Is the Purchase Funnel Dead? How the Internet’s Rewired Consumer Buying Behavior

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The ‘Purchase Funnel’ is one of the most prevalent models of the consumer’s decision making process used by marketers today. It’s found in many industries, and in the automotive industry, it looks like this:

The Purchase Funnel is a variant of communication theories like AIDA (‘attention’, ‘interest’, ‘desire’, ‘action’) or DAGMAR* which became popular in the 1950’s and ’60’s. These models were derived from classical learning theory and have in common the assumption that, for marketing communications to be effective, the consumer must go through a linear sequence of mental events, with each stage dependent on the success of the previous stage, producing a ladder-like progression towards purchase.

Although developed half a century ago when the world was a very different place, linear sequential models such as the Purchase Funnel still provide the basic metaphor and language of marketers today because the logic of the sequence seems irrefutable and the supposed stages lend themselves readily to objective measurement.

It all seems reasonable enough. So what’s the problem?

The problem is that it doesn’t even come close to mapping the consumer’s approach to a considered purchase decision in the Internet age. In the automotive category, for example, the 2004 New Autoshopper.com Study** found that among all new-vehicle buyers, approximately 50% say their make/model decision and the price paid/offered were impacted by automotive information found on the Internet—up from about 40% in 2002. The Purchase Funnel takes no account of the way consumers use online research to 1) expand their consideration set and 2) to take advantage of the experience of existing owners and users to help guide their choice. Both points have important implications for the purchase funnel.
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* Defining Advertising Goals for Measured Results, 1961 (Russell Colley)
** Based on responses from 26,838 consumers who leased or purchased a new vehicle registered in January or February 2004

How so? Let’s take both points separately.

Expansion of the Consideration Set

A recent study of search behavior online*** revealed that generic terms account for the majority of online search activity associated with a subsequent purchase. The study of search behavior in the consumer electronics category showed that generic product search terms (e.g. “camera,” “plasma television” or “PDA phone”) accounted for more than 70% of total search volume, while trademarked retailer terms (e.g. “Best Buy,” “Gateway.com”) accounted for 20% and specific product terms (e.g. “Canon digital camcorder,” “HP notebook nx9010”) accounted for 10%.

It also found that while 85% of searchers do indeed conduct additional CE/C searches later in the shopping process, the majority of consumers continue to use the same search term type (either generic or branded) with which they began the search process. As importantly, comScore also found that generic search terms are likely to have influenced even those consumers who converted to purchase after conducting a retailer trademark search (e.g. “Best Buy” or “Gateway”). Fully 84% of these buyers searched using a generic term earlier in the buying cycle, reinforcing the importance of reaching consumers early in the search process when they are defining their consideration set.

The implications of this study challenge a widely held assumption encoded in the purchase funnel, that most consumers begin the product search process by using a generic search term (e.g. “plasma TV”) and then later refine their search activity to product-specific terms (e.g. “Sony Plasma KE-42M1”). It also suggests that the use of generic search terms will invariably open consumers up to the possibility of being tempted by new brands and products that were not in their original consideration set.

And, in fact, we already see this happening in the automotive category. CNW Research is considered the industry standard measurement of consumers’ automotive purchase behavior. Historically, it has reported that consumers start out with six or seven vehicle models in their consideration set and then, over the following six months or so, gradually refine the list down to the one or two vehicles that they will test drive. The latest annual tracking studies from CNW reveal that around half way through this process, the number of models investigated jumps back up from around four, to five or six. We believe this spike is reflecting new make and model considerations generated by online searches for information about their original considered set.

We also believe that what influences consumers most in this stage is not what the manufacturer says about the ownership experience but what current owners say, which brings us to point number two.
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*** This ComScore study is based on a massive, global cross-section of more than 2 million consumers who have given ComScore explicit permission to confidentially capture their browsing and transaction behavior, including online and offline purchasing.

11 COMMENTS

  1. Thanks for the articulation of what our sales guys have been unsuccessfully pitching to the car company ad agency’s for the past 10 years…what excuse will the “the Funnel is the only thing” ad agencies have now for not becoming “research is the real thing” agencies and adding content sites ( like The Auto Channel.com) to historic and ineffective “Blue Book, and Yellow Page” media buys?

  2. Are legible files for the third and fourth charts available? The three-line chart next to the passage about CNW and the ORBIT chart near the end are very intriguing, but largely indecipherable.

    Thanks for a terrific diagnosis.

