Conversion funnels as sales and marketing instruments

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Prydneprovs 'ka State Academy of Civil Engineering and Architecture

Dnipropetrovsk State University of Internal Affairs

Grigol Robakidze University

Conversion funnels as sales and marketing instruments

Olena Galushko

M.Sc. (Economics), M.Sc. (Computer Sciences), Senior Lecturer

Yevheniia Kovalenko- Marchenkova

Ph.D. (Economics), Associate Professor

Murtaz Kvirkvaia, Ph.D. (Economics),

Associate Professor

Georgia, Ukraine

Abstract

The article deals with the topical issues of attracting consumers through conversion Abstract. The article deals with the topical issues of attracting consumers through conversion funnels. Funnels are modern tools that are widely used in marketing and sales and allow us to track and analyze the steps that customers take on the way to a purchase. With the help of funnels, we can determine at which stage customers most often abandon a purchase and develop a strategy to increase the conversion. Funnels allow to identify weak points in the sales process and improve it, which leads to an increase of the company's profit.

The article discusses the stages of the conversion funnel and its features in marketing and sales. Special attention is paid to the functioning of conversion funnels in e-commerce. The article also discusses methods of improving the conversion funnels, such as: modern information technologies, optimization of forms, personalization of communication with the consumers, and others.

The behavior of the consumer at different stages of the conversion funnel was analyzed, as well as the factors that could reduce the effectiveness of the funnel. Recommendations are offered to improve the efficiency of using the conversion funnels in marketing and sales.

Keywords: buyer, purchase decision, conversion funnel, AIDA model, content, e-commerce.

Анотація

Олена ГАЛУШКО,

Євгенія КОВАЛЕНКО-МАРЧЕНКОВА, Муртаз КВІРКВАЯ

ВОРОНКИ КОНВЕРСІЇ ЯК ІНСТРУМЕНТИ ПРОДАЖІВ ТА МАРКЕТИНГУ

Стаття присвячена актуальним питанням залучення споживачів через воронки конверсії. Воронки є сучасними інструментами, які широко використовуються в маркетингу і продажах та дозволяють відслідковувати і аналізувати кроки, які клієнти роблять на шляху до покупки. За допомогою воронок можна визначити, на якому етапі клієнти найчастіше відмовляються від покупки, і розробити стратегію для збільшення конверсії. Воронки дозволяють виявити слабкі місця в процесі продажу та покращити його, що призводить до збільшення прибутку компанії.

В статті розглянуто етапи воронки конверсії та її особливості у маркетингу і продажах. Особливу увагу приділено функціонуванню воронок конверсії в електронній комерції. Також в статті обговорюються методи удосконалення воронок конверсії, такі як: використання сучасних інформаційних технологій, оптимізація форм, персоналізація комунікації з клієнтом, та інші.

Проаналізовано поведінку споживача на різних етапах воронки конверсії, а також фактори, які можуть знижувати ефективність воронки. Запропоновано рекомендації щодо підвищення ефективності використання воронок конверсії в маркетингу і продажах.

Ключові слова: покупець, рішення про покупку, воронка конверсії, модель AIDA, контент, електронна комерція.

Introduction

Sales promotion has always been an important part of marketing. The role of sales promotion in marketing is to grab the attention of potential buyers and convince them to make a purchase. To do this, there are the following traditional methods: advertising, promotions, loyalty programs, cross-selling (offering additional goods or services to customers who have already made a purchase), offering free samples, remote customer service contact centers, service centers, etc. Sales promotion methods are constantly evolving and changing in accordance with changing market and consumer needs. For example, in recent years, more and more attention has been paid to Internet marketing and social networks. New technologies have also emerged, such as mobile apps and chatbots, that help improve customer interactions and increase sales. But all methods of sales promotion require an answer to the question: "How to lead the buyer to take action, i.e. purchases?" - and that is what conversion funnels are for.

A conversion funnel is a tool that allows you to track how many people who received the introductory information took the targeted action. The target can be any action that meets the marketing goals of the company - registering on the site, requesting a call back or consultation, subscribing to the newsletter, downloading promotional materials, purchasing, etc. But if we are talking about a sales funnel, the target action is a purchase.

Analysis of recent research and publications

The issues of sales promotion and the use of sales funnels in their work were considered by such domestic and foreign scientists as: F. Kotler, J. Bowen, J. Makenz, S. Beheshti, N. Borozdina, I. Lytovchenko, E. Malikova, O. Maslov, E. Mironova, I. Sapitskaya, M. Morozova, M. Oklander, N. Shimin etc. Still, the research of sales marketing is a relevant scientific issue, since it allows you to analyze the movement of the buyer at all stages of the sales process: from the first contact to the conclusion of a transaction in order to optimize the sales process and increase the number of transactions (Lytovchenko, 2008; Maslov, 2019).

