Mystery of the Missing Profits (Part 8)

Fixing Funnel Frictions

In Solving eCommerce’s Fifth Funnel Friction, I wrote: “[Friction] exists in various forms and has a significant, often underestimated, impact on profits. These frictions have created inefficiencies and roadblocks in online and offline businesses, impeding customer engagement and diluting brand value. ‘Funnel frictions’ in customer journeys are the silent assassin of profits. From unidentified customers slipping through the cracks to inefficient ad spending, these frictions create hurdles in establishing profitable relationships with consumers. They lead to disjointed customer experiences, increased costs, lower conversion rates, and ultimately, eroded profits. The ability to identify and address these frictions, therefore, is not just about improving customer experiences but also about securing a brand’s bottom line.”

I have discussed the five funnel frictions and their fixes in my previous essays.

The 3 primary funnel frictions (ToFu, MoFu, BoFu – for top, middle, and bottom of funnel) reduce the efficacy of transactions from existing customers. The BTF friction is caused by existing customers becoming inactive, while the ATF friction focuses on the waste in acquisition. Here’s a summary.

  1. ToFu (Top of Funnel) – From Identity Gap to Anon-to-Known Conversion
  • Challenge: Transitioning site visitors, who are mostly anonymous, into identifiable leads.
  • Solution: Craft strategies to prompt visitors to voluntarily share personal details like email and phone number, establishing a digital connection that paves the way for a deeper relationship in subsequent funnel stages.
  • Breakthroughs: Email 2.0, Atomic Rewards
  1. MoFu (Middle of Funnel) – Alleviating the Attention Recession through Inbox Commerce
  • Challenge: Sustaining engagement in a digital environment where attention spans are shrinking.
  • Solution: Harness the transformative capabilities of Email 2.0. Incorporate innovative features such as Microns, Email Shops, and Engaging Footers, which elevate inbox interactions. Facilitate end-to-end user experiences, from product searches to payments, without ever leaving the email interface. Supplement this with Atomic Rewards, encouraging customers to proactively share zero-party data.
  • Breakthroughs: Email 2.0, Inbox Commerce, Atomic Rewards
  1. BoFu (Bottom of Funnel) – Transitioning from Red to Green Journeys
  • Challenge: Catering to potential buyers who, upon reaching a website or app, expect streamlined purchase paths.
  • Solution: Deploy the sophisticated tools of Martech 2.0 and create Digital Twins through the Large Customer Model, anticipating and suggesting the most appropriate next actions for users. Implement Velvet Rope Marketing to distinguish and cater to high-value customers with exclusive perks, elevating their loyalty and, in turn, overall profitability.
  • Breakthroughs: Martech 2.0, Digital Twin, VRM
  1. BTF (Below the Funnel) – Counteracting Dormancy and Churn with Reactivation via Progency
  • Challenge: Maintaining a connection with customers post-purchase and addressing the inevitable lapses into inactivity.
  • Solution: Instead of falling into the trap of pricey adtech strategies for retargeting, focus on revitalising dormant customers. Engage a Progency that maintains an unwavering focus on rejuvenating relationships with Best Customers, ensuring their journey with the brand continues.
  • Breakthroughs: Progency, Email 2.0, Atomic Rewards
  1. ATF (Above the Funnel) – Cutting Adtech AdWaste to Achieve Near-Zero Acquisition Cost
  • Challenge: Acquiring new customers with as low CAC as is possible.
  • Solution: Drastically reduce AdWaste stemming from misguided acquisition and reacquisition efforts. Three methods to make this happen: reacquisition, referrals, and using Best Customer Genome for targeted lookalikes.
  • Breakthroughs: Martech 2.0, Email 2.0, Progency

This needs to be combined with two mindset shifts: a focus on Earned Growth as the lodestar, and every CXO should wear the hat of a Chief Profitability Officer, actively driving profitability at every decision point.

These solutions might appear self-evident and should have been implemented much earlier. And yet, they are not being applied by marketers who keep pouring money into new acquisitions at the cost of bettering relationships with existing customers. The question then arises: Why should we expect a paradigm shift now?

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.