What Is a Marketing Funnel? Stages, Models, and How to Build One
A marketing funnel is a model of the stages a customer moves through on the way from first hearing about a business to becoming a paying, repeat customer, most commonly broken into awareness, consideration, conversion, and loyalty. The concept dates to 1898, when advertising pioneer E. St. Elmo Lewis described a sequence later known as AIDA (Attention, Interest, Desire, Action), and every modern funnel model, from the simple 3-stage TOFU/MOFU/BOFU framework to 6-stage models with loyalty and advocacy, is a descendant of that original idea.
This guide covers where the funnel model came from, the stages in the versions most businesses actually use, how to pick the right model for a small business, what to measure at each stage, why the model needs updating for how people search today, and the steps to build one from scratch.
The 4 core stages of a marketing funnel
Most funnel models, regardless of how many stages they use, are variations on the same 4 core moments in a customer's decision:
- Awareness. A prospect learns your business exists for the first time, through a Google search, a social ad, a referral, or a drive-by sighting of a sign.
- Consideration. The prospect actively compares you against alternatives: reading reviews, visiting your website, comparing pricing, or requesting more information.
- Conversion. The prospect takes the action that turns them into a customer: booking a tour, scheduling an appointment, requesting a quote, or making a purchase.
- Loyalty. The customer returns, refers others, or becomes a long-term account, the stage many funnel diagrams leave out despite it often being the most profitable one.
The shape narrows because not everyone who becomes aware of a business goes on to consider it, and not everyone who considers it converts. That narrowing is where the "funnel" visual comes from, and it is also the reason marketers track a conversion rate at each stage rather than assuming a flat pass-through rate. HubSpot's marketing funnel glossary uses this same 4-stage structure as its baseline definition, the version most widely taught today.
Where the funnel model came from
The idea is over a century old. According to Wikipedia's history of the AIDA model, an anonymous formula in an 1898 issue of Printers' Ink described attracting attention and then convincing the prospect, and American advertising pioneer E. St. Elmo Lewis is generally credited with formalizing the sequence by 1910. The acronym AIDA itself was coined later, in 1921, when copywriter C.P. Russell noticed the first letters of Attention, Interest, Desire, and Action spelled the opera title "Aida." The association between AIDA and a literal funnel shape was first published in the sales manual Bond Salesmanship in 1924.
That history matters for one practical reason: the model has never been an exact science. A comprehensive 1999 academic literature review found little empirical support for strict hierarchical funnel models, and the widely repeated attribution of AIDA entirely to Lewis is itself debated among historians. Modern extensions like AIDAS (adding satisfaction) and AISDALSLove (adding search, evaluation, and sharing) exist specifically because researchers kept finding that real customers do not move through 4 clean, sequential stages, they loop back, compare multiple times, and get influenced by people outside any single business's control. Treat the funnel as a useful planning tool for organizing marketing activity by buyer intent, not as a literal, provable description of how any individual customer thinks.
Funnel models compared: which one should you use
Businesses do not agree on how many stages a funnel needs, and the right answer depends on how complex the sale is and what the business needs to measure. The table below compares the 4 models a small business is most likely to encounter.
| Model | Stages | Choose this if |
|---|---|---|
| 3-stage (TOFU / MOFU / BOFU) | Top, Middle, Bottom of funnel | You are a small team that needs the simplest shared language to align sales and marketing, and you do not need to distinguish "aware" from "interested" separately. |
| 4-stage AIDA | Attention, Interest, Desire, Action | You are writing ad copy or a landing page and want a proven, century-old sequence for structuring a single piece of persuasive content start to finish. |
| 5-stage | Awareness, Interest, Consideration, Intent, Action | You run a longer sales cycle, common in professional services or higher-ticket purchases, and need to separate a prospect who is "still comparing" from one who is "ready to book," for lead scoring or sales follow-up timing. |
| 6-stage with Loyalty and Advocacy | Awareness, Interest, Consideration, Intent, Action, Loyalty/Advocacy | Your business depends on repeat business or referrals, common for clinics, venues that host repeat corporate events, and any business where a past customer's review or referral drives new leads. This is the only model of the 4 that explicitly tracks what happens after the sale. |
A local service business with a straightforward buying decision (most home-service trades) is usually well served by the 3-stage model. A business with a long consideration window and a high average value (venues, elective health and wellness care) usually benefits from the 6-stage version, since the loyalty and advocacy stages are where the highest-margin revenue and the cheapest new leads (referrals) actually come from.