The purpose of the article is to investigate features of marketing and sales funnels and to develop recommendations for their efficiency increasing.

Formulation of the main material

The history of the conversion funnel is connected with the development of Internet marketing and E-commerce. In the early 2000s, companies began to actively use the Internet to sell their goods and services. However, they faced a problem - many site visitors did not make purchases, but simply left the site. To solve this problem, a conversion funnel model was developed, which helped companies optimize their website and increase sales. Since then, the conversion funnel has become a widely used model in marketing and sales that helps companies optimize their business and increase the effectiveness of their marketing campaigns. consumer conversion funnel purchase

A conversion funnel is a model that maps the path a potential customer takes from first contact with a product or service to the completion of a purchase. It includes several stages, such as familiarization with the product, interest, desire, action, etc.

But the history of its origin began much earlier, when in 1898, the American Elias St. Elmo Lewis introduced the new term "consumer funnel" - advertising that should grab the users attention to interest them, and then convince that the product is needed and persuade to buy. Later in 1921, this approach became known as AIDA model: Attention ^ Interest ^ Desire ^ Action. Since the 1960s the AIDA principle began to be portrayed schematically in the form of a funnel, and synonyms arose: shopping funnel, customer funnel, marketing funnel, sales funnel (Mazar, 2023, Yankulov, 2022).

At the first stage (attracting attention), a potential client must notice a product or service. This can be achieved through the use of bright advertising, attractive design, etc. Psychologically, this is due to the fact that people usually pay attention to something new and unusual.

At the second stage (interest), a potential client begins to be interested in a product or service. This can be achieved by providing information about a product or service that will be of interest to the customer. Psychologically, this is due to the fact that people are usually interested in what is relevant to their needs and desires.

At the third stage (desire), a potential customer begins to desire the product or service. This can be achieved by providing information on how the product or service can meet their needs and desires. Psychologically, this is due to the fact that people usually want what is relevant to their needs and desires.

At the fourth stage (action), the potential client makes a purchase. This can be achieved by providing convenient ways to purchase and pay, as well as by providing information on how the product or service can be used. Psychologically, this is because people usually make a purchase when they see that a product or service can help them meet their needs and desires.

Modern versions of AIDA include additional components: satisfaction - AIDAS; confidence - AIDCAS. However, it remains the most common the classic folding sales funnel model of four segments: cold contact (engagement the attention), interest, conviction and purchase (Maslov, 2019; Lytovchenko, 2008). The AIDA model helps break down the sales process into four stages and determine what marketing and sales activities are required at each stage to successfully close the deal.

Advantages of the AIDA model are:

Helps to structure the sales process and determine the necessary actions at each stage;

Takes into account the psychological characteristics of consumers and their behavior when making a purchase decision;

Allows you to create an effective marketing and sales strategy aimed at converting potential customers into real customers.

Disadvantages of the AIDA model are:

The model is focused on only one side of communication (from the

seller to the buyer), not taking into account the possibility of feedback and interaction with a potential client;

Does not take into account the individual characteristics of each potential client, which can lead to ineffective sales strategy;

The model does not take into account the influence of competitors on the sales process.

The conversion funnel is a generalized algorithm based on which the Customer Journey Map is built. Marketing efforts and tools are directed to ensure that the funnel is effective and leads to the targeted action. But the way a buyer goes through each stage of the funnel is also influenced by individual psychological characteristics.

Consumer behavior is influenced by the following factors:

Personal. Whatever the needs of the customers, they acquires the product based on his lifestyle at the moment. The lifestyle can be attributed to its primary values, interests, outlook on life and personal preferences. This also includes the type of personality and character of a person, that is, how selfconfident he is, how he puts himself in society, what level of self-confidence he has, and others. It is also worth considering how a person relates to himself and to which social class he belongs:

Social. Human is a social being, so is somehow influenced by the people around. This may be a primary social circle, such as family and close friends, or a secondary one, such as work colleagues or hobby groups.

At the same time, social influence can be of several types:

Normative, which is based on certain rules, orders and penalties;

Value-oriented, which involves accepting the values and beliefs of a group of people;

Informational, in which there is an exchange of data and experience;

Social, which implies the participation of a person in the life of a community;

Status, in which the realization of certain needs and desires can be limited if a person does not have the necessary level of influence within the group.

