Commentary

I Miss The Old Purchase Funnel

A long time ago, before Ogilvy, Bernbach and the real Mad Men, when advertising was taking its first baby steps toward being a legitimate profession, an early pioneer in advertising and sales techniques named Elmo Lewis invented a model to explain how it all worked. In 1898, before the car or airplane was invented and when the life expectancy of a man was just 48 years, the "AIDA" model was born.

Ye Old Purchase Funnel

AIDA -- which stands for attention interest desire action -- was the inspiration behind the classic purchase funnel, the accepted model for how advertising works for over 100 years. Nice and linear, it had consumers proceed along an orderly path from awareness to consideration to purchase, and for agencies and marketers, life was good.

TV got you awareness, print informed you enough to get into your consideration set, and retail/POS brought it home. Then came the Internet. Okay -- somewhat disruptive -- the funnel wobbled a bit, but still it survived. Certainly Google wasn't complaining. Search made them rich by owning the bottom of the funnel. Web sites and "clicks" grabbed hold of the mid-funnel and helped start today's actions-based orientation, which marginalized "soft" attitudinal metrics, expensive tracking studies, and printed magazines you couldn't click through. Again, the purchase funnel teetered a bit, but remained standing.

The Modern Purchase Funnel

It wasn't until the rise of social media, with its hyper-complex, peer-to-peer dimension overlaid on top of a bevy of marketing touchpoints, that the soothing predictability of the purchase funnel finally suffered a mortal wound. McKinsey dealt the final death blow, introducing a "modern" version of the funnel. Compared to Ye Olde Purchase Funnel, it is decidedly non-linear. You go around two circles. But you can also go backwards. Or sideways (i think). And the new model was called.... um, uh … Come to think of it, there is no good name for the frankenfunnel they created because it’s a shape not found in nature, which of course is brilliant for McKinsey because we have to call it "The McKinsey funnel" in order for anyone to know what we are talking about.

Killing off Ye Olde Purchase Funnel was the easy part. Replacing it with something simple -- well, apparently that's not so simple. I've been in 20 meetings where the McKinsey frankenfunnel has come up, and not once has anyone had the courage to admit that they didn't have a clue what to do with it. Another brilliant stroke by those folks over at McKinsey. You have to hire them; then they'll explain it. In business meetings, no one will ever admit they don't get it. Safer to trash Elmo Lewis' creation (God rest his soul)  and say something like: "Oh, yes -- the purchase funnel -- well, we ALL know that's dead!" which is always followed by a chorus of laughs and knowing harrumphs from a crowd thankful to have something to say on the topic that people understand and agree with. 

The conversation never progresses to anything practical, like what we should do differently. No one ever says anything like: "Hey, what are we going to do about those consumers entering the second loop?" At least with the old funnel, we knew what to do if we were weak at the top (more TV) or the bottom (more deals, POS, search). So, just what shape is the purchase journey today? My friend Erich Joachimsthaler from Vivaldi knows, and has a great way of presenting it on stage.

Your Very Own Purchase Journey: Complexity Sells

Standing still as people mull the question, slowly the music comes up, giving away the answer -- it takes a few seconds and then the audience gets it .... flight of the bumblebees! Random. And that's the problem. The drunkard's walk. No one is solving it -- just making it ever more complicated -- complexity sells! In fact, that's why every consultancy or marketing thought leader worth their salt today has to have their very own purchase journey -- try Googling purchase journey if you want a real treat. 

Forget the shape for a moment -- let's just agree it's "non-linear." What's more important is that the number of touchpoints in the journey has almost doubled in a few short years, from 5.6 in 2009 to 10.4 in 2012. So now, there's a lot more to manage. The result: a proliferation of specialist agencies, one for each and every kind of touchpoint. There's one for events, one for shopper marketing, one for social, which isn't always the same as digital. It might be a different agency when digital is targeting Hispanics, except for the media placement, which is consolidated with one shop to get better rates. Or not. I'm told the average F1000 client now has 18 agencies. That means the average brand manager never gets to manage the brand, because they have to brief the 18 agencies all day -- 22 when there's a pitch happening. Shouldn't we be simplifying, not complicating?

