What is a Customer Acquisition Funnel?
The traditional customer acquisition funnel has evolved significantly in the digital age. It is now also embodied and applied across different niches, and it can be a roadmap to your app’s success. This framework takes users on a journey from awareness to retention, transforming them from prospects into loyal customers. The ever-evolving nature of app stores means that mastering funnel use will require the freshest strategies.
By understanding and optimising each stage of the funnel, marketers can consistently and effectively attract, engage, and convert whichever audience they are faced with.
This blog will examine the customer acquisition funnel and its application to app marketing. We will discuss how you can leverage the traditional funnel’s strengths to optimise your user acquisition strategy. Let’s dive in.
The User Acquisition Funnel
From the image below, you will see the user acquisition funnel has a different structure to the traditional customer acquisition funnel. The user acquisition funnel emulates an inverted pyramid structure towards the top and expands towards the bottom. This is because the stages towards the bottom of the funnel include actions which essentially make you reiterate certain processes in the funnel.
Here is a more in-depth observation of each of the stages of the user acquisition funnel:
- Exposure / Discovery: Compared to a traditional customer acquisition funnel, the biggest difference we see in the user acquisition funnel is that the early stages (in this case, Exposure and Discovery) are combined. In the Exposure and Discovery stage, the marketers’ job is to help drive awareness and app discoverability. This is actioned through both organic and paid user acquisition strategies. Paid acquisition methods at this stage include Search ads (Apple and Google), paid social ads, affiliate marketing and more. Organic methods at this stage include ASO, organic search, social media, content, community, press, forums, referral links, email, word-of-mouth and more.
- Consideration: The Consideration stage is all about demonstrating trust signals. For apps, much of the Consideration stage is done via app ratings, reviews, and social proof on the actual app page in the app stores. If you’re leveraging paid customer acquisition, app ratings are critical, especially since many app install ads display ratings. Higher ratings build positive trust signals, which drive more organic downloads and allow your acquisition budget to go further. This stage allows you to reassure potential users of your app’s quality and value, encouraging them to proceed towards installation.
- Conversion: Your definition of conversion will vary based on the type of app you are launching. Conversion can refer to the act of downloading your app, signing up for an in-app subscription, making an in-app purchase or even setting up an account. Regardless of your definition of conversion, tactics that are used at this stage to progress prospects include:
- Onboarding: At this stage, you should prioritise making your app usage flow easy to use and as engaging as possible. This is key to reducing user drop-off rates; a streamlined onboarding process is likely to keep users engaged with your app. You can do this by including personalised welcome messages and in-app tutorials. This can significantly enhance user engagement and satisfaction by guiding them through the app’s features and functionalities. The more simplified you make your onboarding process, the better the initial experience will be for new customers.
- UX Design: When using an app or website, 94% of first impressions are influenced by design.This shows that the very first impression a potential customer has of an app sticks with them. It is critical that marketers work with developers and user interface designers to ensure users have positive initial interactions with your app.
- Customer Relationship: Proactive communication through the right channels is the key to building customer relationships. This stage is all about keeping users engaged and feeling valued. At this stage, you’ll want to include features like in-app chat and messaging, in-app rewards to reward loyalty and maybe even user-feedback options like in-app surveys or review structures so users feel like their voices are heard and valued.
- Retention: Retention is critical, particularly since it’s five times more expensive to replace a customer than to retain one. It is common knowledge that apps have a high churn rate; the average app loses 77% of its daily active users within the first three days after installation. This stat highlights the importance of keeping users engaged. This means regular updates, optimisations, and fresh content are crucial for keeping users interested and reducing churn.
Now that we’ve observed the user acquisition funnel, let’s compare it to the customer acquisition funnel.
The Different Phases of the Customer Acquisition Funnel
The traditional customer acquisition funnel carries an inverted triangle shape. This is because it visually represents the process of narrowing down a broad audience to a smaller group of paying and loyal customers. In comparison to the user acquisition funnel, the customer acquisition funnel leads to a single desired action.
As a part of your marketing strategy, it is integral that each stage of your funnel is intricately designed with customer acquisition techniques that lead a prospect from one stage to the next. See each of the stages of the customer acquisition funnel below:
Awareness
The awareness stage of your customer acquisition funnel is vital for increasing brand awareness and attracting potential customers and users. During this initial phase, the primary goal is to create visibility for your brand and generate interest throughout a wide audience.
In the traditional customer acquisition funnel, this is achieved through SEO, content marketing, social media campaigns, and advertising. In principle, this stage is very aligned with the exposure/ discovery stage of the app user acquisition funnel.
Interest
At this stage, your prospects will be aware of your brand and are starting to learn more about it. You’ll want to continue providing them with valuable content to help them learn more about your product or service. At this stage, prospects are also looking for ways to solve potential problems and pain points they may be dealing with. You can do this through blog posts, videos, infographics, case studies, eBooks, and webinars. The primary focus of this stage is to continue to educate your prospects.
Consideration
In the consideration stage, the buyer will have clearly defined and given a name to their problem. They are committed to researching and understanding all the available approaches or methods to solving the defined problem or opportunity. In other words, they are considering potential solutions.
