The customer decision journey &
August 2019 | Article
Customers continue to move beyond the simple marketing funnel and the ways that they research and buy products has become far more complex. Here is how to adjust your marketing program to their new customer journey and the ePhy world.
The goal of marketing is to reach customers at the moments that most influence their decisions. That is why Apple makes its packaging as artistic and visually appealing as the device inside, giving buyers a sensory experience that strengthens their brand.
It is why P&G years ago underwrote the kind of radio and later television programs that would reach audiences most likely to buy their products – hence “soap operas.” As times have changed, it is also why P&G has abandoned soap operas and is now using social media as more effective marketing channels to each women. And it is why paying attention to the “social proof” power of online reviews is so important today, given that we’re more likely to make a purchase if others around us — even total strangers — agree that it is a good decision.
In 2009, the age of digital shopping was taking hold in earnest – where competitors were just a click, swipe, or tap away – and the purchase decisions of customers were radically changing. At that time, McKinsey proposed a new approach in an article, “The Consumer Decision Journey.” After “examining the purchase decisions of almost 20,000 consumers across five industries and three continents,” McKinsey developed the new approach to help marketers navigate the complexities of the new digital marketing environment.
The core of McKinsey’s consumer decision journey approach has proven itself to be an extremely effective framework to work from in the years since. As this concept has been put to the test in active marketing, it has been improved and refined by many others.
Core Agenda has put its own stamp on it by embedding the fluidity of digital and physical touchpoints – which we call “ePhy engagement.” We also refer to it as the customer decision journey, rather than “consumer decision journey,” given we feel that it is equally applicable to consumer as well as B2B relationships.
This article is written to provide a guide starting with McKinsey’s foundation from 2009 through the improvements made in the interim on how to make your marketing far more effective by working from this framework.
The Old “Funnel” Marketing Concept
Marketing has always sought to identify moments of value, or touch points, when consumers are open to influence. For years these touch points were discussed using the metaphor of a funnel.
With this marketing concept, customers start with a number of potential brands in mind, at the wide end of the funnel, and marketing is directed at them as they reduce the number of brands they are considering – moving through the funnel.
As illustrated in Exhibit 1 that we derived from earlier McKinsey work, customers work through phases of awareness, familiarity and consideration – ultimately emerging from the funnel with one brand they choose to purchase. At that point marketers attempt to anchor loyalty so a customer will repeat purchases without considering any other brands again.
With a traditional marketing funnel metaphor, customers start with a set of potential brands and methodically reduce that number to make a purchase.
A Radically Changed New Environment
The Internet has fundamentally changed the way that customers and businesses communicate, obtain information, purchase goods and services and transact business since its commercial emergence in 1994 and growing acceptance since that time. This transformational impact has extended to physical channels of engagement also.
Given these changes, it has become clear that the funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels that have emerged during this new era. Adding to this is a the emergence of an increasingly discerning consumer, well-informed by the web’s seemingly limitless troves of information.
McKinsey’s original insights were that a more sophisticated approach was needed that was less linear and did a better job of capturing the complicated interactions than the funnel suggested. They called this new approach, the consumer decision journey.
How customers really make decisions
Discussing how the consumer formed the impressions that impacted their decisions, the 2009 McKinsey article noted:
“Every day, people form impressions of brands from touch points such as advertisements, news reports, conversations with family and friends, and product experiences. Unless consumers are actively shopping, much of that exposure appears wasted. But what happens when something triggers the impulse to buy? Those accumulated impressions then become crucial because they shape the initial-consideration set: the small number of brands consumers regard at the outset as potential purchasing options.”
The decision-making process is now recognized as a more circular journey (illustrated in Exhibit 2), with five primary phases representing potential battlegrounds where marketers can win or lose: (1) initial consideration, (2) active evaluation, the process of researching potential purchases, (3) closure, when consumers buy brands, (4) post-purchase, when consumers experience brands, and provide public input, which influences others, and (5) the loyalty loop, when customers bond and re-purchase from a brand without bothering to consider other alternatives again.
Exhibit 2 – guide
Walking through the journey
(1) After something triggers an impulse to buy, the customer considers an initial set of brands, based on brand perceptions and exposure to recent touch points.
(2) Customers add or subtract brands as they evaluate what they want.
(3) Ultimately, the customers selects a brand at the moment of purchase.
(4a) After purchasing a product or service, the customer builds expectations based on experience to inform their next decision journey.
(4b) During a customer’s post-purchase phase, some will share their perspectives either digitally and/or during physical interactions, which will influence other customer perspectives on a brand.
(5) Some customers will form a loyalty attachment and will bond to a brand – choosing to repeat purchases without considering any other brands again.
The customer’s decision-making process is now a circular journey with five phases
In the euphoria of the seeming ease of using the Internet, its easy to make the mistake of forgetting about the traditional physical forms of marketing that were the exclusive norm before the emergence of the Web. But while customer engagement through digitally enabled touch points has transformed marketing, all roads don’t necessarily lead through the Internet. In fact, numerous physical channels are preferred for a variety of situations – and they capture market segments missed by the Web. For example, radio, magazine ads mail, and keynote presentations, among others, continue to have their place.
