:

  • The tracking of new leads in a specific duration
  • Number of resource downloads
  • Number and track of email subscribers
  • Helpdesk chat messages management

It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution — not product — is the number one cause of failure. If you can get even a single distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel.

Peter Thiel, early Facebook investor, and PayPal founder


Activation is the next stage in funneling that can be defined as the customer’s first experience of your product/service. Activation is encouraging the prospects to try out your product and counting on their experiences about it. The probability of the prospects’ conversion to a customer depends upon how good is the user’s first experience. 

In this phase, the user learns and experiences the unique features and the value of your product, which makes it indispensable for him. The “Aha!” moment, the commonly used term, is critical for the conversion of prospects to the paying customers. It is the moment when the user realizes and experiences the importance and real value of your product. Therefore, you should make efforts to get the user to this “aha moment” as soon as possible to make him return to your product again.   

Building a mutual relationship with the buyer is crucial at this stage. It can be achieved through various means of product reviews, former customers’ testimonials, infographics to gain attention, and inbound marketing.

Depending upon the type of your product or service, the activation process includes following components:

  • Free trial duration
  • Product sampling
  • Free consultations
  • Quotation requests

The following KPIs are measured as a part of your AARRR metrics at the activation stage:

  • New trial signups
  • Conversion from free to paying customers
  • The churn rate

The components included in the activation process are:

  • Use of Call to Action (CTA) button
  • Demonstration of the subsequent process
  • Reengagement of inactive customers


Retention is the next step of funneling that refers to the number of users who stick to your brand repetitively. Maintaining contact with users is essential to form a lifetime relationship that will lead to the ultimate goal of generating revenue. The efficiency of a company’s marketing strategies and product success is assessed based on customer retention data.

At the retention stage, AAARRR metrics to be included are:

  • Retained customers percentage
  • Average customer lifespan
  • Customer lifetime value
  • Churn rate

Your most unhappy customers are your greatest source of learning.

Bill Gates

Churn rate refers to the number of people unsubscribing or dropping off your product after they started using it. It indicates your product’s market fit. The customer churn rate should be less than your customer acquisition and retention rate to achieve your business growth. A situation is analogous to a leaky bucket of water, where the bucket never gets full despite the enormous influx of water due to leaking at the bottom.

According to Harvard Business Review, it’s 5 to 25 times more expensive to acquire a new customer than to retain an existing one.

The above statement holds so true! Alluring and convincing the true potential and value of your product to a “stranger” is a challenging, expensive, and time-consuming task. However, it is easier and economical to sell your product again to the customer who has acquired it and experienced its potential. Therefore, it is crucial to retain the customer who has developed trust and realize the worth of your product.

There are different ways through which customers can be constantly engaged. Few of them are listed below:

  • Events celebration with customers: business anniversaries, the launch of a new product, the opening of new office branch
  • Conducting and promoting future webinars: Webinars are an effective way to interact and engage your customers. The entrepreneurs can deliver a lot of information in a condensed way through their short presentations to the targeted audiences. Hosting webinars lead to developing trust in your products/services in the customers.
  • Appreciation and milestone emails: they help in making the customers feel special.
  • Informative emails for offers, schemes and new products


Customer referral is the ultimate gift to an entrepreneur by his customers and crucial for business growth. Word of mouth is the proven best-trusted form of marketing. It is one of the most trustworthy and cheapest approaches for customer acquisition.

83% of consumers are willing to refer after a positive experience—yet only 29% actually do.


The constant referral generation requires a systematic method to be adopted by entrepreneurs. Referral marketing is similar to a marketing campaign that requires enormous efforts, encouragement, and motivation to the customers and clients for giving a referral.

The metrics required to track at this stage are:

  • Net Promoter Score (NPS): It is an index to measure the customer’s willingness to recommend it. NPS is an indicator of customer loyalty and satisfaction.
  • Viral coefficient: Viral coefficient is critical for your business growth, which implies the number of users a customer refers to your product in specific time duration.
  • Referral numbers
  • Sharing on social media
  • Customer reviews

The motivation for customer referral can be achieved by different email campaigns.

  • The reward for customer referrals: Who doesn’t like appreciation and rewards? Providing the awards to the customers for forwarding an email or referring your product/service to a friend motivates customer referrals. It’s a win-win deal for the customer and the entrepreneur. Rewarding is a cost-effective means to gain customers.
  • Creation and inclusion of unique referral links: The referral links enables your customer to share your referral program, which can be copied and sent through email, messages, or shared on social media.
  • Customer reviews and feedback: The online reviews and customer feedback are some of the features that prospective customers consider seriously. Thus, the entrepreneurs should focus on getting the feedback by quick and straightforward techniques like “click a button.”


Revenue is reaping the benefits of following all the above AARRR funnel stages. Revenue is not the last step of the AARRR metrics framework, as this was just the tip of an iceberg. You require massive efforts in sales and marketing for revenue generation. This is the stage when your product or service is purchased that can be in the form of signing a contract or registration for a monthly/yearly subscription or placing an order.

Revenue measurement per customer and per channel is a crucial and effective method for allocating an accurate marketing budget for your business operation. It will allow raising the future business capital and scale-up your startup.

The revenue generation metrics to be included are:

  • Higher Customer Lifetime Value (CLV)
  • Customer Acquisition Cost (CAC)
  • Customer lifespan
  • Higher revenue
  • Increase in conversion

The revenue generation can be enhanced by growing your Customer Lifetime Value (CLV) that refers to the revenue earned from a customer in his lifetime. Diminishing Customer Acquisition Cost (CAC), i.e.the expenditure done in acquiring a customer in the form of marketing, sales, and other costs, will increase the revenue generation. 

Again, the email marketing is at our rescue, which plays a significant role in revenue generation.

  • Cart abandonment emails
  • Automated upgrade emails
  • Promotional, seasonal sales and discounts

Funneling is the most effective approach for business optimization and growth assessment. It is crucial to have a thorough understanding of your funnel that will help you to identify the source of your customers and the required efforts in that direction. You should unceasingly keep track of your AAARRR metrics to achieve the ultimate goal of your business growth. The metrics mentioned above will facilitate the sustainability and efficient scalability of your business.  

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