Bowtie funnel: A modern twist to marketing funnels

It's a dog-eat-dog marketing and sales world out there. Resilient businesses focusing on long-term success are scrapping the stodgy, straight marketing necktie for the modern bowtie approach. You should be, too. Here's why.

If you're a digital marketing professional, business owner, sales manager, or start-up founder, you know the importance of leveraging marketing and sales funnels. After all, funnels help streamline the customer journey. However, on average, 65% of a company’s revenue comes from existing customers. That means the journey doesn't end when a sales call is scheduled, a contract is signed, or a product is purchased; it's only the beginning. In fact, one of the most critical parts of the journey is after the first conversion — and why traditional marketing funnels fail.

"Bowtie funnels" are an innovative marketing technique that solves this problem. If this is news to you, or perhaps you don't know how bowtie funnels work, we've got the deets! And, trust me, you'll want in on this modern marketing funnel strategy designed for the entire customer journey. 

What is a bowtie funnel?

Bowtie funnels offer infinite loops of potential recurring revenue streams from your existing customer base. 

A bowtie funnel looks just how it sounds. Think of a bowtie you might wear to a formal wedding or black-tie event. All have two halves shaped like a sideways triangle or funnel with a knot in the middle. Each side of the bowtie funnel represents two types of customers and the stages they go through. While B2B and B2C bowtie funnels differ slightly, the concept remains the same.

Rather than merely ending the customer buyer journey at the first sale, your aim should be to nurture the customer experience for customer success. Ideally, you want new prospects to become converted customers who also become brand loyalists, brand advocates, and, ultimately, brand ambassadors. This is only possible using a bowtie funnel that spans the entire customer journey.

Modern bowtie funnels vs. traditional marketing funnels

There are distinct differences between traditional and bowtie approaches to marketing funnels. While both are rooted in a basic four-stage model, the bowtie funnel provides a strategy that aligns with the unique and complex present-day customer journey.

Traditional AIDA model

The traditional marketing funnel follows a linear customer journey with the primary goal of getting the customer to take action (i.e., close the sale). This type of funnel dates back to 1898 when American businessman Elias St. Elmo Lewis developed a model to map the customer journey. The theoretical model implies that customers go through stages when making a purchasing decision.

The first principle of marketing funnel thinking: "Always be closing."

Most traditional marketing funnels are based on the four stages of the AIDA structure:

• A: Awareness - attract attention (customer sees)
• I: Interest - generate interest (customer likes)
• D: Desire - stimulate desire (customer wants)
• A: Action - spur into action (customer buys)

This vertical, cone-shaped strategy assumes customers will slide down the funnel, stopping once the customer takes action. AIDA funnels only fit transactional businesses that want to focus on sales volume, but many companies benefit from establishing long-term relationships with customers. Tacking on the word "retention" or "advocacy" after action — as many marketers do — isn't enough to transform transactional marketing into relationship-based marketing.

Modern bowtie model

This horizontally structured bowtie funnel can be traced back to 2009, when it was first used in the travel industry. On the Shearwater Blog, airline sales expert Martin Collins refers to the bowtie funnel model as "fish where the fish swim." He was convinced that the ROI (return on investment) on the right side of the bowtie funnel is greater than on the left side of the funnel. 

First principle of bowtie model thinking: "Recurring revenue is the result of recurring impact."

The original bowtie funnel was based on two sources of revenue during different stages of the customer journey:

• Pre-Purchase Stage (left side of bow tie) - primary revenue (airline ticket)
• Post-Purchase Stage (right side of bow tie) - ancillary revenue (seat upgrade, baggage, rental car, hotel, and credit card fees)

The ancillary revenue occurred, on average, 46 days following airline ticket purchase. Similar results occurred in later years when the bowtie model was adapted to SaaS (software as a service) businesses. SaaS subscriptions generate more revenue during the 12 to 18 months following the initial purchase. Author Jacco J. van der Kooij, often credited with the modern bow tie funnel method, indicated that the traditional marketing funnel is broken.

You can see how the traditional marketing funnel approach doesn't account for post-purchase revenue opportunities. Yet, most marketing is done before the sale. Even if you have a subscription-based business, you still rely on recurring revenue from repeat business, expanded purchases, referrals, etc. The modern customer journey is not linear at all. It's a multi-channel journey that spans numerous paths.

Benefits of using a bowtie funnel

If you're still wondering why you should use a bow tie funnel, check out the many advantages. 

Retain customers

Retaining customers comes after the sale, a strategy that traditional marketing funnels fail to address. Studies have shown that the chance of selling to an existing customer is 60-70%. In contrast, you only have a 5-20% chance of selling to a new prospect. 

