Lower Funnel vs Upper Funnel: Which is Best for Your Startup's Growth?

As a startup founder or marketer, you’re always looking for the best way to grow your business. One of the biggest questions you’ll face is whether to focus on lower funnel or upper funnel marketing. In this article, we’ll dive deep into the differences between the two and help you determine which is best for your startup’s growth.

What are Lower Funnel and Upper Funnel Marketing?

First, let’s define what we mean by lower funnel and upper funnel marketing. The conversion funnel is a framework that describes the customer journey from awareness to purchase. At the top of the funnel (tofu), you have people who are just becoming aware of your brand or product. In the middle of the funnel (MOFU), you have people who are considering your product and doing research. And at the bottom of the funnel (BOFU), you have people who are ready to purchase.

Lower funnel marketing is focused on the bofu. The goal is to convert people who are already interested in your product into paying customers. This might include tactics like retargeting ads, email marketing, or sales outreach.

Upper funnel marketing, on the other hand, is focused on the TOFU and mofu. The goal is to generate awareness and interest in your brand or product. This might include tactics like social media ads, influencer marketing, or content marketing.

Understanding the Differences Between Lower Funnel and Upper Funnel Marketing

Now that we have a basic understanding of what lower funnel and upper funnel marketing are, let’s dive deeper into the differences between the two.

Timing

The most obvious difference between lower funnel and upper funnel marketing is timing. Lower funnel marketing is focused on people who are already interested in your product and ready to purchase. Upper funnel marketing is focused on people who may not even know your product exists yet.

Cost

Another difference between the two is cost. Lower funnel marketing can be more expensive because you’re targeting people who are further down the funnel and closer to making a purchase. Upper funnel marketing, on the other hand, can be less expensive because you’re targeting a larger audience.

Conversion Rates

Because lower funnel marketing is focused on people who are already interested in your product, conversion rates tend to be higher. Upper funnel marketing, on the other hand, is focused on generating awareness and interest, so conversion rates may be lower.

Customer Lifetime Value

Finally, lower funnel marketing tends to have a higher customer lifetime value (CLTV) because you’re targeting people who are more likely to become loyal customers. Upper funnel marketing may generate more leads, but those leads may not be as valuable in the long run.

Pros and Cons of Lower Funnel Marketing

Now that we understand the differences between lower funnel and upper funnel marketing, let’s dive deeper into the pros and cons of each.

Pros of Lower Funnel Marketing

Higher conversion rates: Because you’re targeting people who are already interested in your product, conversion rates tend to be higher.
Higher customer lifetime value: By converting people who are already interested in your product, you’re more likely to create loyal customers with a high CLTV.
More predictable ROI: Because you’re targeting people who are closer to making a purchase, you can more accurately predict your ROI.

Cons of Lower Funnel Marketing

Higher cost per acquisition: Because you’re targeting people who are closer to making a purchase, the cost per acquisition can be higher.
Limited audience: By focusing only on people who are already interested in your product, you’re limiting your audience and potentially missing out on new customers.
Saturation: If you rely too heavily on lower funnel marketing, you may saturate your audience and see diminishing returns.

Pros and Cons of Upper Funnel Marketing

Now let’s look at the pros and cons of upper funnel marketing.

Pros of Upper Funnel Marketing

Lower cost per acquisition: Because you’re targeting a larger audience, the cost per acquisition can be lower.
Increased brand awareness: By targeting people who may not even know your product exists, you’re increasing brand awareness and potentially creating new customers.
Longer customer lifetime value: While conversion rates may be lower, the customers you do convert may have a longer CLTV because they’re discovering your brand for the first time.

Cons of Upper Funnel Marketing

Lower conversion rates: Because you’re targeting people who are less familiar with your brand or product, conversion rates may be lower.
Difficult to measure ROI: Because upper funnel marketing is focused on generating awareness and interest, it can be difficult to measure its impact on sales.
Less predictable ROI: Because you’re targeting a larger audience, it can be more difficult to predict your ROI.

How to Determine Which Funnel to Focus on for Your Startup’s Growth

So how do you determine which funnel to focus on for your startup’s growth? The answer depends on a variety of factors, including your budget, your target audience, and your overall marketing strategy.

If you’re just starting out and don’t have a lot of brand awareness, you may want to focus on upper funnel marketing to generate awareness and interest. If you have a limited budget, you may want to focus on lower funnel marketing to convert the leads you already have. And if you’re looking to create a long-term marketing strategy, you may want to combine both upper and lower funnel marketing to create a full-funnel approach.

Ultimately, the best approach will depend on your specific business goals and the needs of your target audience.

Combining Lower and Upper Funnel Marketing for Maximum Growth

While lower and upper funnel marketing have their pros and cons, the best approach for most startups is to combine both for maximum growth. By creating a full-funnel approach, you can generate awareness and interest while also converting the leads you already have.

To do this, start by creating a clear marketing strategy that includes both upper and lower funnel tactics. Use data to determine which tactics are working and which aren’t, and adjust your strategy accordingly. And always be testing new tactics and experimenting to find what works best for your business.

Case Studies: Successful Implementations of Lower and Upper Funnel Marketing

To give you a better idea of how lower and upper funnel marketing can work together, let’s look at a few case studies.

Dropbox

Dropbox is a great example of a company that used both upper and lower funnel marketing to achieve massive growth. They started by targeting early adopters with a referral program that rewarded users for inviting their friends to join. This helped them generate awareness and interest in their product.

Once they had a solid user base, they started using lower funnel tactics like retargeting ads and email marketing to convert those users into paying customers. This approach helped them achieve massive growth and eventually become a household name.

HubSpot

HubSpot is another company that used a full-funnel approach to achieve growth. They started by creating educational content that targeted people who were interested in marketing and sales. This helped them generate awareness and interest in their brand.

Once they had a solid audience, they started using lower funnel tactics like email marketing and sales outreach to convert those leads into paying customers. This approach helped them achieve massive growth and become a leader in the marketing and sales software space.

Conclusion

Lower funnel and upper funnel marketing both have their pros and cons, but the best approach for most startups is to combine both for maximum growth. By creating a full-funnel approach, you can generate awareness and interest while also converting the leads you already have. Use data to determine which tactics are working and which aren’t, and adjust your strategy accordingly. And always be testing new tactics and experimenting to find what works best for your business.