Marketing is a really young discipline — only about 90 years old. And, in all that time, the concept of the marketing funnel (also called the sales funnel and the conversion funnel) drove goal setting that underpinned marketing strategy.
Then, a couple of practitioners, Mark Bonchek and Cara France, published a post on the HBR Blog entitled, “Marketing Can No Longer Rely on the Funnel” that started a real introspection among academics questioning whether the funnel is still relevant in today’s world. Mark and Cara raise some interesting points about the funnel concept but let’s start by looking at what the marketing funnel is and what it isn’t.
The marketing funnel
Whether you call it the marketing funnel, conversion funnel, or sales funnel, the concept is central to marketing because conversion is the name of the game. After all, companies are in business to make money and they only make money if they convert (sell) customers. That’s why marketing strategy revolves around driving prospects down the funnel toward conversion. Hence, the funnel concept forms the basis for most goals set by the organization which impacts KPIs (key performance indicators) and other metrics that contribute to the success of your brand.
There’s a good reason for the centrality of the funnel form. The notion is that companies succeed by pouring consumers into the top of the funnel and slowly consumers flow out the sides of the funnel so that there are fewer consumers left at each stage of the conversion process. So, figuring out why consumers leave the funnel and how to get more of them to flow through to complete a transaction is important if you want to make more money.
An unfortunate reality in marketing is that tracking prospects as they move down the funnel is just so darned hard because it’s hard to determine the cause/ effect relationship. Attributing consumer action to a SPECIFIC tactic is challenging and assessing what individual company tactics do to the mass of neurons inside someone’s head is nearly impossible. John Wanamaker said it best when he said:
Half the money I spend on advertising is wasted; the problem is, I don’t know which half.
Over the last few decades, marketers responded to this criticism by becoming increasingly analytic and the holy grail became tracking movement down the marketing funnel. Strategies focused on the funnel and analytics tracked which tactics were most effective.
Even Google Analytics adopts the notion of moving visitors down a funnel by allowing website owners to easily track movement through a website from entry to thank you page. But, is the process really a funnel? Let’s jump into that conversation.
Of course, the marketing world is VERY different today than when John Wanamaker made his famous quote. Among the most impactful changes over the last decade or so, is that digital marketing now allows marketers to not only track movement down the funnel but a company can determine which tactics more effectively drive consumers down the funnel. For instance, I can track which clicks to my website came from an ad on Facebook and, if I tag the link, I can even determine which Facebook ad drove users to click to my website. Not only that, I can follow those clicks as users move through my website and I can determine which visitors’ actions translated into a sale and where visitors left my website, where they went, and whether they returned later to take other actions on my website. I’m in a much better position than John Wannamaker because I know which advertising was wasted. I can optimize performance by using these insights to create better ads, develop better landing pages, and streamline the conversion process to generate a higher conversion rate.
I can also compare my conversion rate against that produced by other companies in my industry (see graphic below). Not every visitor to my website will buy something every time they visit. That’s just not realistic. By comparing my performance against that of my competition, I can develop more realistic assessments and generate more impactful strategies.
Is conversion really a funnel?
Mark and Cara (remember the HBR article above) make some good points about how the marketing funnel is obsolete today. First, they mention that social media now means consumers no longer move in a linear fashion from awareness to conversion. Of course, that’s not really new — consumers NEVER moved in a linear fashion leading to product purchase. Marketers used the funnel as a conceptual framework for the process knowing that consumers don’t move through linearly, but cycle through and jump around. That doesn’t make their point any less valid, however.
Certainly, more recent treatments of conversion result in alternative views of the funnel, most not even using the funnel concept. Let’s take a look at a few of them.
This one from Coast Digital is a slight variation on the traditional funnel as it makes explicit the reality that consumers jump out of the funnel at each stage of the journey. While this funnel only charts the conversion process once the visitor arrives at your website, you can easily expand the concept to consider actions consumers take before visiting your website.
