In Season 2 of The Office, Ryan—who is attending business school at night—quizzes his boss Michael’s business knowledge (while Dwight watches on):
Ryan: “Is it cheaper to sign a new customer or to keep an existing customer?”
Dwight: “Keep an existing—”
Michael : “Shut it. Can I . . . can I just do it, please?”
Michael : “Uh, it’s equal.”
Ryan: “It is ten times more expensive to sign a new customer.”
Michael: “Okay. Yes! It was a trick question.”
It’s been a long time since the episode, “The Fire,” came out in 2005. And yet the answer to Ryan’s “trick” question remains the same: Acquiring new buyers is often more expensive than retaining existing customers.
Which brings us to a new question:
Why does the traditional marketing and sales funnel focus on recruiting new customers? Especially when building relationships with loyal customers is key to your brand reputation, successful word-of-mouth marketing, and sustainable growth.
An important part of the equation is missing.
Introducing the bow tie funnel, a new growth mindset for business-to-business (B2B) companies.
What Is the Bow Tie Funnel?
The customer journey doesn’t end when a customer makes a purchase. Buyers have more options than ever, and if you don’t work to retain their business, they will take their business elsewhere. That’s why this new-and-improved sales and marketing funnel gives equal weight to customer acquisition and customer retention.
The bow tie funnel reimagines the traditional marketing and sales funnel. It is a holistic look at the entire customer journey, starting with the pre-purchase process where the buyer considers whether to buy from your company to the post-purchase customer relationship where they become loyal to your brand loyalty (or not).
Simply put, the bow tie funnel assesses the true lifetime value (LTV) of a customer—from the earliest stages of the buyer’s journey to purchase and beyond.
By focusing on the customer relationship both pre- and post-purchase, the bow tie funnel is designed to optimize the acquisition and retention process.
The Traditional Marketing & Sales Funnel Is Limited
The traditional marketing and sales funnel is an excellent visual representation of how you can recruit new customers. It follows four stages:
The first stage, attract, is the widest section of the funnel because the goal is to gather as many leads as possible. As the funnel narrows, prospects drop off until—hopefully—only a few interested buyers remain.
And then the funnel ends.
What comes next?
That’s the problem with the traditional marketing and sales funnel: Since it only focuses on customer acquisition, it ends after the customer makes a purchase.
. . . which is unfortunate because, as Ryan alludes to in The Office, retaining existing customers is cheaper than acquiring new ones.
To reap the benefits of both customer acquisition and customer retention, turn the traditional funnel 90 degrees to the left and mirror its shape on the right side. The result is a bow tie that represents the entire customer journey—with the point of purchase smack dab in the middle.
The Bow Tie Funnel Focuses on Both Acquisition & Retention Throughout the Entire Customer Relationship
The bow tie funnel has two sides: The left side represents the customer acquisition and conversion process, and the right side focuses on customer retention. Together, these two sides symbolize all stages of the customer journey.
On the right side—the customer retention optimization (retention CRO) side—the bow tie funnel is divided into four stages:
After a customer makes a purchase, they move to the adopter stage. Then, as they continue to engage with your brand and (hopefully) become delighted by your products or services, they move through the funnel.
Unlike the left side of the bow tie, the customer retention process never ends, which represents endless opportunities to engage with existing customers and encourage them to stay loyal to your brand.
Benefits of the Bow Tie Funnel for B2B Companies
One of the best ways for your organization to achieve your revenue goals is to increase customer LTV by curating a loyal customer base, keeping clients happy, building brand trust, and establishing long-term relationships with customers. Since the left side of the bow tie funnel focuses on brand trust and customer retention, it’s no surprise that successful B2B companies use it to reimagine the traditional marketing and sales funnel.
Another significant benefit of the bow tie funnel is that it extends the length of the customer journey, which means you have more time to collect customer data, notice patterns, and use those insights to improve the customer experience. Your marketing, sales, and customer success teams can work together to gather buyer feedback both before and after the buyer makes a purchase.
A Closer Look at the Stages of the Bow Tie Funnel
The left side of the bow tie funnel focuses on customer acquisition and conversion rate optimization, while the right side is dedicated to the customer retention process.
As a B2B marketer or sales representative, you’re likely already familiar with the pre-purchase stages on the left side of the bow tie funnel since they align with the traditional marketing and sales funnel. But what about the flipped mirror image on the right?
Let’s take a close look at each of the four stages on the right, post-purchase side of the bow tie funnel.
Stage 1: Adopter
The adopter stage is where a brand-new customer has just made a purchase or signed up for your service. They are ready to see whether you deliver on your promises and if your products or services address their concerns, solve their pain points, and make their lives easier.
Unfortunately, your customers may also be feeling buyer’s remorse. At this stage, it’s critically important for you to prevent them from regretting their purchase and make them feel confident in your brand. Anything you can do to help them realize the value of your products or services will help them feel good about their choice.
It’s also a good time to gather helpful customer data. What encouraged them to trust your brand? What tipped the scales and made them sign on the dotted line? Their answers will help you tweak your customer acquisition process (the left side of the bow tie funnel).
