Mastering the funnel: Mapping your customer’s journey to revenue growth

Every company with something to sell depends on attracting customers and getting them to trade money for value. That’s true whether you are selling sports gear from a bricks and mortar location, or a software solution online.

We have always found it worthwhile to pay attention to the larger customer journey – the process that starts with them identifying a need, and that intersects, ideally, with them finding you and making a purchase.

Today, I want to talk about what we’ve been doing maximize the potential of our customer journey. The principles I lay out here can be applied to any company looking for customers, be they a software-based service provider or a retailer.

Why the customer journey is important

Without customers to buy their products or services, sellers go nowhere.

If you are contemplating starting a business, you need a pretty good idea of who, where, and how big your market is. If you already run a business, you probably have a slightly better sense of who your customers are.

But do you know enough about them – what motivates them, how they make the decision to buy, how much they are willing to spend? Do you know where do they hang out, who they look to for validation, and how big your market is? Only by understanding your customer purchase funnel can you make informed decisions that send customers in the right direction.

It’s all too easy, when looking to the future, to rely on what worked in the past.

But that can be dangerous, because the world is constantly changing. New competitors, new products, and new ways of doing things can appear out of nowhere. You have to stay on top of things.

Besides, just saying you will continue to do what worked well in the past doesn’t give you much control over outcomes. If you want to ramp up your rate of growth, you need to do better than you did last year.

Understanding and improving your customers’ journey allows you to have a measure of control over the process, and lets you improve the odds of positive outcomes.

Here’s how to do it, in six steps:

(We identified these six steps thanks to the efforts of two of my colleagues, who have worked tirelessly in defining and polishing our revenue funnel -- Tomek Ogrodzinski our research and analytics lead, and Yan Kong, our accounting supervisor.)

1. Map your customer journey

There’s a process people go through as they become life-long customers.

Think about the last product you bought. From a buyer’s perspective, the process starts with a need or want, then moves to a research and consideration phase before a decision is made to purchase. Anxiety is often highest right after the purchase, as the buyer reconciles the actual value with the expected promise.

From the vendor’s point of view, that same journey starts with demand generation, then moves to ensuring that a buyer with a need is aware of your company, upon which you nurture and engage in an effort to convert them to a customer. It’s then that you need to deliver on the promise and turn them into an advocate.

The list of steps in the process can be pretty long. But it is important for a company looking to grow to create as detailed list as possible. Because every single item on that list is a touchpoint, a lever than can be adjusted and tweaked to maximize results.

So the first thing you need to do is create a map of your customer journey. It should be as detailed as possible, listing every single step of the customer journey that can be measured, adjusted or improved. And remember, your customers don’t confine themselves to only one of your departments.

2. Analyze the journey

Once you have created the list of steps, analyze it – in detail. No step in the process is too small for scrutiny.

What you want to do is understand what motivates customer behaviour from one step to the next.

You also need to analyze the financial implications of making changes.

In our case, a lot of potential customers never make it past the first five minutes of a trial of our service. We needed to understand whether it was worth spending money bringing in a lot more people for the trial, on the assumption that the more people who started a trial, the more customers we’d end up with, or whether we’d get a better bang for our buck by working more closely with the people who are already starting a trial, to convert more of them into clients.

To answer that question and others like it, you have to understand customers’ transition points and their impact on future revenue. Every transition point becomes a lever we can act on.

By the end of this second step, you will have taken your list of customer touchpoints and figured out which elements are more important, costly, etc.

3. Understand each lever

Next, you need to understand how all the items on our list interact with a number of variables.

History helps. You know what worked in the past, right?

But you need to go deeper, and figure out what affects each lever and how those factors interact with the market, with pricing and with each other. What are the balancing forces? If you increase X, will all other items in your funnel stay the same, or will some lever degrade?

Working with our sales, support and product team, we created a spreadsheet to figure out what things were creating the biggest impact on the levers we had identified. The spreadsheet contained variables that could be worked on and adjusted. As we played with the file, increasing one value and decreasing another, we got to the point where we were able to see just what levers were likely to have the greatest positive impact on the customer funnel.

This turned into a snapshot of our baseline model for the customer funnel – something we could work with and work on.

A word of caution, by the way, when you do this exercise. Entrepreneurs are optimists. “Of course this will work!” many will claim. It’s important to be realistic when looking at levers and transition points; don’t let entrepreneurial optimism blind you to certain realities.

4. Play with the plan you’ve created

Now that you understand the funnel, and which levers do what, you can start to play with it. Here’s where you ask questions like:

• What are the things we can do from an advertising and marketing perspective to move certain levers?
• Do we have the right people in the right places to effect the changes we plan?
• Are our prices right for the market?
• Are we engaging with and onboarding our customers in the right way?

Various teams can be tasked with looking for ways to influence the customer funnel. Some things they come up with will overlap – and that is good, because it opens the door to necessary collaboration between groups.

Some of the things you can do will have a bigger impact than others. And as you play with the funnel plan, you will begin to see what works and what doesn’t.

For example, if you come up with a plan to double the number of people who enter your store, but your plan shows that sales might only go up by 10%, then you’ll be spending money attracting the wrong customers.

Better to spend on something that brings in a better return.

Another word of caution: It’s important as you do you modelling to plot out the downside of any tweaks. Because not every adjustment will lead to a positive outcome.

By the end of this step you should have a series of projects to work on the funnel – for example, five initiatives to be undertaken by five different departments within the company. Each would have an overlapping impact on the conversion rate of visitors into customers.

In our case, we plugged the projects into our spreadsheet and turned certain projects on or off to see what the impact would be on the expected result. It was quite cool to see what happened, because it allowed us to visualize what we happen if we decided we had the funds to undertake only three of the five projects.

At this stage – while you’re still playing and before you have begun to act – it’s also good to get everyone’s ideas about how they can impact the funnel.

5. Act on the information you’ve gathered

Once you know what levers to move, and once you have a plan to move them in place, you can start to act. As noted in previous posts, we extensively use objectives and key results (OKRs) to help align everyone and ensure a high degree of accountability.

With the approval of our board, we used our funnel adjustment plan to get our revenue forecasts in place. Having a plan gave us a lot of confidence in our projections, and it gave teams within the company a sense of accountability. They had told us what they were going to do to adjust the funnel, and now they were expected to follow through.

6. Re-assess and adjust the funnel as required

Once the plan was implemented, we met every two weeks to adjust it in the light of ongoing results.

For us, one of our big issues is converting people who begin a trial of our service into customers. We get a lot of website traffic, and we were looking for ways to convert more visitors into customers.

One of the projects put forward in our plan was to allow people to sign up for a trial using their Google credentials.

This feature was rolled out earlier this year, and we immediately saw a 30% increase in the number of daily trial starts. This was better than expected.

We now need to monitor how many of them convert into customers. As long as the number is in line with our earlier conversion rates, we’re good. In the meantime, we have gone into our spreadsheet and adjusted it to show that the Google sign-in lever is giving better-than-expected results.

The bottom line in all of this: Having a clear plan for tweaking the customer funnel allows you to back up revenue projections with logic. And that takes some of the guesswork out of the process.

Allan Wille is a Co-Founder and Chief Innovation Officer of Klipfolio. He’s also a designer, a cyclist, a father and a resolute optimist.