What is a Brand Funnel?

Brand funnels are a common way to quantify the relationship between individual brands and the mass market of potential consumers. They are based on an observation of the process that people must go through on their way from not knowing about a brand, product, or service to becoming a loyal customer. This discovery path can actually be applied far beyond the realm of brands and products, though most businesses don’t capitalize on the versatility of brand funnels in other contexts.

Brand Funnel Metrics

So what is the discovery process described by brand funnel metrics? It’s a set of steps that all consumers go through when buying virtually any product. These steps are universal to consumer goods, business-to-business products, and even large infrequent purchases like homes or medical procedures. While different practitioners might have their own nuances (and labels) at different stages of their own brand funnel models, the common stages are as follows:

Aware: The first step of coming to purchase a product or brand is learning that it exists in the first place. Do consumers recognize your brand and understand what you sell? Do people know that your product exists?

Marketers often talk about awareness in two ways: unaided and aided. Unaided awareness measures how often consumers think of your brand (or product) off the top of their mind. For example, if asked to “please name some brands of athletic clothing,” you might say “Nike, Adidas, and Puma.” You would have unaided awareness of those brands.

As a follow-up, the researcher might then show you a list of 15 brands and ask you to select which ones you’ve heard of. You would certainly select Nike, Adidas, and Puma, but you might also select New Balance, Under Armour, Reebok, and The North Face. You know these brands when you come across them, even though they didn’t pop into your mind all without some assistance. You would have aided awareness of those brands.

Familiar: Consumers might say they are aware of a brand even if they have little idea of how what the brand sells or how much their products cost. This often is the case for companies that spend a lot of money on top-of-funnel marketing (like TV, radio, and billboard advertising) but poorly communicate their value proposition. After consumers indicate which brands they are aware of, they are then asked which of those brands they are familiar with.

Whether you ask about familiarity in your brand funnel questions depends on the industry and brand. We have found that in food and snacks, for example, many consumers have heard of “up and coming” brands like Siggis Yogurt, RXBAR, and So Delicious but may not be able to tell you what they are. In other industries, like automobiles, asking familiarity is superfluous. In short, whether to include this stage of the brand funnel depends on consumer and marketing dynamics in your category.

McDonald’s enjoys the #1 spot in category unaided awareness as well as near universal aided awareness. With over 38,000 locations in over 100 countries, the Golden Arches have become one of the world’s most recognizable symbols.

Consider: Just because you’re familiar with a brand doesn’t mean you’d buy it - and that’s exactly what this part of the brand funnel measures. The consideration stage tells us the share of “familiar” consumers (or “aware” consumers, if you opt to not ask about familiarity) who would consider buying from you if presented with the opportunity.

Adopt (or Ever Purchase): The adoption stage of the brand funnel is straightforward -- of the consumers who are familiar with your brand, how many have ever purchased? This stage of the brand funnel reveals your brand penetration within a market.

Repeat Purchase: The repeat purchase stage of the brand funnel asks consumers who have ever purchased a brand whether they’ve purchased that brand within a specified time frame (usually past 12 months). This metric is instrumental in illuminating repeat purchase and lapsed buyer dynamics.

The selected time frame depends completely on your product’s sales cycle. If you’re selling protein bars, it would make sense to ask about a purchase within a relatively recent period of time (e.g., “Which of the following brands have you purchased within the last 3 months”). If you’re selling winter jackets, you may want to extend this period to the last 12 or 24 months. And if you’re selling refrigerators, TVs, or other big ticket electronics, you may want to extend it even further.

Advocate: Of the brands consumers are familiar with, how likely would they be to recommend them to family members or friends? This is Net Promoter Score question, and it has come under fire in recent years for not delivering what it promised -- actionable, simple, robust information.

While we understand why brands may have dropped NPS, we still believe it has noteworthy merits. First, it is widely understood by non-research executives and therefore generates conversations about consumers. Second, it can be used as a benchmark against third party data (which often captures NPS as the metric of choice). And third, NPS actually does correlate with brand advocacy. Our advice? Don’t put all your eggs in the NPS basket, but ask the question.