From Touchpoints To Trust Points

But how do you clean up such a mess? Perhaps, the answer is not "touchpoints," it's "trust points:" interactions with credible third-party "influencers" who provide enough assurance in one shot to leap over many touchpoints and buy the damn product. Influence produced by trust points is the 3-point shot of marketing. Today, third-party credibility is the accelerator -- not impressions, reach, frequency, or any of the old linear ideas from 1898. A few good trust points are better than a lot of low-impact touchpoints. Think of the journey as reduced to 3 key steps (that's one less than even the super-simple AIDA model!) 

1. Before Trust: I may or may not have heard of you, but either way, I don't trust you because no credible third party has validated you for me. 
2. Trust: 
I trust you because i've had a quality interaction with an influencer who recommended you.
3. Advocacy: 
you are a super-satisfied customer who has developed into a brand advocate, and is now able to accelerate others through the purchase process. Your "value" is not only the lifetime value of the purchases you've made yourself, but the aggregate lifetime values of all the people who you have influenced to purchase the product. 

Retention Meets Acquisition

Marketers have always undervalued the impact of customer retention, and have seen their jobs as mostly acquisition. However, it is 5 times as expensive to get a new customer as to keep an old one, so most marketers are probably under-resourcing retention. And in a connected world, the value of current customers is even more significant, as the lines between acquisition and retention become blurred, and current customers -- be they advocates or dissatisfied detractors -- have a very significant impact on acquisition.

How do we know that the concept of trust-based marketing works? There is a lot of good data on third-party effectiveness. According to the Edelman trust barometer, we trust other people 78% of the time, but we only trust advertising direct from brands 18% of the time. Recently, BuzzFeed compared the results of the exact same content consumed by the end user with one key difference: the source. In test A, the content was delivered directly from the brand, while in case B the content was delivered via online sharing from a friend or other third party.

Test B outperformed test A by nearly 300% in the ability to create intent, accelerating the path to purchase. And that's the key point. Who cares what shape the funnel is -- what matters is the ability to compress it. Appinions -- the influence marketing platform that first came up with the term "trust points" -- has done some interesting research on the topic as well. They found that the most influential, engaged brands attribute much more of their performance to blogs and social than to traditional press coverage of push-style product releases in the news stream. 

All of this is especially helpful in considered consumer purchases. Or in the B2B world where the decision is always complex, and influencer validation provides the time-honored "CYA" service for the executive who must make the final decision. In fact, 57% of all B2B decisions are essentially made before the first sales call based on brand reputation, fueled in large part by third-party recommendations. So only 43% of the B2B purchase journeys have any chance at all to culminate in a purchase win that wasn't already predetermined. I found this to be true in agency pitches. When the client had already "heard good things about us," our win percentage jumped dramatically.

Trust-Based Marketing Is The Future

Underlying the changes taking place in marketing is the structure of the Internet itself. As VivaKi thought leader Rishad Tobaccawala says: "The Internet is a connections engine." It is fundamentally about connecting people, which is the foundation upon which social media is built. That means social media is not so much a channel (Facebook, Twitter, etc) as a fabric that overlays everything.