Drive profits from more customer success

Truth be told, it doesn't take much to drive profits when you focus on customer retention. According to Hubspot, if you improve retention by only 5%, you can drive profits by more than 25%. Compared to traditional marketing funnels focusing on customer acquisition and conversions, you'll have the opportunity to upsell/cross-sell your products with less resource investment.

A bow tie funnel works wonders for customer retention. That's because it helps you nurture relationships throughout the entire customer journey long after they've made an initial purchase. When customers are happy with their experience, they become loyal customers, brand advocates, and brand ambassadors. It's like a dog never biting the hand that feeds them. Give the customer what they want or need, and they'll keep returning for more — and bring the pack with them.

Save money and increase customer lifetime value

Speaking of customer retention, did you know marketing to your existing customers is less expensive? Researchers have found that it costs 5-7 times more to get new customers, depending on the industry. Many companies view customer retention as one of the ways to make more money. But customer retention via bow tie funnels is also a way to save when you stop depending on new customers as your primary source of revenue. 

Think about it: You spend a lot of money on marketing and sales campaigns to find new customers to buy your products or services. However, most customers prefer to buy from brands they trust. In that case, the customer acquisition cost (CAC) can be challenging to recoup, so it often goes to waste. For that reason, customer retention — not just customer acquisition — should be your top marketing priority.

Gather more valuable data on the customer journey

Marketers can use bow tie funnels to track customers and identify growth drivers. Specifically, you can measure volume metrics (number of leads, deals, or accounts), conversion metrics (rate of leads, opportunities, or accounts), and time metrics (how much time passes) from one stage to the next. It's also an opportunity to align marketing and sales.

Some of these metrics include the customer lifetime value (CLV), churn rate, retention rate, renew rate, repeat purchase ratio, and more. While marketers use many of the same metrics, what they fail to do is continue measuring beyond the initial purchase. Plus, bowtie funnels give you plenty of time to gather valuable data throughout the entire customer journey. The data can help you identify successes as well as shortcomings. The more data you have, the better you can make decisions and improve the customer experience.

Implementing a bowtie funnel strategy

Now that you realize traditional marketing funnels are ineffective, it's time to learn how to implement a bowtie funnel strategy. Follow these key bow tie funnel implementation steps for long-term business success:

Step 1: Measure current customer retention marketing efforts

When evaluating your current marketing funnel, pay close attention to your existing customer retention marketing efforts. Measure those efforts and decide whether they're working for you. Take this time to revise or refine your strategy and reevaluate.

Step 2: Collect extensive sets of customer data

Your bow tie funnel provides you with valuable customer data. Be sure to collect extensive, detailed data you can use to help you make data-driven decisions at the departmental and company-wide levels. You can set journey touchpoints (when customers come in contact with your brand), select journey KPIs (key performance indicators), and predict customer behavior (stay one step ahead).

Step 3: Get all teams on board

One of the biggest challenges many companies face is silos. That's where each department has its own data unavailable to other departments. This commonly happens between sales, marketing, and customer service. Get team leaders on board so that everyone's on the same page and has the information they need.

Step 4: Tailor strategy to each stage

Ensure you tailor your bowtie funnel strategy for each stage of the customer's journey. For example, during the Conversion or Selection Stage, help customers feel confident about their purchase. You could send a personalized email, offer a coupon, or encourage them to share your company's products on social media. Similarly, for the Brand Ambassador Stage, you should reward dedicated customers by offering exclusive content, inviting them to VIP events, or offering affiliate marketing programs.

Step 5: Emulate competitors but stand out

Level the playing field by keeping up with competitor companies to see what they're doing. It's okay to emulate some of their ideas, but be sure to set yourself apart. That way, customers won't get confused and will be able to distinguish your company's offerings from others with similar products.

How a funnel can help with customer success 

Simply put, traditional funnel marketing is broken. It's too linear for today's customer journey, and bow tie funnels are where it's at. Take action now if you want to grow and scale your business, even during pandemics, wars, economic downturns, and other uncertainties.

So, are you ready to get your marketing swag on with the modern bow tie funnel like many businesses? We can help your company! The Funnel platform provides a single hub to connect, store, organize, and share all your marketing data. It's an easy way to streamline the customer's journey, not only from the awareness stage to the conversion stage but also from the loyalty stage to the cross-sell stage. 

See for yourself why 2000+ of the world’s most modern, data-driven companies trust us to ramp up their marketing efforts. We offer a customized, no-commitment platform walkthrough from one of our product experts, so schedule a free demo today.

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