Fueled by impeccable customer service and customer-friendly policies, American Express has built an army of loyal brand advocates sing Amex’s praises, and in doing so, encourage others to switch to Amex.

Future Purchase Intent: In addition to including advocacy in your brand funnel, we suggest asking consumers which brands they are likely to buy in the future. One might assume that this question would perfectly line up with the previous (advocacy), but that’s not always the case. For example, you might not be likely to recommend the toothpaste you use, the yogurt you eat, or hotel you stay in when you visit grandma, but you might still have a high likelihood to buy from these brands next time you’re in the hygiene aisle in Target, shop for groceries, or book a hotel.

The term, “funnel,” comes from the idea that the total number of people at each stage is smaller than the number of people at the previous stage in this process. Thus, we can model the size of the group at each stage by drawing an upside-down pyramid, or funnel-shaped, diagram.

Interpreting and Improving the Brand Funnel from “Top to Bottom”

We don’t just track brand funnel metrics to make our marketing team feel good (or bad). This type of information has clear and immediate business implications because improving your brand funnel has direct impacts on financial outcomes for the organization.

There are two main ways to interpret brand funnel metrics: one is to analyze the absolute values of each stage and the other is to look at the conversion rates from each stage to the next.

Absolute Values: Upon looking at your brand funnel numbers, business leaders can quickly identify how your company stacks up in terms of presence and receptiveness with consumers in your market. If our aided awareness is 25% and our competitors’ aided awareness is 50%, we can say that they are about twice as widely known as us. This has massive implications for how we structure our marketing budgets and strategic goals in general. Do we need to compete with other companies on sheer size of awareness? Or can we win by efficiently converting and retaining users from a smaller audience?

Healthy brand funnel metrics are a double-edged sword for growth. On one hand, low brand funnel readings can indicate greater opportunity for growth because they open the door for marketing and product positioning efforts to raise the numbers. If you are able to grow awareness, consideration, and conversion over time, you’re bringing net new customers into the fray for your brand.

On the other hand, the higher your absolute brand funnel metrics are, the more challenging (and expensive) it will be to raise them farther. As awareness approaches 80%, it becomes increasingly difficult to push it up even higher. So it might make sense to focus on other metrics that have lower absolute ratings. Choosing where to focus is often done by looking at the relative conversion rates of each stage.

Relative Values: Because the brand funnel model is set up with clear stages, we can measure the rate at which customers who have completed one stage of the brand funnel also go on to complete the next stage. Those that do not complete the next stage are said to “fall out” of the brand funnel at that point.

For example, a customer who has heard of your brand but is not at all familiar with your products, services, and prices has fallen out between awareness and familiarity. A consumer who is familiar with your offering but would not consider buying it has fallen out between familiarity and consideration. A customer could fall out of your brand funnel between any two stages on the journey to becoming a loyal customer.

While many executives and marketers intuitively know that they should be improving the conversion rates of each brand funnel stage, we often find that people don’t appreciate the full power of these metrics to illuminate business strategy. Let’s take a closer look at brand funnel fallout metrics, what they mean, and how they move the needle for a company.

Fallout: The Importance of Asking Why

At Langston, we’ve found that each of the brand funnel fallout ratios corresponds to very real, very common problems in business.

Here’s a quick summary of each fallout ratio and what it means if the reading is unfavorable:

Unaided Aware/Aided Aware: The unaided/aided awareness conversion rate can be thought of as a “recall vs recognition” metric. It sheds light on how top-of-mind an aware brand is. We usually find that only world-class, ubiquitous brands that have poured hundreds of millions of dollars into top-of-funnel marketing over the course of decades achieve a high unaided/aided awareness conversion rate. Examples include Coca-cola, Nike, and Apple.