As illustrated in Exhibit 3, the customer’s decision journey is a two lane road. Marketers now have a vast mix of digital engagement touchpoints and traditional physical touchpoints, some of the latter emerging since the digital revolution began. Core Agenda calls this new environment “ePhy engagement.”
The customer’s decision journey is a two lane road with lanes for digital touch points and physical touch points.
Updating your approach to marketing for the customer decision journey
Your first step in adapting your marketing to the customer decision journey is to develop a deep understanding of how your customers make decisions. The challenge is focusing your strategies and spending on the most influential touch points. Businesses and practices that want to remain successful against the increasing complexity of the customer decision journey will have to adapt to survive. This change mandates that you adopt new ways to measure customer attitudes, the performance of your brand, and the effectiveness of your marketing expenditures across the whole process.
Without such a realignment of your marketing spending, you face two risks as a business or practice. First, you can waste a significant amount of money by focusing on touch points that aren’t optimal. Second, your efforts to engage with your markets can seem to be out of touch — for example, by trying to push products or services on customers rather than providing them with the information, support, and the experience they now want – the expectation of being enabled to reach decisions themselves.
Four kinds of activities can help you address the new realities of the customer decision journey.
(1) Re-prioritize your objectives and spending
In the past, most marketing efforts focused on the far ends of the funnel – either building awareness going into the funnel or generating loyalty among current customers at the end of the process. With the today’s customer however, your approach has to change.
You need to be much more specific about the touch points that you will use as your customers move through initial consideration to active evaluation to closure. By just remaining focused at the traditional marketing funnel’s front or back end, you could miss exciting new opportunities at the most important points on the decision journey for your business or practice – and you may miss targeting the right customers.
(2) Readjust and tailor your market messaging
For some businesses and practices, new messaging may have to be developed that is specific to help you win in the parts of the customer journey that offers the greatest revenue opportunities for you. Legacy general market messages that cut across all stages of the market journey may have to be replaced. For example, if there are weaknesses that are in the minds of customers about you at specific points of the journey, you may have to develop specific messages to address those perception issues.
(3) Invest in customer-driven marketing
In order to look beyond funnel-era push marketing, businesses and practices should invest in tools that allow then to interact with customers as those customers learn about their brand. The core focal point of these tools and customer-driven marketing is the Internet. The Web is crucial during the active-evaluation phase as customers seek information, reviews, and recommendations.
While traditional media push marketing still has its place, your budgeting needs to shift away from that and toward developing resources that will attract customers. This includes digital tools such as websites that detail your products and services; Web resources, such as reviews, that stimulate word-of-mouth; and advertising that is automatically customized according to what is known about the customer and their viewing context.
Digital marketing enables you to create dozens of variations on an advertisement, and present it at the most effective time and place for a specific customer. Taking advantage of this accuracy and cost effectiveness with targeting for your marketing is in your reach no matter what your size.
(4) Win the in-location battle
One consequence of the new world of marketing complexity is that more customers hold off on their final purchase decision until they’re in a store. Or if you are a professional services provider and they’ve made an appointment to visit you, their loyalty to you will be significantly impacted by every facet that they experience during their visit.
For retail, merchandising and packaging have therefore become very important selling factors, a point that’s not widely understood. Customers want to look at a product in action and are highly influenced by the visual dimension: up to 40 percent of them change their minds because of something they see, learn, or do at this point—say, packaging, placement, or interactions with salespeople.
For professional services, you need to consider the touch points that your practice location presents – from the visual to interactions with staff and everything in between.
Integrating all of your customer-facing activities
In many businesses and practices, different parts of your organization undertake specific customer facing activities, including informational Web sites, your digital presence, traditional advertising, sales teams, public relations and loyalty programs. Different individuals are often responsible for each element – and usually they don’t coordinate their efforts or even communicate. These activities must be integrated by appropriate leadership providing a coordinating focus.
The necessary changes are profound. A comprehensive view of all customer-facing activities is essential. The full scope of the customer decision journey goes beyond the traditional focus on marketing of brand building, advertisements, and perhaps market research. These needs aren’t going away. But what you do need now is a broader outlook that realigns marketing with the current realities of consumer decision making, intensifies efforts to shape the public profiles of your business or practice, and builds new marketing capabilities.
Understanding your customers’ decision journey isn’t just important for large enterprises. Small and midsize businesses and practices who aspire to remain competitive and grow also need to be aware of the profound changes in the way customers research and buy products and services. Unless you change the focus on your marketing to match this evolution, it will undermine your core goal of reaching customers and prospects at the moments that most influence their purchases. This shift in consumer decision making means that you have to adjust your marketing spending and view the change as not a loss of power over customers but as an opportunity to be in the right place at the right time, giving them the information and support they need to make the right decisions.
About the Author(s)
Ted Bream is the Managing Partner of Core Agenda.
The author wishes to note that this brief evolves the original insights from an article, “The Consumer Journey,” written by David Court, Dave Elzinga, Susie Mulder, and Ole Jørgen Vetvik of McKinsey in the McKinsey Quarterly in June 2009.