What to measure at each stage
A funnel is only useful if a business can see where prospects are dropping off. Typical measurement by stage:
| Stage | What to measure |
|---|---|
| Awareness | Impressions, reach, branded search volume, new visitor sessions |
| Consideration | Website engagement (pages per session, time on page), content downloads, email signups, inquiry form starts |
| Conversion | Completed bookings, appointments, quote requests, or purchases; conversion rate; cost per lead |
| Loyalty | Repeat booking rate, referral rate, review volume and rating, customer lifetime value |
Most small businesses track conversion metrics closely but nothing above them, which makes it impossible to tell whether a slow month is a top-of-funnel problem (not enough people finding the business) or a bottom-of-funnel problem (enough people finding it, but something in the offer or follow-up process is losing them). Platforms like Google Analytics, Meta Ads Manager, and CRM tools such as HubSpot or Salesforce all report awareness- and consideration-stage data separately from final conversions specifically so this diagnosis is possible. The U.S. Small Business Administration's guide to developing a marketing plan recommends the same stage-by-stage thinking, treating the funnel as one section of a written marketing plan rather than a standalone diagram.
Why the funnel needs rethinking for how people search today
The classic funnel assumes a prospect clicks through to a website at some point during consideration. That assumption is weakening. According to Search Engine Land's June 2026 coverage of SparkToro's research, Google searches in the US ended without a click 68.01 percent of the time in the first 4 months of 2026, up from 60.45 percent in 2024, as AI-generated answers increasingly satisfy the query directly on the results page. That shift hits hardest at the top of the funnel: a prospect researching "how to choose a marketing agency" or "what does a chiropractor cost" may now get a synthesized answer without ever visiting any single business's website, which means awareness- and consideration-stage content increasingly has to earn a citation inside an AI answer, not just a click.
This does not eliminate the funnel model, it changes what "awareness" means in practice. A business's top-of-funnel content now has 2 jobs: earning a click when a click is still possible, and earning a mention or citation when it is not. Content built to be quoted directly, clear definitions, specific numbers, structured answers, does both.
Common funnel mistakes small businesses make
- Only tracking the bottom of the funnel. Watching bookings or sales alone without any visibility into how many people saw or considered the business first makes it impossible to diagnose a slow month.
- Treating every visitor the same regardless of stage. Someone who just discovered the business needs a different message than someone who already requested a quote and is deciding between 2 competitors.
- Ignoring the abandonment point. Friction at the conversion stage is common and often fixable. Baymard Institute's meta-analysis of 50 published studies puts the average cart or form abandonment rate at 70.22 percent, meaning roughly 7 of every 10 people who start a conversion action do not finish it, most often due to an unclear next step, an unnecessarily long form, or a lack of trust signals at the exact moment they were ready to act.
- Skipping loyalty entirely. Many small business funnels stop at the sale. For a repeat-visit business, a customer's second, third, and later visits, plus their referrals, are usually where the real profit is, and they get none of the marketing attention the first sale did.
Source: Baymard Institute, cart and form abandonment rate research.
How to build a marketing funnel for your business
- Pick a model that matches your sales cycle. Use the comparison table above; most local service businesses should start with the 3-stage or 6-stage model rather than a more complex 5-stage version built for enterprise B2B.
