What is the Marketing Funnel?

No matter what kind of business you have, it’s crucial to understand how to best engage with audiences at the different stages of the buying journey. Because they’re not all the same, it’s vital to have a strategy for each stage to scale your ads - and your business effectively. 

How does the marketing funnel work?

The marketing funnel is split into Acquisition, Retargeting, and Retention, or ARR for short. 

We segment our audiences this way because each audience is different and requires specific attention. ARR segmentation is a proven and often-used marketing strategy that helps businesses better control their ad accounts and make tactical and effective decisions. 

Simply put, Acquisition is your brand awareness, Retargeting is your reminders to interested consumers, and Retention is your customer nurture.

Furthermore, this strategy helps you manage your budget effectively while nurturing each stage of your funnel with care and attention. These audiences vary greatly and require different tactics to achieve results.

Let’s go over the stages in more detail.

What are the Madgicx funnel stages?

The Acquisition stage is further divided into Prospecting and Re-Engagement. We do this to separate your first-touch awareness ad activities from your second- and third-touch marketing. While these audiences are both considered “cold audiences,” their tactics, goals, and ad types are different, which is why we split them up. 

Having both types of Acquisition stages in place ensures a steady stream of new potential customers. By setting up your targeting correctly, you can improve your account's performance more quickly.

Note: When creating Acquisition audiences in Madgicx, there is an automatic exclusion of non-acquisition of:

• 30 Days Website Visitors
• 180 Days Purchasers 

Let’s go through these four funnel stages.

​📣 Acquisition Prospecting

Where: Top of funnel

Who: People who don't know about your brand and who you are trying to reach for the first time. Your goal at this point is to introduce them to your brand. This is your largest and broadest audience because it includes anyone who might be interested in your product based on your market segment. The ads targeting this audience are your cold calls.

Recommended budget allocation: 60%

Tactic: Introduce your brand and generate awareness of your offer to a broad audience to find as many potential customers as possible.

🤗 Acquisition Re-Engagement 

Where: Middle of funnel below Prospecting and above Retargeting

Who: People who have had at least one touch with your brand but didn't reach your site. These people may have interacted with your social pages or ads. You want to entice them to go to your website and browse your products. 

Recommended budget allocation: 20%

Tactic: Utilize the Meta system to target people who have shown interest in your brand on Meta's platforms.

‍

🪝 Retargeting

Where: Middle of the funnel

Who: People who have been to your site and engaged with your brand. This audience includes your website visitors and your high-intent visitors. They’re already most of the way through the funnel, so you want to help them complete a purchase and become your customers.

Recommended budget allocation: 15%

Tactic: Use the Meta Pixel to track website actions and user intent.

❤️ Retention

Where: Bottom of the funnel

Who: Your customers! People who have bought from you before - you want them to continue buying from you.

Recommended budget allocation: 5%

Tactic: Target your email list and people who’ve purchased on your website to promote new purchases, thereby increasing the lifetime value of your customers.

The Madgicx full-funnel targeting strategy

We developed this strategy, which has been our go-to for years, and perfected it over time. We use it because it works, and we encourage you to do the same. 

Our budget strategy is to put the bulk of our ad spend into our Acquisition Prospecting campaigns.

This is because Acquisition is where it’s at. First and foremost, you want to reach new potential customers - and the only way to do that is through Acquisition. 

One of the biggest challenges that businesses face is attracting these new customers. Anyone will tell you that getting new clients is a numbers game. At Madgicx, we want to help you work around this challenge, and our experts have crunched the numbers so you don’t have to. 

Allocating 60% of your ad budget to Acquisition Prospecting improves your chances of getting new customers. But you can’t stop there.

To build a full-funnel strategy, we suggest you allocate about 20% of your budget to Acquisition Re-Engagement— that’s 80% of your budget allocated to acquiring new customers—and 15% to Retargeting. 

Finally, we recommend you allocate approximately 5% of your budget toward Retention. 

Retention is critical, as you want to stay relevant to your customers; however, as this is the narrowest audience of the funnel, we allocate the smallest budget. We want to keep in contact with our customers, but we don’t want to spend more on retention than we would spend on acquiring new customers.

However, if you are a SaaS or lead generation business, you wouldn’t need the retention stage, and you can reallocate the budget elsewhere. 

Remember, every ad account and business is unique, and there are no hard and fast rules. Testing your account to find the budget that delivers results is essential. 

Get in touch with our team if you need help setting up your funnel optimally.

Why does Acquisition need 80% of the ad budget?

While this may seem like a lot, how else will you get a steady flow of new potential customers to your store? The truth is that people won't buy from you if they don't know about you! 

Just as the audience doesn't know you, you don't know them either. Think of these ads as newspaper advertisements and classified listings from days gone by. Usually, people need to get to know you and feel familiar with you before they’re ready to buy. 

So, gaining new customers happens once people are familiar with you, and that's why you need to test different audiences and ads until you discover what works. These experiments cost money. Hence, we suggest you allocate the bulk of your budget to Acquisition. This funnel stage is where you test the most.

How do I launch a new audience for my marketing funnel?

Launching a new audience is easy with Madgicx’s Audience Launcher. Read our article that explains how to do it. 

Now, go forth and build your sales funnel!