Aren’t funnels funny?
Funnels are a funny thing. They help us focus on the various stages of the customer lifecycle and uncover problems and opportunities. Deep down, many of us know they’re a bit of a lie. A customer’s journey is far more back-and-forth and less deliberate than a funnel. If you’ve been in this space long enough, you’ve probably seen McKinsey’s Consumer Decision Journey model, which is much more circular.
However you model this journey, one thing tends to remain consistent when estimating the impact of an experiment or feature: we tend to treat each stage of the journey separately from a mathematical standpoint. In other words, a percentage improvement at the top of the funnel (or TOFU, for you foodies) is assumed to be equal to the same percentage improvement at the bottom of the funnel (BOFU—for nobody).
What many often ignore is that:
That’s not true. The closer a change is to the actual conversion point, the higher the impact it will have for a given percentage improvement.
Stages influence one another—i.e., higher-funnel stages can impact lower-funnel stages.
There’s a natural maximum that’s often overlooked.
It’s this last point that got me thinking while watching the World Series (Go Jays!).
People’s stomachs can only grow so much
Senior leadership loves to set ambitious goals like doubling conversion or 10x-ing revenue (we can get into this another time). While large goals can push an organization toward action (or panic, depending on the culture), they often overlook the fact that there’s a limit to what customers can actually do.
Take online grocery, for example, where the goal is often to increase basket sizes. A lot of effort goes into recommending the right product at the right time to the right people. But at the end of the day, customers have limited budgets and fixed stomach sizes. They can literally only eat so much. Yet this reality is rarely considered when setting OKRs—we never want to admit that opportunity has a ceiling.
The takeaway
So the next time you’re setting goals for a program, take a beat and consider: maybe customers can only eat so much. Perhaps it’s time to focus on something else—like margin.
