And what action steps your business can do at each step
Marketing is simple in theory: you follow your customers along their decision process as they search for a product or service that can satisfy their needs.
To help with their decision process, the marketer provides relevant information to help them make a decision, and in doing so, nudges them every so often so they will choose their company to satisfy their needs in the end.
Well, this marketing theory is very easy to explain, but extremely difficult to accomplish in practice.
This is because the customer decision journey is getting more and more complicated every day, enhanced by modern technology such as social media and smartphones.
As we explained in the previous article, the traditional concept of a customer funnel can no longer accurately capture the iterative, lengthy nature of the modern customer journey. We, as marketers, need a new way to think about our interaction with our customers so we can serve them better.
This article is designed to help you solve that problem.
Here, we will present a simple 3-stage framework to help you understand how your customers are interacting with your business in this modern age, and show you actions that you can take in each of the three steps presented to increase their chance of becoming your loyal customers.
While the traditional “funnel” framework focuses on conversion as the sole purpose of your business actions, this 3-stage framework focuses on helping you create a holistic customer experience at each stage of the model. This framework also provides you with the right metrics to measure your success at each stage.
Stage 1: Search
Search is the start of your customer’s journey.
Triggered by some event in their lives (advertisements, recommendations from friends, or simply a need they want to met), your customers decided to embark upon a journey to find a service or product that can satisfy their needs.
“Teddy told me the most important idea in advertising is ‘new’. Creates an itch. You simply put your product in there as a kind of calamine lotion.” -Don Draper, Mad Men
Because modern customers are empowered by the internet and smartphones, they are likely to go onto the internet and find a wide range of offerings that have the potential of solving their problems.
Based on all these offerings, your customer forms a “consideration set” in their mind — a set of products or services that they are potentially interested in purchasing.
Your task, as a firm, is to be in that “consideration set.”
Company Actions: Acquire customers so they add your brand to their “consideration set”
So how do you get into the “consideration set” of your customers?
1) The first step is to know them really well.
Ask yourself the following question:
Who are my target audiences?
- What channels and platforms do they frequent if they are searching for a solution that satisfies their needs?
- What kind of information will they be interested in?
After considering these questions, you will have a fairly good idea of what online platforms and channels are the best ones for you to reach your audiences.
2) Then comes the second step: you craft messaging based on your assumptions about your customers.
Create messaging for each of the various channels you can reach them with, and then wait for the data to come in to evaluate how well you actually reached them in each channel.
Modern advertising platforms like Facebook and Twitter all provide ample data for you to examine the effectiveness of your ads on different audiences, and your job is to find the audience that resonates with your message the most. Once you identify the best audiences, double down on reaching them.
But how do you define “success” in this step?
Based on the customer story I described earlier, most customers are probably not ready to make a purchase yet. So what you really need to do here is to first attract them. Make them interested in your brand and product first, before worrying about actually converting them.
Therefore, your success metric should be “customers acquired.” This metric can be measured by the amount of customers visiting your website without bouncing, or even better, those that visited a product page or brand page on your site (this is your decision based on the stage of your company).
Stage 2: Consideration
Okay, let’s continue with the story of our customers.
Now that our customers have established a “consideration set,” they now conduct research on all options in their set to determine which company most accurately and reliably satisfies their needs.
We can divide up the information gathered by your customers roughly on a 2x2 matrix presented below.
Primary product information includes the features and details of the product as described by the companies themselves. This could be information from the company website, their Amazon profile, or other third-party platforms.
Primary brand information is about what the company stands for from the company’s point of view, whether that’s through the company’s social media page, their blog, or a press release.
Secondary product information, on the other hand, is product information from other users of the product, including friends of the potential customer. This could be from Amazon ratings and reviews, or review sites like Yelp.
Secondary brand information is the reputation of the brand from other sources, such as social media. This brand image, usually termed doppelganger personality, is the reputation that it does not have total control of, such as what others say about the brand on social media.
Increasingly, secondary brand and product information have become more and more important in a customer’s decision process. However, if the company does not have a brand message or a good product in the first place, that secondary information will not exist.
Modern consumers take secondary brand and product information very seriously, as evidenced by review sites like Yelp.
During the customer’s journey, she may be engaged with brands in the consideration set at different levels depending on how attractive each of the brands are to her. Your goal as a marketer in this stage is to make these customers as engaged as possible.
