You can cover your face and try to go a step further. But if you cover both eyes while hailstones lash your face, you lose your orientation, and the landscape you know quickly disappears. When conditions change, you should be ready. And in marketing, they have changed fundamentally.
The marketing funnel model of the early 20th century no longer works. And it's no wonder - the whole of society and the economy on which it is built have changed. For brands, this means the inevitable necessity of changing their values and the way they present themselves. You can turn a blind eye to the first fact and drift for a little longer in the winds of change. But if you hide your head in the sand, it could easily lead your brand to oblivion.
If marketing has a goal, it is to reach us, the consumer, at moments that have the greatest impact on our decision-making process. These are so-called touchpoints, moments or places where we can perceive the brand and which may lead to a decision to buy its product. For years, touchpoints have been understood in association with the purchase funnel, which describes the customer's path in his decision-making process, from brand awareness, through the creation of opinion and consideration, to the moment of purchasing the product. In 1898 Elmo Lewis described it as a theoretical model, and in the middle of the last century it was elaborated with new levels.
/ The traditional Purchase Funnel, which marketing has adopted as a metaphor for its activities.
According to this traditional way of thinking, we, the consumers, start with a number of potential brands in mind, so we should know as much as possible about the brand at the beginning. We then gradually move through the funnel and, as we get acquainted with the content, we filter and reduce the number of brands that we focus our attention on, until we finally fall out of the funnel with only one brand, which we choose to buy. And in an ideal world, we remain loyal to it. Since its propagation, this model has been embraced as marketing’s central metaphor with only minimal modifications.
Thanks to this simplification, the so-called marketing funnel has become one of the pillars of the decision-making process used by brands. The model is used by agencies to plan the distribution of activities, the means of communication, and in particular, the associated distribution of the marketing budget. The lion’s share of energy and finance is therefore invested in raising awareness, hoping that at the end of the journey we consumers will choose the brand. But the biggest weakness lies in this metaphor.
At the start of the 21st century, the first evidence began to appear that the process needed to be fundamentally reworked from a marketing perspective (2009, McKinsey & Company). Several years later, Mark Bronchek and Cara France published the results of a survey of marketing leaders such as Sephora, Google, Intuit, SAP, and others. These results showed that the marketing funnel could no longer be relied upon (2014, Harvard Business Review).
According to today's marketers, the primary problem is that the above model conceives of the path as a linear one. In the meantime, the purchase process has changed fundamentally, and with it the distribution and importance of individual touchpoints. As consumers we are much more informed and connected. Within ourselves, we certainly go through a process of getting to know the brand, evaluating it, deciding to purchase and be loyal to it - sometimes in a matter of seconds. From the point of view of marketing, however, we freely enter the process of brand presentation at any stage of its communication. In contrast to the original idea, we pass through the whole funnel from below.
Let's say we want to buy a sports shirt. We have two or three brands on our minds which have aroused in us the desire to change our wardrobe. When we start looking for them on the Internet, we find about twenty other options. Logically, our attention then moves to the new variants. We find that we may want a different material, different functionality, different colours, or a different cut. We look at them, and the more attractive the goods offered, the more time we spend. To help us make a good decision, we look at some reviews. These usually point to other, previously hidden sources of amazing shirts. Under the weight of necessity, we are very likely to share this experience with friends at the earliest possible opportunity. Our friends will then, on the basis of their practical experience, add other key decisions to the story.
Is it any wonder that, at the moment of purchase, 70% of consumers still hesitate over which brand to choose? It is almost certain that at the end of the process, we will choose from a significantly larger number of brand names than we started with. It's tough for the brand that initially pumped its finances into giving us the idea of having a new t-shirt.
/ In 2009, McKinsey & Company outlined how the actual decision-making process - the Customer Decision Journey - worked. This is a circular path with four touchpoints representing a potential battleground:
In 2014, the Prague branch of the Grévin Museum, in cooperation with an advertising agency, launched a campaign to attract customers. According to its creators, it achieved a „significant increase in brand awareness“ (2018, Marketing&Media). In 2018 the Grévin management announced the end of its activities, as it had not been able to get this amazing project into the black, even after four years. Instead of finding their own uniqueness and an awareness of who they could truly be in a city as small as Prague, they believed that the problem was building awareness. They spent their finances "on others" to present an attractive package to "all." At the end of their story, only the media and the agencies into which they put their finances can be satisfied. Albeit with great results about brand knowledge.