Psychological. These factors are built on the basis of personal experience and emerging emotions and feelings about it. For example, one of the factors is learning, in which the user learns different skills in relation to a product or service. Based on this, attitudes will be formed not only towards certain goods and services, but also towards the brand, brand of goods or manufacturer, and the attitude is very difficult to change if it has already been formed.

When working with customers, it is worth considering who, how and how much can influence his final decision to buy from the side. This point also includes the perception of the product, built on the basis of the meaning that a person reads in advertising or from other sources of information.

Steps of rational decision making are:

Definition of need. A person realizes that he needs to buy something in order to satisfy his need;

Market research and selection of the optimal product. A person conducts market research, compares prices, quality and other parameters of products in order to choose the best option;

Assessment of risks and benefits. A person analyzes the possible risks and benefits of purchasing a product in order to make a purchasing decision;

Making a purchase decision. A person makes a decision to purchase a product based on the analysis.

Steps of emotional decision making are:

The emergence of an emotional need. A person feels an emotional need to buy a product, such as a desire to please themselves or others.

Intuitive product selection. A person chooses a product based on their emotions and intuition, without conducting a detailed market analysis.

Confirmation of the decision. The person is looking for confirmation of their decision, for example, reading reviews or asking the opinion of friends.

Making a purchase decision. A person makes a decision to buy a product based on their emotions and beliefs.

Depending on the product or service that the company is promoting and the target audience, AIDA model can be adapted to take into account relevant factors, including the emotional aspect of decision-making or the rational evaluation of the benefits of the product. It should be noted that the AIDA model is only a tool for analyzing consumer behavior and cannot take into account all the factors influencing their decision making.

To increase the effectiveness of the AIDA model, the following recommendations can be added to usual company's activity (Table 1):

Consider the characteristics of the target audience;

Include feedback and interaction with a potential client in the sales strategy;

Analyze competitors and take into account their influence;

Use modern technologies and tools such as CRM, Data Mining, artificial intelligence.

Table 1 Action plan for AIDA model

Source: created by authors based on (Sellers, 2021)

The AIDA framework has limitations as it does not consider non-linear buyer journeys, impulse purchases or short sales cycles, and is only a small part of a holistic business strategy. Focusing on one AIDA element per marketing tactic may not be effective, and the framework may be too simplistic for more involved or nuanced buying decisions. Other models, like the flywheel, may be more appropriate for a holistic business strategy (Sellers, 2021; Galushko, 2019).

It is also worth considering that not all customers reach the end of the funnel and can fall off at any stage. Average conversion ratio for E-commerce is 1-4 %. To successfully work with a funnel, company needs to constantly analyze its effectiveness and make adjustments to the marketing activity.

The development of artificial intelligence and its application in software products using the AIDA model (CRM systems) will significantly increase the efficiency of conversion funnels due to a more client-oriented approach. In our opinion, artificial intelligence will be able to solve the following tasks in conversion funnels:

Data mining about potential customers. To collect data about potential customers, you can use tools such as web analytics, social networks, CRM systems, etc. The data can be collected using machine learning algorithms that can automatically process large amounts of information and highlight the most significant indicators, such as behavioral factors, customer interests and needs.

Personalization of communication with potential customers. To personalize communication with potential customers, you can use machine learning methods that allow you to automatically analyze customer data and determine their needs and preferences. Based on this data, you can create personalized messages and offers that increase the likelihood of converting into real buyers.

Automatic management and optimization of the sales process. To automatically manage and optimize the sales process, you can use the following tools: automatic systems for sending messages and offers, as well as machine learning algorithms that allow you to automatically determine the most effective sales strategies and optimize the sales process.

Analysis of the effectiveness of each stage of the sales funnel. To analyze the effectiveness of each stage of the sales funnel, you can use both big data analysis, statistical methods and machine learning.

Forecasting sales results. To predict sales results, you can use machine learning methods that allow you to analyze large amounts of data and determine the most likely sales results. This data can be used to optimize the sales strategy and improve the efficiency of the sales process.

Conclusions

The AIDA model helps to structure the sales process and takes into account the psychological characteristics of the target audience, but does not take into account the individual characteristics of each potential client and the influence of competitors on the sales process. In general, for successful marketing and sales activity, it is necessary to take into account all the factors that affect consumer behavior, and use the appropriate tools and methods to achieve maximum results. AIDA model needs to be adapted to take into account relevant factors, including the emotional aspect of decision making or the rational evaluation of product benefits

The development of artificial intelligence can significantly increase the effectiveness of conversion funnels through a more customer-centric approach. To successfully work with a company's funnel, it is necessary to constantly analyze its effectiveness and make adjustments to marketing activity.

References

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