By David Rogers
As the adoption of social media, mobile computing and new digital behaviors continues to deepen, businesses today are faced with the challenge of rethinking many of their basic strategic paradigms. In thinking about customers, businesses are facing a shift from a paradigm of individual customers to one of customer networks. At the same time, many models for marketing need to be updated as well.
One of the oldest and most widely adopted marketing models is the “marketing funnel.” This model, based on psychological “hierarchy of effects” theory dating to the early 20th Century, plots marketing as a sequence of psychological states in the mind of a the customer: from Awareness (of the product category) to Consideration (thinking about a purchase), to Preference (for a specific model or brand), to Action (making the actual purchase). More recently, as the importance of customer retention to a company’s value became better understood, a fifth stage has been added: Loyalty. The funnel’s shape arises as each of the five stages is depicted as narrower than the last, indicating a smaller subset of customers (e.g., more people are aware of a product than consider purchasing it).
For years, marketers have harnessed a traditional set of tools to marshal their target customers through each psychological stage. These tools were traditionally all broadcast media: TV ads might drive awareness, a direct mail piece stressing product features might drive consideration… all the way to a rewards points card whose regular reminders were sent to instill customer loyalty.
Today, social media and the incredible diversity of digital content have transformed the process of the funnel. While the original five psychological stages still hold true, there are a host of new sources of information influencing the customer at each stage. Instead of broadcast messages dominating the decision-making process, network communications (often from other customers) hold increasing sway. We can see how by looking again at the five stages:
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