Is the Brand Funnel Dead?

The quick answer is “No”. The more complicated answer is, “its use has probably evolved”.

Questions about the tool’s relevance pop up today given the whole millennial and digital discussions, often not mutually exclusive, but significant enough in today’s marketer’s landscape for it to be seriously considered.

I am a firm believer that a brand can fundamentally grow in one of two ways:

1. 1. Get more people to use your brand – Increasing Penetration
   2. Get people who are buying you to use your brand more – Increase Consumption

The first approach covers category conversion/growth and battles for market share from competition. The second approach covers quantity promotions either via price off or extra volume amongst other things.

The problem arises in identifying sources of potential growth and classifying them. That’s where the Brand Funnel comes in.

The 1st step in the funnel is awareness, if no one knows your brand then the chances they will use the brand and develop a relationship with it are next to none. From here, you get your 1st bucket for source of growth which is the people who are unaware. Attracting and converting them will be enticing if you’re a new brand and you’re looking for more and more people to know you so that a bigger chunk of them can be compelled to try.

The next step will be the Ever Tried people, those who have tried you at least once. Out of all the people who are aware of your brand, the number who try you are your Trialists and the number who don’t try you despite knowing you come into the 2nd bucket of source of growth which is the Aware not Tried group. Why have they not tried? Your brand is not available, the price is too high, they’re too satisfied with their current brand etc. Find the problem and address it via communication or other elements of the 4Ps.

How many of the Trialists stay till the next step of Current Usage vs. how many exit the funnel at this stage provides you with the 3rd bucket for source of growth. The people who leave you at this stage are Trial leakers and the reasons for leaving can be manifold as mentioned above, such as price, availability, didn’t like the usage experience etc.

Now you are at the Current Usage stage which means the consumers have used you within a 3 week or 3 month period and may or may not be currently using your brand. The ratio of Current Users over Ever Users is usually coined as “Loyalty”. The last step is consumers graduating to MOUB status which is a state where more often than not, they would be using your brand. The people you lose at this stage are known as Lapsed Users and are the 4th bucket of source of growth.

All of the above buckets represent the increasing penetration way of growing a brand, whereas the 5th bucket for source of growth is simply getting your MOUB users to increase consumption. The underlying assumption is that at whatever step you bring in the users to the funnel, they will flow down to the last level without changing anything else. At the last step you will assume a uniform consumption for these users and calculate the incremental quantity you would be able to generate over a year.

A lot of you may already know the above, but most researches and trackers give you only the percentages for each step of the funnel, what they don’t give you is this is a percentage of what? The ‘what’ is your target market. How many people in absolute use your brand? This is usually arrived at by applying filters to the overall population of a given market.

To illustrate this, let’s assume we operate in a country with a total population of 1 million people. Now we are in the business of selling detergents and women are the main decision makers and category users, so we target them. We are also a premium brand with great urban distribution but not so much present in rural where our category is not used. So the 1st filter we may apply is an Urban/Rural one, let’s say this is 30% Urban so we’re left with 300,000 people. Since we talk to women in a certain age bracket we apply another filter of say 50% and are left with 150,000 people. Now only SEC ABC can afford us so we apply this filter of about 30% and we’re left with 45,000 people as our total target market. The filters will differ based on the market and category you operate in.

To this number we apply our full brand funnel percentages and end up with the number of people actually using our brand on a regular basis. So if your funnel has 100% awareness, 80% Ever Used, 60% Current used and 55% MOUB, you end up with 24,750 people as your brand base. The above exercise can be done on individuals or on no. of households, depends on the information available or sometimes the nature of the product.

The second thing is arriving at a uniform consumption level. Once you have the number of people using your brand, you will need a consumption level in order to arrive at an absolute incremental number. Once again, you can use at least a couple of approaches to reach a consumption level. The easiest one is to take your annual sales in tonnage and divide it by the number of users you have calculated above so that you get a per capita consumption number per year. Let’s say our detergent sells 247.5 tons annually then our consumption is 10kg of detergents per capita per annum. The other way is to apply consumption rates from readily available research data in the form of Household panel or from a detailed U&A study.

Armed with this data point we can calculate each buckets’ incremental volume potential assuming wherever they come into the funnel they flow through it as is.

Now that you have the volume potentials for each source of business, it’s easy to prioritize and assess where you need to allocate company resources. Even though we’re far from done in terms of having a way forward in place, but the above provides a solid framework to stand on.

The 5th bucket is a bit more arbitrary as in it involves setting the potential yourself. To increase consumption per capita you may set a target of increasing it by 10% or to double it or to aspire to the category consumption or regional consumption levels if they are higher. Once you set the bench mark, all you have to do is multiply the final users’ number with the new target and arrive at a volume potential for this bucket as well.

Now there may be several ‘assumptions’ with the above. Some of the more common ones include the fact that the real world is not so linear or that the flow of people in and out of each step of the funnel is much more fluid. This approach also discards the fact that actual consumption is taking place at each level of the funnel already and that in reality you actually have a mix of trialists, current users and most often brand users at any given point in time. I view these as precisely the reason to apply the model so that we can make some sense of the ever changing world. There are also other sources you can try and tap into or look for combinations. For example what if I attract the trial leakers and increase retention to the last step at the same time. Can be done, just requires more effort.

Another point is on the name of the steps used. The traditional terminology is Awareness, Interest, Consideration, Intent and actual Purchase or something to that effect. In the digital age the funnel has evolved to Attract, Convert, Close, Delight. The end result is the same. We are trying to arrive at a number of potential desired actions!

For consumer brands it’s the number of people who are actually using my brand or are buying my brand. On the digital space, it starts from generating leads form awareness and converting them to take the desired action of sending a message, placing a call or clicking the “buy” button. The logic remains the same. Applying different Usage levels in the funnel is a good way to arrive at how many actual consumers one has. In big markets with 100 million + populations I’ve seen the target market shrink to 10 or 15 million actual people you need to talk to. If you can figure out a touchpoint circle for them, you know where you can get them which makes the whole exercise less expensive and more effective.