Every step in the journey can be disrupted today by peer-to-peer influence, even TV ( via social TV). Every interaction with influencers creates a leapfrog effect, capable of moving the recipient from prospect to buyer in one shot. Trust-based marketing is the future. It's not the old purchase funnel, but at least I can explain it to my mother. "Son, the best form of advertising is word of mouth." And that was true even before 1898.
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8 comments about "I Miss The Old Purchase Funnel".
  1. Steve Schildwachter from rVue , June 21, 2013 at 8:47 a.m.
    Jon, your article made me think twice about the fate of the purchase funnel. And I totally agree that word-of-mouth has always been the best form of advertising. Social Media's big benefit to marketers is that we can now monitor word-of-mouth, rather than guess what happens over the backyard fence. You overlook, however, the value of McKinsey's Consumer Decision Journey (yes, it has a name). The "CDJ" seems to have become an open-source for channel planners -- you see it used all over the place. It's not hard to understand or use, although I grant there's a lot of misunderstanding and misuse out there. I wouldn't blame the CDJ, I'd blame our industry which usually gravitates toward quick-fix solutions devoid of clear, critical thinking. Your article, however, is indeed well thought-through, and despite minor disagreement about the CDJ, I loved it. Thanks.
  2. Tom O'Brien from NWPS , June 21, 2013 at 9:25 a.m.
    Nice article - Trust Based Marketing is also the past! It was just disintermediated for a while by mass media! @tomob
  3. Taylor Wray from Kantar Retail , June 21, 2013 at 9:26 a.m.
    Great article. I'm digging the Marshall McLuhan-esque undertones a lot. Electronic technology is driving EVERYONE in society away from the rational, linear decision-making process (remember how text-heavy and logically persuasive print ads used to be a la David Ogilvy?) and toward a cyber-enabled "tribal" decision calculus based on trust, emotion, and word of mouth. Forget mass marketing; we've entered the era of peer-to-peer advertising.
  4. Leslie Nolen from The Radial Group , June 21, 2013 at 9:39 a.m.
    Pfui. Consumers and businesses have NEVER made rational/linear decisions. Pipeline/funnel/buying process/buying journey charts have always been tidy representations of a messy process. Yeah, the venues and delivery mechanisms have changed and multiplied. But objective information integrated with emotional triggers have always been part of the purchase picture - long before David Ogilvy. And they still are. WIIFM - in whatever way we choose to phrase it - remains the ultimate question that potential buyers are answering. The fact that people in the business of marketing (marketing their clients as well as their own 'unique expertise', of course) continue to find new trademark-worthy ways to slice and dice what they're doing shouldn't be confused with truly fundamental changes in how consumers and businesses decide to buy.
  5. Paula Lynn from Who Else Unlimited , June 21, 2013 at 9:41 a.m.
    It sounds more like a Professor Irwin Corey (Best masterful double talker ever) justifying his job from mouth to mouth.
  6. Nicole Lipson from Georgia-Pacific , June 21, 2013 at 10:38 a.m.
    It's true that trust points have more value than touch points, and third-party endorsements are almost always more favorably recieved than company-speak. Read Google's ZMOT-Zero Moment of Truth. The funnel is no longer relevant...Google says it's more like the airline industry's flight map...many key hubs and touches coming and going from one place to next. The question is...where is the most relevant hub, and who is your most trusted advocate? Finding both is the sweet spot!
  7. Tim Orr from Barnett Orr Marketing Group, Inc. , June 21, 2013 at 6:32 p.m.
    Plus ça change, plus c'est la même chose. As the Zen master says, "When I point at the moon, do not mistake my finger for the moon." There never was an actual purchase funnel. It was just one way (of many) of thinking about (and oversimplifying) the observed processes. The only value in such a construct is whether or not it helps us be more successful. Word-of-mouth is far more ancient than the funnel or even advertising itself. Besides, I think you'll find that AIDA was directed more at the structure of a piece of marketing communication than at the marketing process itself.
  8. Chris Wood from Xerox , June 22, 2013 at 5:12 a.m.
    Spot on Leslie Nolen and other contributors. All the 'experts' that are climbing out of the woodwork have a vested interest in creating disruption, spreading FUD so marketeers will turn to them for the solution - often the same old story simply re-packaged and branded. Most of the intelligent marketeers and their agencies have always know that the customer buying process is a messy business - and that most buying decisions are not rational, they're still made on the basis of emotional response - even in the B2B arena - so lets not kid ourselves that there is a fundamentally new paradigm, just that the number of channels available to deliver the messages and influence the customers attitudes, opinions and behaviours have multiplied - so now you need to be everywhere