Aware → Familiar: The aware/familiar conversion rate tells us how many people who have ever heard of the brand actually know what the brand sells (and roughly for how much). You may have heard of an up-and-coming apparel brand in conversation, but do you know more or less what they sell, what makes the brand different, what their products look like, or about how much the brand’s products cost? If not, you’re aware of the brand but not familiar with it. Brands with an aware/familiar conversation rate near 100% have done a great job at communicating what their brands offer. An example includes Geico, a brand whose message is crisp, consistent, and easy-to-grasp. A brand with a low aware/familiar conversation rate may have spent a lot of money at the top-of-the-funnel, but has poorly communicated what their brand actually offers.

Familiar → Consider: Familiar/consideration conversion tells us the percentage of consumers familiar with your brand who would consider buying it. A number of 100% means every person who knows your brand would consider buying it; 0% means the opposite. What’s a good familiar/consider ratio? It completely depends on your market. Ultra-premium car brands (think Lamborghini or Ferrari) have an extremely low familiar/consider conversion simply because they are priced too high for the everyday consumer. More everyday brands like Walmart and Target should expect familiar/consider conversion rates upwards of 80%.

Consider → Ever Purchased: The consider/ever purchased conversion rate gives us insight into how the dynamics of potential future purchase behavior and past purchase behavior interact. When this ratio exceeds 100%, it means more consumers would consider the brand than have ever purchased it. When it falls below 100%, it means more consumers have ever purchased than would consider.

On one hand, it can be a promising sign when more consumers would consider a product than have ever tried it (100%+), as it often signals pent up demand for a brand. This situation is often the case for fast-growing start-ups like White Claw, Allbirds and Tesla. On the other hand, when consideration exceeds adoption for too long, it might indicate that consumers are unable to find your brand (physical availability barrier), don’t think to buy your brand (mental availability barrier), or are stuck in their old ways of buying competitors (habitual barrier).

A consider/ever purchased ratio of <100% means more consumers have ever purchased the brand than would consider buying it. This is a strong negative sign for brands, as it usually signals that brands have become stale, irrelevant, or uncompetitive (think K-Mart or Sears).

White Claw and other hard seltzer brands experienced a tsunami of demand in the mid-2010s, causing their consider/ever purchased rates to soar. These ratios later declined as more consumers had the chance to try the bubbly beverage.

Ever Purchased → Purchased Recently: The ever purchased/purchased recently conversion rate illuminates lapsed buyer and repeat purchase dynamics. A conversion rate of 100% means that every customer who has ever purchased your brand has done so within a specified period of time (oftentimes, in the last 12 months). In other words, high repeat purchase. A rate of 0% means that no customer who has ever purchased your brand has done so in the recent past -- i.e., every buyer has lapsed.

Once we identify an area of interest (or concern) in brand funnel conversion rates, we immediately want to dig deeper into that stage. Langston does this by asking one simple question powered by survey logic - why?

Concluding Words

Here are a few examples of how Langston would ask brand funnel fallout questions.

Familiar But Would Not Consider: “You indicated that you are familiar with [brand] but would not consider buying it. Why not?”
Ever Purchased But Would Not Consider: “You indicated that you’ve purchased [brand] but you would not consider buying it again. Why not?”
Would Consider But Never Purchased: “You indicated that you would consider [brand] but you’ve never purchased it. Why not?”
Ever Purchased But Not Repeat Buyer: “You indicated that you purchased [brand] but not in the last 12 months. Why not?”

Once we build our view of why people are falling out of the brand funnel where they are, we have created three very powerful pieces of information to drive decisions in the organization. We now know roughly how many consumers in our target audience have reached each stage of their journey to becoming loyal customers, as well as which stages are the biggest barriers to consumers on that journey, and why they are falling out of our brand funnel at that point. Armed with this information, how could you not generate and act on strategies to improve your brand funnel and, thus, drive more customers into your products?

Our team is committed to making the collection and interpretation of brand funnel metrics seamless for our partners. If you’d like to learn more about how we collect brand funnel metrics in our Better Brand Tracker or Inflection Point products, schedule a free 30 minute intro call below.

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DISCLAIMER: We base our research, recommendations, and forecasts on techniques, information and sources we believe to be reliable. We cannot guarantee future accuracy and results. The Langston Co. will not be liable for any loss or damage caused by a reader's reliance on our research.

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