The Sales Funnel Is Dead. Long Live The Loyalty Loop!

There has been a lot of recent discussion about how social media has changed the way that brands and consumers interact.  The Harvard Business Review featured an article in its December 2010 issue "Branding In The Digital Age - You're Spending All Your Money In The Wrong Places" by David C. Edelman.


This article articulated how today's consumers engage with brands, and asserts that the traditional ways of marketing and influencing the customer are no longer relevant.  This concept is not unique - it is echoed over and over by  marketing pundits who have seen how social media has literally changed the rules of the game.


Traditional marketing was based on targeted one-way communications. Identify the customer and impact his buying decisions with advertising messages.  There was no customer feedback, communication, or collaboration with the brand in this process.  The "buyers' funnel" was used to illustrate the purchase process.

(Source:  Harvard Business Review, December 2010, p 64)

Today, social media has created a new purchase mechanism and replaced the funnel model.  Now consumers typically utilize a more extended evaluation phase during which various brands are added and/or eliminated.  But most importantly, after purchase, consumers typically enter into an open-ended relationship with the brand and its advocates.  This typically happens online on various flatforms.  This new "Decision Journey" is shown below.  Note the all important Loyalty Loop.

(Source:  Harvard Business Review, December 2010, p 64)

This process is sometimes referred to an an "integrated purchasing experience".


Mr. Edelman then cites two very important implications to this change in the consumer decision process.



The first is that marketers need to shift their focus from targeting consumers in the traditional "consider" and "buy" stages and instead  look to influence the "evaluate" and "enjoy / advocate / bond" stages.  Today's consumer is typically highly influenced by other consumers' advocacy - ie, online advocacy.  If that advocacy is weak or invisible the consumer will often times  purchase another brand that has demonstrated consumer support. 


The second important implication is that traditional marketers have focused on traditional marketing media and budgets known as paid media.  This is primarily advertising in any number of channels.  


Today marketers also need to focus on owned media which are websites, and earned media, which are customer supported channels that provide comments, feedback, and advocacy for brands they use and endorse.  Earned media cannot be bought.  As the name implies, it must be earned!


Companies that do not adapt to the new CDJ (consumer decision journey) will increasingly find their brand left behind as their competitors utilize and benefit from these tactics.