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The funnel is a shorthand term for describing the route by which prospective customers, or prospects, become customers. The visualization of the process looks like a funnel. A larger number of prospects go in the top and are reduced to a smaller number of customers who come out the bottom.
Marketers use the term every day, but who came up with the funnel visualization in the first place?
Interestingly, the idea for the funnel visualization was a refinement of a previous visualization, also derived from a piece of kitchen equipment – the pot. In 1904, Frank Hutchinson Dukesmith, editor of Salesmanship magazine, created a mnemonic to help salespeople remember the critical stages of the sales cycle. The key stages were attention, interest, desire, and conviction. Dukesmith later changed conviction to action, and the popular sales mnemonic AIDA was born.
Dukesmith explained that the number of prospects decreased with each stage – more potential customers will be interested than will finally take action. He represented each stage as an iron pot, with the size of each pot diminishing from A to I to D to A. If you stacked the pots, with the smallest on the bottom and the others balanced on top, it resembled a funnel.
Perhaps this is what inspired Arthur Peterson, a marketing and sales executive in the pharmaceutical industry. Nearly 50 years later, he connected the idea of a “customer funnel” with Dukesmith’s AIDA mnemonic in his book Pharmaceutical Selling, Detailing, and Sales Training: “The progression through the four primary steps in a sale, i.e., attention, interest, desire and action, may be compared to that of a substance moving through a funnel.” Rather than envisioning a separate pot for each stage, Peterson’s funnel was dissected horizontally into four sections: A-I-D-A. The concept has stuck, and nearly every sales executive learns it early on in his or her career. Peterson’s funnel is shown below.
So, Peterson is the first person I could find who called it the funnel. Whether he was influenced by Dukesmith or not, I can’t say with certainty, but it seems likely for a guy who was a scholar of sales and marketing techniques.
P.S. – For those wondering what “detailing” means, as I did: To “detail” a doctor is to give that doctor information about a company’s new drugs, with the aim of persuading the doctor to prescribe them. Long the only avenue for marketing drugs, pharmaceutical companies are now evaluating the cost and effectiveness of detailing versus advertising direct to consumers.