Is the Sales Funnel Relevant in Predicting Buying Behavior of Digitized Customers?

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For ages now, marketers relied on the sales funnel to get insight into their potential customer’s thought process, challenges, and decisions. Indeed, the sales funnel is academically grounded in the marketing funnel, AIDA model (Attention + Interest + Desire + Action model), and the hierarchy of effects model 1. It’s no wonder that one of the first models I’d to master early in my marketing studies was the AIDA model…

The ADIA model is thought of as a linear process which starts when the customer is becoming aware of a need and ends when he/she purchase a product or service to satisfy the need. The model derives from consumer psychology and specifically the cognitive journey a customer undertakes when buying a product.

The way that the sales funnel is commonly described graphically is shown below:

What is a sales funnel?

A common view of the sales funnel is of a staged process that a consumer takes in order to purchase a product or service 1. The sales funnel, which is also known as the buying cycle or buying funnel, rests on information processing theory, which is at the core of most consumer behavior models 1.

For that reason, marketers use the sales funnel as a model how to reach their consumers. This model states that consumers pass through the different cognitive stages (i.e., from Awareness to Research to Decision in order to get to the Purchase stage) as they decide whether and what product or service to purchase.

  1. The first stage is called Awareness. Here a customer realizes that there is a product that can solve his/her problem or need.
  2. The second stage is called Research. Now the customer is looking to find a specific product line and learn more about this type of product or service.
  3. The third stage is Decision. With the research done, the customer is deciding between different brands of a specific product by forming choice set.
  4. The final stage of the buying funnel is Purchase. This stage follows when the customer has made up her mind what specific product and brand she intended to purchase. Now she’s typically doing a price, convenience to order, or similar comparison before executing the purchase.

As you can see, the sales funnel fits nicely with concepts of decision making. Also, ‘awareness’ aligns well with intelligence. Furthermore, ‘interest’ (research and decision) lines up well with design, and ‘action’ (purchase) aligns well with choice.

What are the advantages of using the sales funnel model?

Waqar Ul Hassan in Mena Entrepreneur mention three distinct advantages that your business may enjoy by using the sales funnel:

  • Increase conversion rate – the people that ends up at the bottom of your business’s sales funnel are the ones who are more likely to pay for your offerings. To that end, the non-targeted individuals will simply be filtered out by the funnel. As a result, the ones who stay are going to buy more thereby boosting conversion rate.
  • Predict sales volume – data are important to digital marketing. Indeed, customer data can help in improving existing strategies or developing new ones. A sales funnel is handy to predict your business’s sales volume as it shows how many customers move onto the next stage.
  • Identify problem areas – a sales funnel can help in identifying areas where products or services cause problems. For example, when potential customers exit the sales funnel, you can trace it to the stage they’ve left and so identifies the cause of the problem…

Can the sales funnel model be used in today’s digital communication channels?

O shoot, I forgot to mention that the sales funnel model was first used in 1889 2 – yip 130 years ago. It’s hard to believe that digital marketers are using the sales funnel model today to predict the online behavior of buyers? A grand old model it seems…

But the jury is out for the sales funnel.

Nobel, 2010 3 suggests that the funnel struggles to account for many of these new realities in a digitized world:

  • Consumer behavior is less funnel-like than previously thought. For example, by researching products online, consumers expose themselves to brands they might not have previously considered.  As a result, their consideration set are enlarged exactly at the point where, according to the traditional funnel, it should narrow.
  • Loyalty and word of mouth are not represented in the funnel. The funnel only supports loyalty as the final step. Rather than asserting that a business must earn and retain loyalty across every customer interaction. Also, the funnel does not accommodate activities like word of mouth effectively. At best, a marketer might note WOM as a factor that creates awareness or preferences.
  • The funnel neglects customer lifetime value and profit. The marketing funnel is a pure volume-based activity model that represents a customer as a customer and a sale as a sale. After all, to understand marketing’s role in creating business value, you need a model that is focused on customer lifetime value. However, the sales funnel only portrays sales volume.

Another aspect that makes the sales funnel fuzzy, is the information overload that your potential customers are experiencing every day. According to Wikipedia is information overload “the difficulty in understanding an issue and effectively making decisions when one has too much information about that issue.”

So, instead of the rational, linear buyer decision-making model that the sales funnel represents, your customers can miss your funnel all together. Or enter or exit it at unexpected places.

The eight cyclones of the buyer’s journey

Eric Keiles and Mike Lieberman (2019) 2 have proposed a new model to describe buyer behavior of digitized customers. They argue that any model (such as the sales funnel) that tries to find some kind of reasonable, sequential order in how we make decisions is going to fall short of reality. Rather, Eric and Mike see the buyer’s mindset as a cyclone of motivations, rationalizations, and emotions.

The table below is to understand the nuances between the buyer’s intent and mindset at each stage in the Cyclonic Buyer Journey 2.

CyclonesWhat the buyers thinksHow the buyer sees youResponsible departments
Pre-awarenessUnaware of existing or upcoming problemThey don'tMarketing and sales
AwarenessThere's a problem - but it's not enough to worry about They don'tMarketing
EducationActively searching for information as how to solve the problem One of many provider options Marketing
ConsiderationDecide on path looking at a variety of optionsOne of manyMarketing
EvaluationLooking at a handful of potential providersOne of fewMarketing and sales
RationalizationDotting 'i's and crossing 't's, focussing on details, covering their assesUnder a microscopeSales
Decision-makingReady to signCautiously exited to get started Sales
Ongoing-deliveryDepends on you Depends on you Customer service

Concluding

I think that the days are over that you just can cast a marketing net, pull it in and see what leads are useful. Rather, you’re marketing strategy should be directed to the individual with a specific need at a moment of time.

Just like if you’re going fishing and you target a specific specie… such as a carp.  On that day at that location a (unlucky) carp will pick up your bait that you’ve have specially prepared for it!

So you would’ve think, don’t you?

Read more:
  1. Buyer Personas help you to Target the Right Customer Segments

A Marketing Plan helps you to communicate the right content to the right audience.

Notes

1 Jansen, B.J. and Schuster, S. 2011. Bidding on the buying funnel for sponsored search and keyword advertising, Journal of Electronic Commerce Research, 12(1):1-18.

2 Keiles, Eric and Lieberman, Mike 2019. Smash the Funnel, The Cyclonic Buyer Journey – A New Map for Sustainable, Repeatable, Predictable Revenue Generation, An Inc. Original, New York, New York.

3 Noble, S. 2010. It’s time to bury the marketing funnel. URL: http://www.forrester. com/rb/Research/time_to_bury_marketing_funnel/q/id/57495, 2.

Images
  1. Feature image – pexels.com
  2. ‘sale funnel’ – ebizplan.net
  3. Carp – ebizplan.net

 

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Douw G Steyn

Douw G Steyn

Management consultant, blog writer, dreamer

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