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Widely recognized as one of the marketing industry's premier brand planners, Cathy Clift is the Chief Planning Officer of Rapp Collins Worldwide. Since joining Rapp Collins, Cathy's client experiences have included Best Buy, DIRECTV, Hyatt Hotels, Sony PlayStation, SBC, Toyota, SunTrust Bank and a growing list of healthcare clients. Cathy began her career at J. Walter Thompson in London and, since then, has built and led account planning teams at some of the most creative agencies in Europe and the United States, including Lowe Howard-Spink in London; Goodby, Silverstein & Partners in San Francisco; and TBWA Chiat / Day in New York. Cathy also served as director of strategic planning for McCann-Erickson, where she introduced the strategic planning discipline to McCann-Erickson's four West Coast offices for clients including Nestle, Microsoft, Washington Mutual and Sony Pictures Entertainment (Columbia TriStar).

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

Written on
March 20th 2006
Author
by Cathy Clift  |
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Influence of Current Owners/Users

There an estimated 65,000 news groups, 80,000 chat groups, over 1 million Internet communities hosting message boards**** and 10 million blogs***** .

Their effect on the purchase process is staggering. For example, based on our work with healthcare clients, we know that while 50% of all patients search for disease and treatment-related information on the web, fewer than 10% go to a branded web site, many opting to read the experience of current patients on message boards and blogs. This is true for many industries, including automotive and retail, where consumers seek unbiased information on the ownership experience.

This means that marketers must not only adjust their online strategy to accommodate prospects in the “research” stage, but also invest more heavily in creating a positive experience for current customers. Importantly, this investment will also pay out in repeat business.

As customer relationship experts, we know that the cheapest way to acquire customers is to leverage the ones you already have, and there’s no better way to do that than to invest in the ownership experience.

For example, based on our experience with automotive marketers, we know that until recently, many were not marketing to customers at all once they took ownership of the vehicle. Not surprisingly, research indicated that up to 50% of buyers were choosing another brand for their next purchase.

To respond, we have worked with several clients to develop strategic contact plans that leverage predictive analysis of time-to-repurchase and model preference of individual customers to develop communications programs that promote the most appropriate car at the most appropriate time. In addition, we have developed relationship-building communications, from e-newsletters to long-lead demand management campaigns, to build the brand’s position in the owner’s mind and keep the company top-of-mind during the vehicle repurchase process.

Moving one step beyond demographic profile-driven communications, Rapp Collins has recently developed a revolutionary system that drives communications based on opt-in consumer preferences and attitudinal predictive modeling. Using templates that ensure a consistent brand message and technology the agency developed, our clients can record customer preferences online and match them against profile information and an owner experience map to generate customized communications that resonate with the buyer. In addition to e-mail and e-newsletters, the system generates unique brochures through print-on-demand technology and variable digital printing — allowing the prospective customer to get the information required to influence the next purchase decision through the channel of his choice. The ROI on these programs is almost always in the triple digits.

Marketing activities that build the relationship are one of the best investments marketers can make, 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.

______________________________
****”Internet activity is alive and thriving outside of the World Wide Web’s 6 billion pages or more, to include over 65,000 newsgroups, 80,000-plus IRC/chat rooms and more than 1 million communities hosting message boards.”
(Source: Cyveillance, May 12, 2003)Number of hits for “health” on Google Groups: 6,510,000
***** “Based on the rapid growth rate demonstrated by the leading services, we expect the number of hosted blogs created to exceed five million by the end of 2003 and to exceed ten million by the end of 2004.” Perseus Blog Survey, December 2004

A New and Improved Model

The solution to the problems of the purchase funnel is rooted in a better understanding of the consumer’s decision-making process, which can be summed up in a model we have found to be very useful in many categories, from automotive to luxury goods and healthcare.

Why is this a better model?

It is fundamentally a customer-centric model, and it recognizes three critical aspects of the consumer’s decision making process:

1. The initial stimulus is much more likely to be an event in the life of the consumer than a marketing or advertising campaign. Taking the automotive purchase process as an example, the initial stimulus or trigger event tends to fall into one of three categories:
- A key milestone related to the age of the current vehicle such as the odometer hitting a certain number of miles, a loan getting paid off or the warrantee expiring, by far the most frequent trigger event.
- A lifestage event or change in personal circumstances such as relocating to a different area, the arrival of children or the departure of children off to college.
- A marketing event such as the launch of a next generation model that makes the current vehicle feel suddenly out of date, the least frequent trigger.

2. Secondly, it accommodates the fact that while having your brand in the consumer’s initial consideration set can very important in low interest categories, the abundance of additional information on the internet means that for considered purchases, the final selection can easily include brands and options that were not originally considered. The implication for marketers is to rethink the online experience to…

3. Third, it implies an investment in the user experience, which can not only impact repurchase but also can create favorable mentions online.



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Reader Comments.

Cathy - good piece. Can you e-mail me the final chart (circle/arrows) as I’d like to write this up on Jaffe Juice.

Thanks,

jJ

Posted by Joseph Jaffe | 12:15 pm on March 20, 2006.

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?

Posted by Bob Gordon | 1:05 pm on March 20, 2006.

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.

Posted by Tom Troland | 1:33 pm on March 20, 2006.

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.

Posted by John Lee | 6:17 pm on March 21, 2006.

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.

Posted by David Wassmann | 6:23 pm on March 24, 2006.

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.

Posted by David Garfield | 11:17 am on June 2, 2006.

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