Customer Acquisition

A 360 Guide on Building a Customer Acquisition Funnel

May 18, 2023
9 mins read

Acquiring new customers is 5 times more expensive than retaining existing customers. So, while a good acquisition funnel is focused on getting new customers, a great one is focused on getting new customers AND retaining the existing ones.

Businesses utilize the customer acquisition funnel to attract new customers while actively nurturing existing ones. Which is a model that describes the various stages a prospect goes through to become your customer. It is a valuable tool for businesses wanting to improve their marketing and sales processes. Because it provides a framework for understanding the customer journey, offers insights into customer behavior and preferences, helps identify improvement areas, and measures and improves ROI.

This article is your complete guide to understating the customer acquisition funnel, its importance, various stages, and how to build and track it with tools like Usermaven. Let’s explore!

What is a customer acquisition funnel?

The customer acquisition funnel is a framework that tracks and monitors the buyer journey. It is a model that businesses use to walk their prospects through to become customers. Each stage uses specific techniques and speaks differently to the customer. The funnel aims to develop a consistent and viable approach to acquiring new customers and growing revenue instead of waiting for customers to come to you.

The framework under discussion is called a “funnel” because it refers to the nature of a real funnel. Just as whatever goes through the top of the funnel comes out smoothly from the bottom. An effective customer acquisition strategy should provide a smooth journey for prospects to become customers with the least resistance.

Why is a well-thought-out customer acquisition funnel important for your business?

The customer acquisition funnel is important for businesses because of the following reasons:

Develop a better understanding of the customer journey - It is a structured model of understanding the various stages a customer goes through, from awareness to conversion. It enables businesses to develop targeted marketing strategies that address customer needs and concerns no matter where they are in their buyer journey.

Identify gaps and areas of improvement - The continuous process of refining your funnel leads to developing a customer journey that acts like well-oiled machinery. By tracking various acquisition channels and funnel stages, businesses can identify any holes from where customers may drop without completing their funnel journey.

Measure and improve ROI - What cannot be measured cannot be optimized. Tracking the stages of the funnel allows you to measure the ROI of your marketing and sales efforts. You can optimize your customer acquisition process to increase sales and improve ROI with different metrics at each stage.

Gather insights into customer behavior and preferences - The customer acquisition funnel is an excellent tool for collecting insight from customer behavior data. It improves your sales and marketing funnel tactics and impacts other business areas, such as customer services, operation, product development, etc.

By understanding the customer acquisition funnel and the stages involved, businesses can develop targeted marketing strategies and optimize their sales processes for lead generation and customer retention.

Understanding the stages of customer acquisition funnel

The stages in a customer acquisition funnel refer to the different steps a customer takes in the acquisition process. Let's look at each stage in more detail.

1. Brand awareness

The first stage of the customer acquisition funnel is where people become aware of a business or brand. The marketing team is mainly responsible for implementing inbound marketing techniques to launch the product in the market and make people aware of the brand.

This stage provides the foundation for the entire acquisition process. A strong brand awareness strategy can provide a wider reach and build potential customers' curiosity about the brand. You can strengthen your brand awareness using the following techniques.

Content marketing: You can use content marketing to create brand awareness with valuable and informative content that educates and engages visitors.

Social media marketing: You can increase reach and visibility by creating and sharing informative and engaging content on social media platforms.

Referral marketing: Businesses use recommendations from existing customers to attract new ones with referral marketing. It uses word-of-mouth, social media sharing, user-generated content, and reward programs to promote a brand resulting in increased brand awareness.

Video marketing: A video is a powerful tool used in marketing to create brand awareness. Video content performs better on social media than text or image-based content. You can create product demos, educational content related to your industry, customer testimonials, and influencer collaborations to engage your target audience.

Paid ads: Another effective way to create brand awareness relies on the targeting capabilities of advertising platforms to reach a specific audience. You can use display ads (appear on websites, apps, and social media), search ads (appear on SERPs), social media ads (appear on social media platforms like Facebook, Instagram, etc.), and video ads (on video-sharing platforms like Youtube, Facebook, Instagram).

2. Interest building

The second stage in acquiring customers is where your customer base starts to build and when users are aware of your brand and show interest in your products and services. At this stage, you need to leverage their interest by offering the right information about your brand with content that educates and engages them.

During this stage, the website visitor is still in the research and evaluation phase and has not made a purchase decision. You need to position your product or service as the solution to a website visitor's problem. For this to happen, you must understand the customer’s problem, pain points, and needs. It can be done through customer research, surveys, or by analyzing customer feedback and reviews.

You can create educational content that provides valuable information, tips, and insights related to their problem and your product as a solution. Portray the key benefits of your product and use storytelling techniques to illustrate how your product improves your customer’s life. You can use blog posts, videos, or case studies that feature real-life scenarios and experiences.

Use customer-centric language that speaks directly to your customer and highlights how they will benefit from the product. Focus more on the benefits of a product, not just its features. Showcase the social proof to demonstrate the product's effectiveness in improving your customer’s life.

3. Visitor consideration

In the third stage, customers actively consider whether to make a purchase. They need information and resources such as more detailed product information, free demos, trials, or customer guidance to get that push to purchase the product or service.

The visitor consideration stage directly impacts the conversion rate. It determines if a visitor turns into a paying customer or not. Because if they don’t find the information or resources needed to make an informed decision, they will abandon the purchase process and move to a competitor.