- Map your actual customer journey to each stage. Write down, in plain language, what a real prospect does at each stage today: where they first hear about you, what they check before contacting you, what the actual booking or purchase step looks like, and what happens after.
- Assign a metric and a goal to each stage. Use the measurement table above as a starting point. Every stage needs a number, not just the final conversion.
- Build or fix the content and offer for each stage. Awareness needs visibility (search ads, social ads, local SEO, GEO content). Consideration needs proof (reviews, case studies, clear pricing signals). Conversion needs a low-friction next step. Loyalty needs a reason to come back or refer.
- Instrument tracking before you spend on traffic. Set up conversion tracking (Google Analytics, your booking or CRM system) before increasing ad spend, so every dollar spent generates a measurable stage-by-stage signal instead of a guess.
- Review the whole funnel monthly, not just the bottom. Compare stage-to-stage drop-off month over month to catch a top-of-funnel problem before it shows up as a sales problem weeks later.
What this looks like in practice
The stages above are not theoretical for the local service businesses that use them well. Do Good Design Co. has reported a 67 times return on investment, about $67,000 in booking profit for every $1,000 in ad spend, and about 700 tour inquiries a month at peak volume, for a New Jersey event venue client, a result built by treating awareness (search ad visibility), consideration (a conversion-built landing page), and conversion (a simple tour-booking form) as 3 separately optimized stages rather than one undifferentiated marketing effort. A health and wellness clinic client has reported a 9.5 times return on ad spend with 1 in 3 tracked bookings being new patients, illustrating a funnel where consideration-stage trust signals (reviews, clear service descriptions) carry real weight in a purchase decision people research carefully. An electrical contractor client, Arctic Electricians, saw 4.5 times more leads in a month after tightening the awareness-to-consideration handoff between ad targeting and landing page messaging. These are DGD-reported results for specific clients, not industry averages, and are not a guarantee of what any other business will see.
Frequently asked questions
How many stages should a marketing funnel have?
Most businesses use either a 3-stage model (top, middle, bottom of funnel) or a 4 to 6-stage model that separates awareness, interest, consideration, and action, sometimes adding loyalty and advocacy. A simple sales process is usually best served by 3 stages; a longer consideration window or a repeat-business model benefits from the extra granularity of a 6-stage model.
Is the marketing funnel still relevant with AI search?
Yes, but the awareness stage has changed. With 68.01 percent of Google searches now ending without a click as of early 2026, according to SparkToro's research, a business's top-of-funnel content needs to earn a citation inside an AI-generated answer, not just a website click, while consideration and conversion stages remain largely unchanged.
What is the difference between a marketing funnel and a sales funnel?
The terms are frequently used interchangeably. Where a distinction is drawn, "marketing funnel" typically covers the full journey from awareness through loyalty, including brand-building activity with no immediate sales goal, while "sales funnel" more narrowly describes the stages a sales team actively manages once a lead has been qualified.
What is the AIDA model and how does it relate to the funnel?
AIDA (Attention, Interest, Desire, Action) is the original 4-stage funnel framework, credited to advertising pioneer E. St. Elmo Lewis around 1898 to 1910. It is the ancestor of every modern marketing funnel model and remains widely used for structuring individual pieces of persuasive content, such as an ad or a landing page, even though most full customer-journey funnels today use more stages.
Why do so many prospects drop off before converting?
Abandonment at the conversion stage is normal and usually addressable. Baymard Institute's research across 50 published studies puts the average abandonment rate at 70.22 percent, most commonly caused by unclear next steps, forms that ask for more information than necessary, or missing trust signals at the exact moment a prospect was ready to act.
For a related question on how to know whether ad spend is paying off once prospects reach the conversion stage, see what is a good ROAS. For what it costs to have an agency manage this whole funnel, see marketing agency cost per month. For the full channel picture a small business can use to fill each stage, see digital marketing for a small business. For the cost side of the equation once a funnel is running, see what is a good cost per lead.