The Funnel We Need: Follow Customers as They Actually Behave

A 4-Stage Cycle Where 'Earned, Owned and Paid,' and 'Traditional and Digital' Don't Matter

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Poor Elias St. Elmo Lewis. When he first described the sales funnel more than 100 years ago, he was trying to map the path a single customer took to a single purchase. Little did he know how badly we'd one day abuse his model.

In recent years some marketers have tried to weld "loyalty" or "advocacy" onto the bottom of the funnel, others have tried to "flip" the funnel, and many have longed to bury the funnel entirely -- all in an effort to find a model that better reflects the ongoing relationships between companies and their customers.

Our research shows a four-stage customer life cycle best sums up how customers interact with companies. First customers discover a product or service; then they explore it in greater detail; next they buy the product or service; and after purchase they engage with the company from which they bought, as well as with other customers. If companies create positive engagements they can drive new discovery -- either by introducing existing customers to additional products or by leveraging satisfied customers to pass the word along to others.

If we take a new approach to understanding the customer journey, of course, we need to rethink how we market to customers in that journey.

Most customers tell us that when they're open to discovering new products and services, they rely on mass-reach channels such as TV ads, search engines and word of mouth. When they want to explore products in more detail, they use depth channels like marketers' websites and retail stores. (They turn to these same channels when completing purchases.) When they want to engage with their favorite brands, they use relationship channels -- signing up for email lists or loyalty programs, or liking a brand on Facebook.

If you want to support this life cycle, you'll need to start looking at the world the way your customers do: As an ongoing sequence of reach channels, depth channels and relationship channels.

That's just what savvy marketers are doing -- building their "Reach and Depth and Relationship" channels into "marketing RaDaRs" that leverage all three types.

Depth channels tell your product's story. Your website, your stores and your salespeople serve a common purpose: To give your customers and prospects the detail they're seeking when they explore your product and to guide them to a purchase.

Relationship channels serve your existing customers. Most of the people who sign up for your mailing lists or follow you in social media are satisfied customers. These channels aren't about attracting new audiences or directly driving sales; they're about staying in touch with your biggest fans.

Reach channels get you into the consideration set. Word of mouth and unbranded searches are the two channels your customers use most to discover products, followed by traditional channels like TV ads and in-store displays. Your purpose for using these tools is to encourage customers to explore your offering in greater depth.

Marketing RaDars

CLICK TO ENLARGE. Savvy marketers are building their "Reach and Depth and Relationship" channels into "marketing RaDaRs," as illustrated here.

We've seen this thinking in action in a number of successful campaigns over the past two years. In the United States, Porsche's Everyday Magic program built reach, depth, and relationship channels into a cohesive marketing plan that helped drive double-digit sales growth in a tough economy. Skin-care brand Eucerin's Thai marketing team (Eucerin's parent company is a Forrester client) built a RaDaR around its Eucerin Club concept; it's now outpacing competitors in this fast-growing market.

If you're going to build marketing RaDaR, it's important to keep two things in mind:

Stop thinking about "earned, owned and paid." The concept of earned, owned and paid media shook many marketers from their slumber and helped them see a way past traditional channel-based marketing plans. But this model was never representative of the way customers used media; like "digital and traditional," it's a classification based on organizational convenience rather than on the customer journey. Our data show that customers turn to reach, depth and relationship channels at different stages of the life cycle -- regardless of whether those channels are digital or traditional, or whether they're earned or owned or paid.

No piece of the model is naturally more important than any other. We talk to many established marketers who prefer to focus on reach channels; often, emerging marketers want to emphasize relationship channels. But each set of channels -- reach and depth and relationship --takes the lead at a different stage of the customer life cycle. If you focus just on one part of the model, you'll be less able to guide your customers through their journey.

Nate Elliott is a vice president and principal analyst at Forrester Research.
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