To ease the customer’s journey, you can set up an initial small-step sign-up to provide a low-commitment option to engage with your brand and its offerings. It can be a free trial or a limited version of the product or service, allowing the customers to experience the product's value without committing to a full purchase.

The consideration stage is the best for introducing a newsletter sign-up to build customer relationships. Ensure you send high-quality content and provide value to keep them subscribed and lead them to convert. By capturing customer contact information, businesses can continue providing value and building customer relationships.

4. Visitor intent

At this point, the visitor has shown clear intent to purchase. Although they may be looking for a solution, not all visitors convert at this stage. Some may still be looking for more information. Analyze customer behavior data to understand their interest better and identify the bottlenecks in their purchasing decision. You can also place ads and offers tailored solutions that resonate with them.

The product or newsletter sign-up option in the visitor consideration stage can help you build a customer database which you can use at this stage to create ongoing engagement opportunities with customers. To optimize the visitor intent stage, businesses can use retargeting ads, email marketing, and personalized recommendations based on the customer's browsing and purchase history.

5. Evaluation

The fifth stage is when the potential customers decide to purchase a product but are still evaluating their options before making a final decision.

The evaluation stage is critical in the customer acquisition funnel because it is where potential customers are most likely to abandon the purchase process. It may be due to concerns about product quality, price, or other factors affecting their decision.

You can push them to convert by providing detailed product comparisons, customer testimonials, and pricing information. Offer exceptional customer service to provide the information to customers right when they need it.

6. Purchase

The final stage of the customer acquisition funnel is when you achieve the goal of converting a potential customer to a paid customer and generating revenue. This stage aims to make the buying process as seamless and frictionless as possible. It involves optimizing the checkout process, providing multiple payment options, and offering incentives such as free shipping or discounts for first-time buyers.

The customer acquisition funnel does not end here; it marks the beginning of the customer lifecycle. It presents the opportunity to nurture customer relationships, encourage repeat purchases, and drive long-term revenue growth. Offer exceptional customer service, provide clear and detailed order confirmation and shipping information, and follow up with customers after the sale to ensure their satisfaction.

Build a customer acquisition funnel with Usermaven

Creating a customer acquisition funnel for an analytics app can be challenging, but it's a critical step in attracting and retaining users. By understanding your target audience, identifying key metrics, and optimizing your funnel, you can increase user engagement and drive growth for your app.

Once you have figured out the target audience and created brand awareness, here is how you can build a customer acquisition funnel with Usermaven.

The first step in building a customer acquisition funnel is to create relevant events. Events are vital to Usermaven's core features to simplify your analytics tracking and represent the top actions and events to monitor, such as signups, purchases, button clicks, downloads, etc. Usermaven automatically tracks events, but you can add custom events and pin the most important ones.

  • Identify which events you want to track as the initial step of your user funnel. Are you measuring your visitors’ interest based on email sign-ups, or is there any CTA you want to track?
  • Create custom events if you don’t find your desired event in the list of automatic events.

Once you have created the events, head to the Analyze drop down and click on the Funnels button.

Analyze funnels with Usermaven


From here, you can create a new funnel or edit an already existing one. This will lead you to All Funnels which showcase all the funnels which you might have created. Click on “New Funnel” and add your events here.

Create Funnels with Usermaven


Let’s say, for the sake of example that you created a funnel to track the users who created a “segment”, it would look something like this:

Funnels with Usermaven

The above screenshot shows the user’s identity, which can be the visitors or the companies. The second step shows the number of visitors who clicked on create a segment followed by the total number of visitors who were successful in creating a segment. You can also see the number of visitors who dropped off at the various points of the funnel. In the top right corner, the figure 0.81% indicates the percentage of people who completed this particular journey; in other words, this also indicates the conversation rate.

FAQs on Customer Acquisition Funnel

What are the components of the customer acquisition funnel?

The components of the customer acquisition funnel can vary depending on the business and industry. But the typical components include:

Awareness -  Customers become aware of your brand

Interest - Customers take an interest in your brand and explore it to learn more

Consideration - Customers consider your product for purchase and seek more information to make the purchase decision

Conversion - Customers purchase your products

Retention - Customers turn into loyal customers with repeat purchases

Advocacy - Customers become your brand advocates because of their satisfaction

How To Measure Customer Acquisition Cost?

To measure the customer acquisition cost (CAC), calculate all the sales and marketing expenses, such as advertising, email marketing, events, content creation, and sales team income. Next, determine the number of new customers that purchased during a specific period. Dividing the total marketing and sales expense with the number of new customers will give you the customer acquisition cost.

CAC = Total marketing and sales expenses /  total number of new customers acquired in a given period

If a business spends $20,000 on marketing and sales during a quarter and gains 200 new customers, its CAC will be $200.

How can you analyze your performance as a company at the different stages of the funnel?

Analyzing your performance during the various stages of the customer acquisition funnel is essential to ensure it achieves the set goals. Below are the ways you can measure the performance of various funnel stages.

Awareness -  Track metrics related to website traffic and social media engagement.

Interest - Measure metrics such as email sign-ups, content downloads, and social media follow.

Consideration - Monitor demo requests, product reviews, and comparison shopping.

Conversion - Track metrics like conversion rate, average order value, and customer lifetime value.

Retention - Calculate customer retention rate, repeat purchases, and customer satisfaction metrics.

Advocacy - Track referrals, social media mentions, and online product reviews.

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