Here’s a version that doesn’t use the funnel concept. Instead, it shows the conversion process as a series of steps where users wander aimlessly through your website and other marketing communication channels before making a purchase. Note the importance given in this version to multiple communications before completing the purchase, each coming through various communication channels. I especially like the notion of analysis paralysis (academics call this cognitive overload) since I recently wrote a post on dealing with this very real impediment to purchasing a product.
Another nice treatment of the conversion process comes from one of Google Analytics’s top gurus, Avinash Kaushik. He calls this the See, Think, Do model. One nice element of this model is it recognizes the importance of post-purchase evaluations and the way you can optimize post-purchase to improve performance. For instance, when customers are happy, they’re more likely to return to make a repeat purchase. Customer lifetime value (CLV) recognizes the present value of these repeat purchases over the length of time the customer continues to buy from you.
Another way that satisfied customers help you is by recommending your brand to others. Even a tacit recommendations such as wearing or using your product can have a positive impact on the purchase decisions made by others.
I created the image below, which encompasses my notion of what the marketing journey looks like that bears no resemblance to a funnel. Instead, consumers move in concentric circles as they consider products to solve their problems. In each circle, the consumer might continue around the same circle or jump to the next circle, or even cross the tracks to move to an even lower circle. The first research paper I ever published dealt with impulse buying and framed the purchase as a rational way to make decisions that didn’t involve much cognitive effort as opposed to an irrational response to a retail environment. I still remember the interview I did with one woman. We were discussing impulse buying and she was very much against it as a waste of money. She felt people who bought on impose were lazy. Yet, as we walked during our discussion, she saw a store window touting a sale. She stopped the interview because she said she wanted to go into the store to see if anything she needed was on sale. Thus, she jumped from awareness straight to purchase.
Should we ditch the marketing funnel?
I’m not really sure.
I think you can make a strong case for ditching the funnel concept although you can’t ditch the notion that consumers move through a series of steps before making a purchase. You also can’t ignore the fact that they can’t buy anything unless they first become aware of its existence. The saying “If you build a better mousetrap the world will beat a path to your door” is so much hogwash. You must first let consumers know you have a mousetrap then convince them it’s truly better.
Yet, the notion that consumers move through the steps in an ordered fashion from awareness to conversion also faces challenges when it comes to understanding reality. Specifically, using the traditional funnel concept only works if:
- You ignore valuable actions OUTSIDE the funnel, such as building relationships and repeat purchase
- It’s short-term oriented and business is a marathon, not a sprint
- Conversion isn’t a linear process, it’s circular
- Consumers may do much of the process before YOU even know they exist — they’re getting their information and recommendations from social media
By the same token, if we lose sight of the marketing funnel, do we drift back to the Wanamaker days when we don’t know what’s working and what isn’t? Monitoring consumer movements toward conversion (and maybe beyond) offers a valuable tool for assessing the success of marketing tactics.
Maybe, rather than ditching the marketing funnel, we need to think about what the funnel looks like in the age of digital marketing. Maybe the funnel looks more like one of those presented above.
Hierarchy of effects
A related concept is the hierarchy of effects, which looks something like this:
Notice, that this depiction of a funnel doesn’t contain conversion because conversion can occur at any point along the funnel. That doesn’t mean we’re ignoring the importance of conversion for businesses, it just means that, by focusing on other elements within the funnel and optimizing the movement across the phases, consumers are moving closer to conversion, helping others find your products, and defending your brand when others disparage it. Inherent in this notion is the belief conversion is part of a cause-effect relationship and that, by focusing on the “causes” of conversion, we’re supporting conversion in a deeper way than if we focused single-mindedly on conversion itself.
This digital funnel focuses heavily on SOCIAL and recognizes that influences from a community more strongly impact purchases than anything a business might say.
I’d love to hear your thoughts about this concept. Is the conversion process a funnel or is it a cyclical process where consumers can move fluidly from awareness to any other stage in the process in concentric circles? If these versions of the conversion process don’t resonate with you, what do you envision the process looking like? Join the conversation in the comments section below.
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