  3. A very interesting piece. I contend however, that the Purchase Funnel is alive and well. The PF is a strategic construct and the author is making a tactical argument. The piece states “The implications of this study challenge a widely held assumption encoded in the purchase funnel, that most consumers begin the product search process by using a generic search term…”. The PF in it’s basic form (awareness, consideration, use, loyalty) does not currently nor has it ever explicitly ascribed precise tactics e.g., magazine ads, brochures, events, search, owner testimonials etc., to each step in the funnel (although they are generally understood).

    The provided explanation of how someone now buys a car still deals with the Consideration stage of the funnel. Granted consumers have many more options (i.e., tactics) today to get them down, up, across and through this stage, but we are still dealing with the strategic issue of Consideration. This has not changed.

    Moving on to Loyalty, the piece goes on to state “…but again, the purchase funnel falls woefully short, guiding the marketer to invest heavily in awareness-building programs and under-invest in the usage/ownership experience.” I again find this to be a specious argument. The PF does not assign relative importance to any step in the funnel over another. If marketer is a doing a poor job of loyalty marketing that does not mean the PF is flawed it means that marketers don’t understand it.

    Today, as in the past, the PF has four equally important steps that provide a flexibly linear approach to the consumer purchase process. Consumers may enter the funnel at different points and by different methods but the funnel is still the funnel. To ensure success, each step must be mastered by the astute application of any and all traditional and new media marketing tactics that are available.

  4. The purchase funnel has been dead a long time. Some consumers ask a friend and buy. Others shop for weeks, months, feverishly. The traditional funnel construct only works in the old Soviet Union.

    In the car business, consumers allegedly shop carefully and then make a decision. Hahahahaha…spend some time at a car dealership and you will be quickly disabused of that notion. Some consumers buy only because they were able to get financing or enough for their trade in. Others shop based on payment, or color. Others, based on what the neighbor said. And then…there are the maniacs, like me, who carefully browse for days, weeks and months for the PERFECT deal. Success in marketing, is finding the various clusters of behavior and marketing to those.

  5. […] As Experience Planners for the web know, it’s not so tidy.  Customers jump around from one mindset to another. In a recent Adotas article, Cathy Clift talks about a recent ComScore study  where the consideration set of a customer looking to buy a product, increased from 4 to 5 or 6 vehicle models after doing generic keyword searches.  That’s a huge “wow!” moment for me.  This implies that a customer, who had 4 plasma television brands/models in minds before starting research on the internet, had 5 or 6 brands/models after completing an initial pass at research using generic keywords like “plasma TV”. […]

  6. The strategic concept of the Purchase Funnel is a very useful construct despite the fact that there never was an “orderly buying process”. The Purchase Funnel is an effective model that helps marketers organize their thinking about consumers navigation through the marketplace, including the automotive world.

    We have all seen what a DNA molecule model looks like. It’s the double helix representation that has revolutionized scientific thinking on a score of issues. I’m told it looks nothing like a real DNA molecule, but the way it is portrayed conceptualizes the workings of a very complex nanoworld. So to, the Purchase Funnel helps marketers conceptualize the processes of buying products, particularly durable goods.

    The Internet is just a medium. It is a relatively new tactical instrument, but just like any other medium, its job is to deliver information to potential customers…at a reasonable cost. Wouldn’t you guess that when radio was invented some people would have believed that the Purchase Funnel [had it been invented then] would have obsoleted any orderly buying process, because you could reach people by the millions. How about when TV came of age…now we could show prospects a product, and even DEMONSTRATE it…havoc.

    The Internet is just another way consumers effectuate their information gathering and decision process. It is a powerful tool, to be sure…but it does not violate the basic hierarchy of effects that the Purchase Funnel so splendidly portrays.

    The purchase process has always been messy and unpredictable at the individual level, which is precisely what makes a framework like the Purchase Funnel valuable. The Purchase Funnel does not pretend to trace individuals through their decision-making stages, but instead describes how a marketer’s brands are doing in building or not building momentum down the funnel. The Purchase Funnel provides the best indication of whether or not a brand is on track to meet sales goals, and provides rich information on where obstacles exist.

  7. I agree with David and don’t believe the purchasing funnel is dead. The dawn of the internet does not mean a fundamental rethink is required here, but rather a few tweaks to the original concept. As with most models, the purchasing funnel needs to move with the times, but we shouldn’t rewrite the rulebook just because something has been around for a while. Sure, information is more readily available and transactions are easier, but one and two way conversations with consumers and independent reviewers pre-date the web.
    Twitter isn’t the solution to every consumer woe.

    http://www.marketing-made-simple.com/articles/purchasing-funnel.htm

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