Understanding the funnel
Traditional marketing divides the world into two groups:
Customers are traditionally undervalued, and prospects are all treated the same.
As marketing got more sophisticated, some prospects ended up being treated a little differently than others. Someone reading Field & Stream, for example, is a more valuable prospect to a bullet company than someone reading Bass Fisherman.
Missing from this demographically-based analysis is the idea that people can change. They change their posture, their attention and their attitude. And as the knowledge they receive increases, their value as a prospect changes as well.
I think marketers always knew this, but they haven't been able to do much about it.
The Google funnel is easily measured and if you're marketing anything to anyone, you need to understand it (this idea is so powerful it's now built in to Google's free web analytics program, Urchin).
Imagine someone out there, surfing on the web. He is a prospect of your fishing bait company in that one day, he might become a customer. He's at the top of the funnel.
Now, he types "bass" into Google. Through that action, he has self-identified as a better prospect. He's moved down the funnel and become more valuable to you.
But, of course, he might have meant "bass" as in "bass guitar." Once he refines his search in that way, he's jumped out the funnel. For right now, he's not worth much.
But wait! He has refined his search by typing in "bass fishing." Now, he's worth a great deal more than he was just a moment ago. Which is why AdWords is such a good idea.
You have a choice when you run an AdWord ad. You can write copy that gets lots of clicks, or more specific copy that gets fewer, but better clicks. Traditional marketers believed that attention was free, and the more the merrier. But Google charges by the click, so new marketers realize that they are willing to pay extra for folks a bit farther down the funnel.
Now, if he's clicked on "Bass Lures for serious fishermen," our surfer's value has just increased immensely. And you've paid handsomely for borrowing his attention from Google. Now the prospect is on your site, and his value to you is quite high--and his cost is high as well.
At this point, your job is not to make a sale. Selling is just one option in a range of things you can do to further drive him down the funnel. You can engage in a dialogue (by phone or email) that takes place over time and avoids the all-or-nothing cliff of "buy now or go away forever". You can further inform or entertain, all in the service of your goal of increasing the interest, education and value of this prospect.
Now, finally, you have refined the traffic in the funnel. Everyone at the bottom is ready to buy, to engage with you, to become a customer.
Once you see the funnel, it's easy to understand how valuable your existing customers are, and easy to think about how you want to spend time and money in promoting and building your site. Most marketers are running a flat campaign. Embracing the funnel changes the way you treat people. And treating different people differently is what consumers demand.