Product Funnels - Part 1 - Acquisition
This step of the funnel can impact every other step, and even if the acquisition teams are tracking this, it's worth taking at least a cursory look from time to time.
Welcome to the first part of this series. Although I originally intended to focus solely on metrics, I realized while writing that there's much more to consider. As product managers, our involvement with metrics and subsequent analysis of those metrics varies greatly. It will differ depending on your company and area of business. Implementation of tracking and reporting takes many different shapes as well. So, instead, with this series, I'll focus on the principles you should know about the various stages of the funnel, including some metrics.
Let's start at the top of our funnel: acquisition. Even if you and your team are only responsible for what happens further down the funnel, you will benefit from knowing what's happening at the acquisition stage because, without users, not much happens in the later stages of your funnel.
What is acquisition, and who does it?
Acquisition can fall to many teams and areas of responsibility, like marketing, sales, PR, customer success, partnerships, advertising, and growth teams. I believe everyone should know at least these three basic things about acquisition, regardless of what area they work in:
Who your target customers are.
What pre-conceptions or expectations do your customers have?
What problems are you solving for your customers?
Why measure acquisition metrics?
This step of the funnel can impact every other step, and even if the acquisition teams are tracking this, it's worth taking at least a cursory look from time to time.
Example: Your acquisition teams are focused on getting new users but may not pay as much attention to how those users perform further down the funnel. Is a new landing page attracting many users who aren't converting further down the funnel? It could be attracting the wrong users, missing critical information, or displaying the wrong prices, causing users to check out before they "checkout."
What's the goal?
If you're not on the acquisition team, it's still worth knowing how things are performing at the top end of your funnel. Acquisition teams have a few goals you should be aware of:
Lower customer acquisition costs (CAC): You can do this by focusing more on organic traffic, referral programs, partnerships, and better targeting. The goal should be to pay less for more traffic.
Improve conversion rates: Get users from Google or elsewhere into your app or website. This is the first step of the conversion funnel.
Monitor channel performance: Like with your product, marketing teams can run A/B tests, perform advanced segmentation, and leverage retargeting to engage users who have shown interest or used your product before.
Build brand awareness: Not strictly an acquisition goal because this can often fall to PR teams, but brand awareness can help lower acquisition costs and increase conversion. If someone is familiar with your brand, acquiring them as a user can cost less.
Your role as a product manager on another team
As a product manager, you should at least know what's happening at other stages of the funnel because your performance will likely be affected by what's happening in other areas of the business.
It's also true that your work can impact acquisition teams. I'm a fan of eliminating silos in product teams because of this. Teams with no idea what's happening in other areas of the funnel will be limited in their ability to produce the expected results.
Things to watch out for
You are likely responsible for at least one of these things that will impact acquisition efforts and, in turn, the rest of your company:
Misalignment: It's not like anyone is intentionally misleading, but if your acquisition-driven landing page says you have the lowest price but other teams can't deliver on that, you will see downstream impacts on conversion.
Customer Feedback: Acquisition strategies should be continuously refined based on feedback and data from new users to ensure alignment with their needs and expectations.
Product-Market Fit: Scaling acquisition efforts before achieving a solid product-market fit is an excellent way to waste money and leads to poor results.
LTV and other metrics: We must collaborate with other product teams. The success of metrics like LTV are a function of acquisition, conversion, monetization, retention, and more—a prime example of how one team's work can impact another.
Partnership opportunities: Referral traffic through partnerships can be a huge driver. These partnerships typically require work from other teams to provide value to the partner.
Misleading Metrics: Vanity metrics (like the number of app downloads) can be misleading if they don't translate into active and engaged users.
Traffic quality: Some acquisition teams are so focused on getting traffic that they might overlook the quality of that traffic.
Neglecting Retention: Poor retention rates will result in a high churn rate, eliminating any benefits of acquiring new users.
Still not sure how acquisition impacts you?
Ask yourself these questions to better understand acquisition's impact on your work:
Who are your target users?
How does this differ from your current user base?
Where are they coming from?
What expectations do users have?
What problems are we solving for our users?
What do they want to do when they get here?
How can you help them find what they're looking for?
Where did they go, and what did they do when they arrived?
Are they finding everything they need?
Did you make your policies and services clear?
What is your unique selling point?
Why should users trust your company?
The more people at your company who are considering these types of questions, the better. You'll get different points of view, and many of these are influenced at multiple stages in the funnel.
So that’s acquisition. I hope you found some nuggets here, especially if you’re not generally involved in the acquisition stage, and hope you’ll join me for the next step in the journey, conversion.
Product Funnels Series
Part 1 - Acquisition 👈
This step of the funnel can impact every other step, and even if the acquisition teams are tracking this, it's worth taking at least a cursory look from time to time.
Part 2 - Conversion
How conversion could indicate customer satisfaction, product performance, or pricing and value perception, helping guide you to product market fit.
Part 3 - Monetization
You might think you have nothing to do with monetization, but many aspects of the funnel can impact your company's revenue.
Steedan thank you for the shout out. Much appreciate it.