If your prospect has moved down your acquisition funnel, your brand will be one of them; however, it’s not guaranteed that it will be their first choice. At this stage, prospects are more inclined towards making a purchase but would still be educating themselves.
To attract prospects at this stage, you should publish comparison posts with your competitors: posts that compare them and your brand—helping your prospects to decide which decision to make. Even if it doesn’t end in your favour, this type of content will make them remember you later on.
Intent
At this stage, your prospect becomes a lead. These leads begin showing signs of being interested in your products or services, which is called “buyer intent.” Some signs of intent include frequent visits to your web pages, high engagement with emails, campaigns, and CTAs, engagement with specific articles or social media posts and more, dependent on your top-of-funnel strategies.
Evaluation
This is when your product is in the spotlight; the lead may have signed up for a free trial, tried your demo or engaged with your sales team. They are actively weighing the pros and cons, evaluating your product against the competitors and considering factors like price, features and customer service. Even if your prices are a con for the prospect, good service may compensate: 68% of people say that they will pay extra for a product that comes with efficient customer service.
Purchase
This is the final stage that every company ultimately wants to reach in the funnel. Unfortunately, only 25% of leads are immediately ready to move to this stage of your funnel; the rest have to be convinced with targeted messaging and a clear value proposition.
What is the Difference Between the Customer Acquisition Funnel and the User Acquisition Funnel?
On observation of each model, we can see that there are some defining differences between both. Even though they both aim to bring new customers to the fold, their goals and user journeys differ significantly.
Goals:
- The customer acquisition funnel has the primary goal of converting users into paying customers, focusing on generating revenue and building a loyal customer base.
- The primary goal of the user acquisition funnel, on the other hand, is to acquire users for the app and focuses on increasing the number of app installs and active users; the user acquisition funnel is more performance-driven.
Action:
- the customer acquisition funnel moves towards a single action – the purchase. Its journey is more linear and goal oriented.
- The user acquisition funnel focuses on ongoing action through the app. Its journey is less linear and involves multiple touchpoints.
Attribution:
- In the Customer acquisition funnel, the actions (touchpoints) are less attributable, especially for traditional marketing channels such as billboard advertising or point-of-sale displays.
- The user acquisition funnel benefits from tech-based solutions that offer tracking and attribution. However, changes in the tech climate like SKAN, the upcoming updates to Apple devices revealed at their WWDC 2024 event or the ever-evolving virtual user search journey mean that user behaviour tracking is becoming more challenging each year.
By recognising the distinct goals and user journeys of the user acquisition funnel, you can optimise your app marketing efforts for maximum impact. Let’s jump into strategies that can be used to optimise your user acquisition funnel – with a particular focus on the exposure/discovery and consideration stages.
Strategies to Optimise Your User Acquisition Funnel
Exposure / Discovery Stage
As this is the first user touchpoint, optimisation strategies need to be primed towards gaining as much attention as possible. Consider a typical user journey. The first example of intent that users often exhibit is search. Typically, people will use Google as their first point of search for any information that they need.
When people are searching for your app or anything related, you want your app to be one of the first options available. You’ll need to prioritise SEO by integrating high-traffic keywords into your app’s landing pages and by creating valuable search-friendly content. Complement this with Google Ads campaigns targeting relevant search terms to ensure your app appears at the top of search results, see example below.
Also, think about the evolution of people’s search journeys – people are now using TikTok as a search engine too. On TikTok, harness the platform’s viral potential by producing engaging, creative content that highlights your app’s unique features, and collaborate with influencers to extend your reach. Use TikTok’s advertising tools for targeted campaigns that can attract your desired audience.
It is also worth paying attention to your App Store Optimization (ASO) efforts. Strive to get featured as “App of the Day” or included in curated lists within the app stores, as these placements can significantly boost your visibility. If you want to learn how, we’ve got an article with actionable advice to help you with that process here.
Additionally, run web campaigns and secure spots in “top app” lists on popular tech websites and blogs to amplify your app’s presence further.
By combining these strategies, you can effectively optimise the exposure and discovery stage of your user acquisition funnel, driving more users to discover and install your app.
Consideration Stage
At the consideration stage, your aim is to focus your efforts on convincing prospective users of your app’s value and reliability.
Reviews play a crucial role in this phase. Encourage satisfied users to leave positive app store reviews and ratings, as these significantly influence potential users. Actively respond to reviews, both positive and negative, to show a human presence and demonstrate your commitment to user satisfaction. Platforms like Trustpilot can also be leveraged for building trust by showcasing honest feedback and your proactive approach to addressing concerns. We touch more on the effects that reviews can have on user trust and perceptions here.
Owned content, such as blogs, can further support the consideration stage by providing in-depth information about your app’s features, benefits, and use cases.
Regularly update your blogs with high-quality, SEO-optimised content that answers potential users’ questions and highlights success stories or testimonials. This combination of authentic reviews and valuable content can effectively guide users through the consideration stage, increasing the likelihood of conversion.