Company Actions: Deepening your engagement with your current audiences
The first step to increasing customer engagement is to define the various levels of engagement customers may have with your company.
For example, a customer that has signed up for your newsletter should receive significantly different treatment (both in messaging and channels) than customers that merely visited a product page.
I like to consider customers’ engagement with your website in three levels, but feel free to make up your own levels:
- View: This is the group of customers that has viewed multiple pages of your website, but did not proceed with actions such as checkout or newsletter signup. These customers are at the lowest engagement level.
- Act: This is the group of customers that has performed some actions on your website, whether that’s entering checkout, signing up for your newsletter, filling out a contact form, etc.
- Convert: This is the group of customers that has converted previously on your website (e.g. purchased a product). Because of their past history of conversion or purchase, this is the customer group with the highest level of engagement.
Understanding how many customers are at each stage of engagement can help you determine what type of engagement strategy you should focus on when interacting with your customers, which is the essence of the next step.
Notice that in this step, customers may still not be so certain they want to make a purchase yet. If you, for example, send them a coupon for your product during this stage, they may have a high likelihood of making a purchase, but only because of the product’s cheaper price point.
However, being associated with being the cheapest option is often one of the worst impressions a brand can have in a customer’s’ mind. This is because as soon as another cheaper alternative is available, your customer will leave.
Therefore, while conversion should probably be a metric you watch during this stage, measuring the engagement level of your customer pool is even more important. For example, you should track whether more people visited your product page as a result of your campaigns (pageviews), or if people’s overall time spent on your website increased (average session duration).
These engagement-deepening metrics are essential in telling you whether the messaging you used is resonating with your audiences (even more essential than just conversion rate).
Stage 3: Purchase
Now we are at the final stage of the customer decision journey. After researching all the products in the “consideration set,” it is time for your customer to make a decision of who to purchase from.
Behavioral science studies have shown that small “nudges,” or changes in “choice architecture,” can have a big effect on decisions like purchases.
While this step seems to be straightforward, small “hiccups” such as additional shipping costs, hidden clauses, or even memory lapses might prevent customers from completing the purchase from your company, even if they decided to purchase.
Your job, as the company, is to make a final attempt to nudge customers to choose your product and to prevent these hiccups, in order to maximize your conversion rate.
Company Actions: Convert your engaged customers
You might have noticed that in this framework, we are holding off on “hard conversion,” i.e. trying to convert customers with techniques such as coupons or promotions.
This is intentional. As we mentioned, if your customers convert simply because you offer a cheaper option, it is less likely that they will become loyal customers and advocates of your product in the future.
However, more often than not, your engaged customers need that final “promotion nudge” to make up their mind to purchase your product, and that’s what we will do in this stage.
In this stage, you should perform two primary actions:
- First of all, run multiple remarketing campaigns via various channels that focuses on converting your customers who have been exposed to your brand.
- Secondly, use checkout recovery and other funnel abandonment recovery techniques to maximize conversions.
The analysis you should conduct in this step is very similar to the traditional funnel analogy. In this stage, you should focus on conversion rate and the ROI of your campaigns (account for your cost of acquiring and engaging your customers when calculating this).
If you laid your foundation well, I have seen companies with 200% to 300% ROI at this stage, which is essentially free money.
Questions to consider
This concludes the introduction to our “Search-Consider-Purchase” model of the customer journey. You can see the full picture of the model below.
As you can see, while it is only three steps and simple in theory, it is in fact fairly complex if you try to implement it across different channels in your organization.
In the end, I would like to leave you with few key questions to consider when implementing this model:
- Given all the time you have, which stage should you spend most of your money on?
- How fast and frequently do you need to engage with your acquired customers before they disappear for good?
- What is the conversion rate of your customers at various engagement levels if you push them to convert today? Is it better to run engagement ads to push them to a deeper engagement level before converting them?
All these are more advanced and complex questions you need to answer to truly master this framework, and at Humanlytics we are trying to automate these analyses so you can answer these hard questions without having deep analytical expertise.
Finally (and most importantly), there is one question you can answer immediately about your marketing efforts that you must consider:
“Am I running ads to make sales, or to create a truly great customer group that can not only benefit from my product, but also advocate it?”
The answer should always be the latter, and this model can help you accomplish it.
Feel free to shoot me an email @ email@example.com or leave a comment below if you have any questions or concerns with anything explained in this article. Thanks!