Leah Mahon, Student, Staffordshire Business School
The new customer funnel is changing the way that businesses interact with their customers on their customer journey as we previously knew it.
For years, the traditional funnel has been one of the most used by businesses. However, according to Davies BDM, it has endured criticism due to its inability to adapt to the changing customer journey aligned with what customers want and need in an era of rampant digitalisation and self-controlled consumerism.
Now, the new funnel is set to be one of marketing’s biggest developments for the digital plethora, as predicted by Campaign Monitor. Its new hourglass shape represents non-linearity and continuity throughout the customer journey. It also boasts of new varied stages for every customer to experience as an acknowledgement of true individuality. The new funnel merges the stages of pre-purchase and post-purchase like never before to demonstrate a truly complete view of the customer life cycle. The concept of multi-touch, multi-channel and multi-path customers journeys are now changing the marketing strategies for every business that is embracing the rise of digital.
Some insight from Customer Journey Marketer, breaks down a little more why the previous customer funnel wasn’t quite cutting it in the dawn of this digital age, and what the new funnel can offer customers.
The Old Customer Funnel:
- Inconsideration of external influences
- Customers are linear and the same
- Lack of focus beyond the point of purchase
- Lack of granularity
- Lacking perspective of journey
The New Customer Funnel:
- Customers can enter at any pre-purchase stage
- Customers do not enter every stage
- Movement in non-linear way
- Customer journeys are individual experiences
So, How are Businesses Using the New Funnel?
Good question! And it’s one that’s on every savvy business’s mind. The streaming service Netflix is using this new funnel with the non-linear perspective at the forefront, as described by Blue Coda. For instance, the average Netflix user would usually enter at the Engagement stage of the funnel.
Netflix market effectively to their customers with a “call to action” by offering a free streaming trial upon subscription for a month on their landing page with just a URL or Google search. This non-linear approach helps to reel in potential long-term subscribers quickly, and enable Netflix to collect data which can lead to profitable conversions. In a time with iron clad subscription polices, they emphasise that users can cancel this at any time, which increases trust in their service too.
According to Towerdata, customers crave that “1 to 1 level” experience and personalisation of their journeys’ which Netflix do throughout. After Engagement, the customer could then move their way down to Advocacy after watching their favourite series with personalised recommendations for similar streaming content. They could pass this onto friends and family, even before they make their way back up the funnel for an official subscription at the Purchase stage.
Another business that is putting the new marketing funnel to good use is Pinterest, as they prepare to launch their ad business in the UK market. Marketing Week demonstrates that they too market themselves well at the Engagement stage, which prompts potential customers to relinquish their data by signing up to their service, which would enable them to view more pins and to create their very own.
UK County Manager for Pinterest, Adele Cooper, highlights that businesses that work with them have the option of a using a “conversion pixel” which tracks if customers click on a pin and what they go onto do next. This means that ad companies now know what to market to their customers as they could make their way to Expansion with targeted ad campaigns personalised to there need and wants, before the Purchase stage has even been met.
Is it Worth the Journey?
It’s not just Campaign Monitor that has proclaimed the death of the old marketing funnel, but a marketer himself – Mckinsey – has also declared the concept of the funnel entirely dead as we knew it. However, according to McKinsey and Company, revival is not far away in the form of the Customer Decision Journey.
Albeit, this model underwent a revival of its very own after failing to meet the forever changing scope of digital. Previously, its journey allowed customers to actively evaluate products or services through technology, while being able to add and remove choices. It also included a feedback loop where customers could continuously evaluate products and services after purchase, prompting products to perform and brands to provide a satisfactory experience every time. However, now in an era of accelerating digital advancements, the Customer Decision Journey was forced to undergo a drastic change.
Throughout the new journey, McKinsey argues that the stages of Consideration (Awareness) and Evaluation (Discovery) can be compressed, or in some cases completely eliminated. Businesses do not just react or respond to customers as they make purchasing decisions, but they also shape their decision journeys entirely. The rise of the digital plethora that once allowed self-controlled and self-educated consumerism, as outlined by Davies BDM is now fuelling the underpinning of further technological advancements that allows businesses to take back control. They have greater control over aspects like design and optimisation, and are now being able to create a space for not just value for the customer, but simultaneously for businesses too with “end to end purchase in consumer markets” being the end goal in this strategic model.
Albeit, an improvement from the linearity found in the traditional funnel with its entry and re-entry method, the Purchase stage is still a primary point of contact with the onus on customers to make a buyer “decision” on their journey. And with personalisation and customer individuality at the forefront, it is arguable that emphasis in this stage is complying with the demands of digital consumerism, because the pivot for customers has now become “the experience, not the purchase.” According to Relevance, personalisation can increase “five to eight times the ROI on marketing spend, and can lift sales by 10% or more.” Customers feel more connected to the message that a business is sending out through personalisation also. Despite the “circularity” of the Customer Decision Journey, it is merely limited to “eating its own tail” while the focus remains on B2C transaction, and the assumption that can customers will remain loyal even if they have a good post purchase experience. Yes, there is more freedom for customers to explore, but ultimately the static nature of the end goal limits this model to a similar function of the traditional funnel. Customers crave a human touch, and businesses that use this strategic tool can risk compromising customer the longevity of their customer life cycle, and ultimately their sales if the journey itself to a potential purchase is indeed a bumpy one.
The connection between the stages of Purchase and Advocacy of both the new funnel and the Customer Decision Journey has also been criticised by marketers. Both models allow non-linearity to move freely throughout, but only once a customer has interacted with a product or service in some way. Take Netflix, for instance, and its call-to-action landing page, or Pinterest and its coaxing to sign up for more pins. The Harvard Business Review argues that now with the expansion of digital, the Purchase and Advocacy stages are now entirely disconnected, because people no longer have to be a customer or relinquish their data to become an advocate for a business. Potential customers are now experiencing what businesses have to offer through live events, content marketing, social media and word-of-mouth. This advocacy is an individual journey in itself that is not acknowledged fully with the previous strategic models, which puts emphasis in the business, before the customer. True non-linearity through the customer journey is yet to be achieved, and now with more than 4 billion digital users around the globe and only predicted to increase by 20% each year, businesses that continue to rely on the convergence of Purchase and Advocacy could find themselves disconnected from their target markets before they have even truly met is this digital dichotomy.
It is food for thought whether the Customer Decision Journey has met its limitations, because its promise to reclaim self-controlled and self-educated consumerism as its very underpinnings for their B2C goals are undoing itself as customers’ feelings aim to be at the heart of every business – and not their money. For businesses to reject this concept would ultimately mean rejecting their customers. As they continue to shape their own individual journeys, and let the journey’s of others influence them, the impulsive nature of human behaviour is the foundation for the personalised digital experience to just keep getting bigger.
What about the Future of the Funnel?
The Customer Decision Journey and the funnel – new and old – don’t quite offer a smooth journey just yet. But just like the dawn of digital, they don’t seem to be going anywhere any time soon, and they have a been a catalyst for further development of the journey customer’s embark upon. As predictions rise to up to 72% of marketing teams to increase spending and create bigger budgets for marketing tools and technological assets in the next two years, and as marketing strategies shift to transactions in the context of a relationship one thing can be for certain…
That in an age of counting followers and subscribers as a sign-point for the changing face of digital, the customer funnel – and the customer journey itself – will be changing right along with it on its very own journey. And businesses that embrace the multi-dimension of social influence, advocacy from non-customers and truly non-linear paths to purchase, they too are sure to come along on the journey.