TL;DR: The linear marketing funnel is an obsolete model for the AI era. It's actively leaking revenue and momentum. If you're seeing climbing Customer Acquisition Costs (CAC), invisibility in AI answers, a dangerous reliance on ad spend, a lack of systematic customer advocacy, and a growing "trust gap" in the mid-funnel, these are not isolated problems. They are symptoms of a broken growth engine. It's time to stop patching leaks and architect a resilient, self-perpetuating Growth Flywheel.
I am James Huang, CEO of Mercury Technology Solutions. October 28, 2025
For over a decade, businesses have been engineered around the funnel—a linear model designed to push customers through a rigid, friction-filled path. But in today's AI-driven landscape, this model is breaking down. A failing funnel isn't just about losing a few leads; it’s a sign that your entire growth engine is built on a fragile and outdated foundation.
Here are five critical signs that your funnel is failing and it's time to build a more resilient model for the new era of customer acquisition.
1. Your Customer Acquisition Cost (CAC) Keeps Climbing
You're spending more on ads, content, and sales just to maintain your current growth rate. This is the classic symptom of a linear funnel. It is a system that inherently leaks energy and requires ever-increasing investment for diminishing returns. You are forced to constantly pay to refill the top.
A healthy, modern growth model should gain efficiency and momentum over time, not lose it. A rising CAC is a clear signal that you are pushing a leaky system instead of building a self-sustaining one. It is a tax on strategic inefficiency.
2. You're Invisible in AI-Generated Answers
Your potential clients are increasingly turning to AI assistants like Gemini, ChatGPT, and Perplexity for recommendations and to answer their most important questions. When you ask these AI tools the same questions your customers would, is your brand cited as a trusted source?
If the answer is no, you have a massive, modern revenue leak. Funnels were designed for a world of Google search results, not conversational AI. The new goal is not just to be an option in the answer, but to become the source of the answer. If AI doesn't trust your brand, you are becoming invisible to the next generation of digitally-native customers. This is a direct failure to build Pillar 2 (Authoritative Content) and Pillar 3 (The Trust Layer) of a modern digital strategy.|
3. You Rely on Ad Spend Instead of "Owned" Authority
Is your primary growth strategy centered on outbidding competitors for paid search terms? While Search Engine Marketing (SEM) is a powerful tool for capturing immediate intent, relying on it exclusively is a dangerous and expensive game. A funnel-based model often over-emphasizes these "rented" channels at the expense of building long-term, foundational "owned" assets.
In today's landscape, a strong brand must demonstrate Experience, Expertise, Authoritativeness, and Trustworthiness (E-E-A-T). This authority is what builds foundational trust long before a client is ready to make a transaction. If your brand's visibility vanishes the moment you turn off your ad spend, your funnel has no real foundation. You have built a house on rented land.
4. Customer Advocacy is an Accident, Not a System
In a traditional funnel model, the customer journey ends at the transaction. The customer is treated as a passive asset to be acquired, not an active catalyst for future growth.
Think about your own business: Do you have a systematic, scalable process for turning your most satisfied customers into your best growth channel? Or are referrals sporadic and unpredictable? If you aren't actively designing systems to mobilize your advocates, you are ignoring the most powerful and cost-effective force for sustainable growth. It's a failure of system design.
5. You Have a "Trust Gap" in the Mid-Funnel
A potential high-value client today doesn't walk into a branch or pick up the phone first; their first interaction happens silently and digitally. They conduct their most important research online, often long before they have any intent to buy.
The rigid funnel tries to force a sales conversation too early, creating a "trust gap." Prospects who are still in the informational research phase are alienated by a hard sell and drop out. You must first win their trust by providing valuable, authoritative content that positions you as a trusted advisor, not just another vendor. If you're losing high-value prospects before they even speak to your team, it's a clear sign your funnel is breaking their journey instead of guiding it.
Stop Patching Leaks. Build a New Engine.
These signs aren't isolated problems to be patched with more ad spend or another marketing campaign. They are systemic failures of an obsolete model. The most resilient businesses of the future are moving from the linear, leaking funnel to the self-perpetuating Growth Flywheel—an ecosystem designed to build momentum and value with every single turn.
Is your funnel showing these signs of failure? Contact Mercury Technology Solutions today to learn how we architect a Growth Flywheel for sustainable success in the age of AI.