We have also shared a range of valuable insights that can be applied to these stages of the user acquisition funnel here.
While the optimisation process is likely to yield long-term positive results for your app, it is also likely to be costly. See below as we delve into costs and metrics associated with the user acquisition funnel.
What is Funnel Formula? (Costs, Calculations & KPI’s Associated with User Acquisition Funnel)
Within app marketing, understanding the costs and KPIs for each stage of the customer acquisition funnel is crucial to optimising for performance and achieving growth.
Exposure/ Consideration Stage
At the Awareness stage of the funnel, most of the costs that you accrue will typically include advertising spend on platforms like Facebook, Google, and Instagram, with CPM (Cost-Per-Mille) or (Cost-Per-Thousand-Impressions) and CTR (Click-Through Rate) being key KPIs.
CPM is an advertising payment model that suggests charging an advertiser for every 1,000 impressions of their ad inside mobile app publisher inventory. It’s the most common method for pricing mobile ads and the most popular among mobile publishers due to its focus on impressions and not clicks, which benefits publishers in a big way. See the calculation below:
Click-through rate (CTR) is a marketing metric that measures how often a link, ad, or email is clicked in relation to how many times it’s shown.
CTR is one of the easiest high-level metrics to use to identify your top-performing ads, emails, or links at a glance. It is most effective when used alongside supplementary marketing metrics. See the calculation below:
Consideration Stage
Moving onto the consideration stage, the costs involved are more centred around engagement tactics like retargeting ads where CPC (Cost Per Click) and engagement metrics are pivotal KPIs.
Cost per click advertising (CPC) is a pricing model used in mobile user acquisition campaigns in which app advertisers pay each time a mobile user clicks on their in-app ad. The Cost Per Click is a solid indicator of a competition level in your industry, knowing average rate for your vertical, you can adjust how much you’re paying for a click in your paid mobile user acquisition campaign and avoid overspending. See the calculation below:
Other metrics that you will focus on at this stage are conversion rates, average engagement times, and session frequency.
Conversion Stage
At the conversion stage of the customer acquisition funnel, key expenses include performance marketing spend on targeted ads across platforms like Google Ads and Facebook Ads, incentivised installs through discounts or free trials, and costs associated with your ASO.
Critical KPIs at this stage include Cost Per Install (CPI), which measures the average cost per app install, and Conversion Rate, indicating the percentage of users who install the app after engaging with an ad or visiting the app store page.
Cost Per Install (CPI) refers to the amount of money spent to generate one mobile app install. See the Calculation below:
Other important KPIs at this stage are Click-Through Rate (CTR), mentioned above, for ad effectiveness, Install Rate for onboarding efficiency and Cost Per Click (CPC) to gauge cost efficiency.
Customer Relationship Stage
This stage is focused on nurturing ongoing engagement and loyalty among users, optimising costs and tracking key performance indicators (KPIs) to sustain long-term app success. Costs in this stage include expenses related to customer support, loyalty programs, personalised communication via push notifications and emails, and in-app events or promotions designed to keep users engaged.
Key KPIs include User Retention Rate, measuring the percentage of users who continue to use the app over time, and Customer Lifetime Value (CLTV), which estimates the total revenue a user generates throughout their relationship with the app. See the calculation below:
Other important KPIs are Churn Rate, indicating the percentage of users who stop using the app, and engagement metrics, such as Daily or Monthly Active Users (DAU/MAU) and session length, which provide insights into user activity levels.
Retention Stage
At the Retention stage of the user acquisition funnel, app marketers aim to keep users actively engaged with the app over the long term. Costs at this stage primarily include expenses for ongoing content updates, in-app events, loyalty programs, and personalised communication through push notifications, emails, and in-app messaging. Additionally, investments in customer support and feedback mechanisms are crucial to addressing user concerns and improving the overall user experience.
Key KPIs for the Retention stage include:
User Retention Rate: The percentage of users who continue to use the app after a specific period, often measured at intervals like day 1, day 7, and day 30.
Churn Rate: The percentage of users who stop using the app within a given time frame, providing insight into user drop-off points.
Daily Active Users (DAU) and Monthly Active Users (MAU): Metrics that track the number of users engaging with the app on a daily and monthly basis, respectively.
Other important KPI’s at this stage include session length and frequency, Customer Lifetime Value (CLTV), as mentioned above.
By focusing on all the costs and KPIs mentioned above, app marketers can develop and refine strategies to ensure maximum user acquisition at the lowest possible cost.
Conclusion
In conclusion, navigating the complexities of the app user acquisition funnel in today’s dynamic digital landscape requires a blend of traditional and innovative strategies. By understanding and adapting the principles of the customer acquisition funnel, app marketers can enhance their approach to both the discovery and consideration stages.
Leveraging SEO and ASO for visibility, engaging with potential users through targeted content and fostering trust through responsive and authentic reviews are essential tactics.
As algorithms and user behaviours evolve, staying agile and focused on providing a seamless and satisfying user journey will be key to optimising the app user acquisition funnel’s effectiveness and achieving long-term success. For more valuable insights to supercharge your app growth, read through our blog, here.