Brands must therefore open their eyes to the fact that key touchpoints lie in places other than those where traditional marketing looked for them. It is obvious that one's own experience and recommendations have significantly greater weight.
Decisions about what to buy increasingly come from those who have had the opportunity to "experience" the brand - irrespective of whether they own it or not. They share their experience and knowledge with us and we simply believe them. This is why inbound marketing, which builds a world for a brand in which we want to live, is growing in importance. A place where they gain most of our attention. A place that inspires and engages us.
Experience and experiences are, more than ever before, of great importance in a brand's after-sales process from the point of view of loyalty. In McKinsey they have defined two kinds of loyalty. The first is active loyalty: the consumer actively shares and recommends an experience with a brand and, in the age of social networks and communities, influences thousands of others. The second is passive loyalty: consumers who stay with a brand out of laziness or confusion over other choices prefer to stick with a brand without committing themselves. However, they remain open to news from competitors that gives them a reason to change. For this reason, in particular, brands should actively and purposefully build a base of both existing customers and fans.
Luxury sports car vendor Advantage Cars organises annual treasure hunt rides that have become synonymous with cars and driving experiences. Originally aimed at regular customers, after the first few years the event attracted the attention of friends and acquaintances who owned cars from other vendors, thanks to sharing and word-of-mouth. And, even though the car industry has one of the highest degrees of brand loyalty, they either changed their car dealer or paid a much higher participation fee, just so they could share the experience and feel part of something bigger than an occasional e-mail or subsidiary service.
Nowadays, the delivery of intangible services as the highest value is automatically expected by customers. This is the second fundamental change that marketing needs to respond to. While brands can still ignore the malfunctioning of the traditional model and try to overwhelm it with media manipulation, hiding from changes in the company's economic cycle could cause serious complications.
Economists Pine and Gilmore published a study on the change in economics as early as 1998. By example, they show how its natural evolution occurs. In agrarian economics, a birthday cake was made entirely from the commodities that you grow or acquire on a farm. Flour, butter, eggs, sugar, which would, in practical terms, cost only a few crowns. As product-oriented industrial economics evolved, the approach changed, and you were able to buy some pre-prepared ingredients of the cake for tens of crowns. Later, when factory production was replaced by a service economy, product-related services became the highest value. Then you could buy the finished product - the cake - for hundreds of crowns. The services associated with its delivery have become a convenient and obvious component. Now, beginning in the 21st century, value is shifting to the knowledge gained through experience and experiences. Instead of visiting a shop, you can participate in an event for which you pay thousands of crowns, and you get a cake for free. From the extraction of commodities to the production of goods and the provision of services and support, we have achieved the preparation of brand experiences.
Have you built a showroom for your brand, a new service centre, better service facilities or a new helpline? And, despite pumping millions of crowns into it and advertising it on every corner, do customers still take it as a matter of course?
The differences are fundamental. Users and clients become guests. Nowadays, those who were served want to be involved. Before, customers were interested in functions, then benefits, and now they want feelings and experiences. Business processes from production through delivery are becoming stages for experiences. Customisation changes into personification. An emphasis on brand awareness must therefore be replaced by brand experience.
We are in the transition from selling services to selling experiences. This has a major impact on the perception of differences between brands. You must realise that the opportunity to differentiate yourself from the competition lies in creating values that bring strong experiences - ones that are educative and memorable. The rest is already automatically expected.
Imagine private universities in the Czech Republic. They annually invest millions in advertising, in the media and elsewhere. They believe that they have great professors and excellent study facilities and leisure options. They keep going on about the same benefits from different sides in the belief that they will attract the attention of several more potential students. In the space of a few years, media houses and agencies have grown tens of millions of crowns richer. If they took half of these funds and used them to create their own, attractive world, their value would be many times higher; people would keenly share their exceptionality themselves and be part of them.
Changing the perception of how a brand can succeed in today’s world means abandoning traditional outbound marketing methods and the associated budgets for "external" companies. Open your eyes and find the courage to devote strength and energy to creating your own world. Internal marketing before external communication. Create experiences.
The beauty of the whole thing is that it can be a good for consumers, employees, and the brands themselves.
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Jiří Macháček, Innovate CEO