Stage 2: Loyalist
Customers in the loyalist stage are more loyal to your brand. They have a deeper connection with your B2B company and have made a calculated choice to upgrade, make another purchase, or renew your services, depending on your business model. As opposed to the adopter stage, where customers make spur-of-the-moment decisions, loyalists have reflected on their original purchase decision and have decided to return.
In the loyalist phase, your customers are already familiar with your brand, products, and services. They don’t need your organization to introduce itself or convince them to buy. Instead, your goal should be to convince loyalists that your B2B company can continue to improve their lives—which is why they should upgrade or renew their purchase.
Stage 3: Advocate
Advocates are repeat or long-term customers who are so loyal to your products or services that they promote your brand through word of mouth (WOM), social media, online reviews, testimonials, and more. Customers in this stage are eagerly talking about your brand with others, which helps develop your brand recognition and generate referrals.
The advocate stage is when you should encourage happy customers to influence prospects who are considering a purchase. If you meet the expectations of your advocates and ensure they have a positive experience with your brand, you will start seeing the benefits of WOM marketing and user-generated content (UGC).
Stage 4: Brand Ambassador
The brand ambassador stage is where your customers are truly passionate about your brand and act as unpaid promoters. Brand ambassadors talk about you in real life and online, generate the most WOM referrals, and passionately share your story with their networks.
These customers are as good as gold—and they should be treated as such.
When it comes to retaining customers and following the bow tie funnel, transforming customers into brand ambassadors is the ultimate goal.
How to Optimize Customer Acquisition & Retention with the Bow Tie Funnel
Is sustainable growth your goal? Then your B2B organization can’t just rely on acquiring new customers—you must also dedicate attention to retaining existing customers.
That’s why the bow tie funnel is such a popular growth strategy. It forces your marketing, sales, and revenue operations (RevOps) teams to take advantage of your customer base. Or, in other words, the bow tie funnel illustrates the growth possible when your organization invests in customer retention alongside customer acquisition.
Follow these strategies if your B2B company is ready to optimize your customer acquisition and retention process with the bow tie funnel.
Measure Your Current Customer Retention Efforts
How successful are your current customer retention efforts? What is your customer churn rate (the percentage of customers who stop using your products or services)? Where (and why) are customers dropping out of the funnel?
Before you begin to optimize your customer acquisition and retention process, measure and analyze your current efforts to see how you’re doing in the first place. Establishing this benchmark is helpful so that as you make changes and implement the bow tie funnel, you can see what’s working (and what isn’t).
Collect Extensive Customer Data
A successful growth strategy relies on customer data.
Collect extensive customer information at every stage in the customer lifecycle, both pre- and post-purchase. Use several different methods of data collection to find what works best for your buyers. Don’t just rely on reports from your customer relationship management (CRM) software; share surveys, hold interviews, request feedback, and collect social media responses too.
With this valuable customer data, you can identify trends, investigate issues, and introduce new ways to curate a positive customer journey.
Get All Customer-Facing Teams on Board
To truly optimize your customer retention and acquisition process, all your customer-facing teams must be on board—including marketing, sales, customer success, RevOps, marketing operations (MarketingOps), and sales operations (SalesOps). All your employees must be invested in the entire customer journey, both before and after your buyers make a purchase.
When everyone is on the same page, teams and individuals can work together to attract new buyers, convert prospects into customers, and encourage long-term customer loyalty.
Tailor Your Retention Strategy for Each Stage of the Bow Tie Funnel
Retaining customers requires different strategies depending on where they are in the bow tie funnel.
The Adopter Stage: Make Customers Confident in Their Purchase
- Send a personalized welcome email
- Encourage them to share their purchase on social media
- Offer a coupon for their next purchase
- Enter them into a buyers-only giveaway
- Reward them with bonus material
The Loyalist Stage: Convince Customers to Stay & Scale
- Share information about related services and products
- Create customizable service and pricing packages they can choose from
- Invite them to manually renew their purchase
- Upsell their current product or service
- Highlight and personalize the benefits of their purchase
- Give personalized responses to emails and phone calls
- Reply to them on social media
- Share their brand-related posts
- Offer early access to new products in exchange for reviews
- Create a referral program and reward them for each referral
The Brand Ambassador Stage: Reward Your Most Dedicated Customers
- Invite them to participate as VIPs at company events
- Send them handwritten thank you notes to show appreciation
- Offer access to exclusive or secret content
- Create an affiliate marketing program for them
- Give them a special shout-out on social media
The Growth Formula Framework & the Bow Tie Funnel
Today’s most successful B2B companies aren’t just focused on acquiring new buyers—they’re invested in retaining their existing customer base. If your organization wants to increase revenue and achieve sustainable growth, you have to build long-term relationships with customers, establish trust in your brand, and optimize the customer acquisition and retention process.
That’s where the bow tie funnel comes in. This method is key to transforming your approach to sales and marketing and encouraging consistent business growth.
Is your B2B company ready to incorporate the bow tie funnel into your revenue strategy?
We can help.
At OneIMS, our growth formula framework is designed to work hand-in-hand with the bow tie funnel to support your growth and revenue goals. We have a history of working with companies in a variety of industries to optimize the customer journey, and we pride ourselves on producing measurable and sustainable results that lead to long-term growth.
Are you ready to build a loyal customer base, find new revenue opportunities, and grow your business? Schedule a consultation with us today to get started.