Love it or loath it, we can't escape the marketing funnel. It's under our collective skin.
Why? For a start, most marketers agree that only some of the people who are aware of their product are actually considering it. And only a portion of these people will go on to prefer it, buy it, and perhaps become loyal users. We could illustrate this observation in a number of ways. For example, we could draw a dartboard with "total addressable market" as the largest outside circle and "loyal customers" as the smallest circle in the center. Likewise, drawing a funnel is a natural and useful way of making this very basic point.
If only marketing were that simple. In truth, marketing is a messy business. For example, moving from awareness to consideration and preference might be sound advice for a rational shopper, but actual buyer behavior involves heavy doses of emotion and chaos. And loyalty is not the end of a customer's journey; it's a state that the marketer must cherish and sustain, hopefully leading to positive word of mouth.
On top of this, one can imagine a boorish marketer taking the funnel a little too literally. Draw it with the wide end at the top, and you can imagine some marketers believing that the more water they pour into the top, the more water they will watch gush out of the bottom. Of course, most marketers are smart people who use the funnel without abusing it, but it would be nice if we could find a model that was 100% idiot proof.
Brands are making plenty of money in social media: Dell Outlet’s Twitter account has generated millions for Dell, the Intel Channel Voice community has decreased costs by eliminating the need for expensive in-person events and P&G used media mix modeling to demonstrate that the BeingGirl.com community is several times more effective at driving sales than the brands' television ads.
Many marketers can draw a straight line between investments in social media marketing and financial results, but many more cannot. This doesn’t mean social media marketing is ineffective; it just means that marketers have to recognize benefits beyond dollars and cents. Facebook fans, retweets, site visits, video views, positive ratings and vibrant communities are not financial assets -- they aren’t reflected on the balance sheet and can’t be counted on an income statement -- but that doesn’t mean they are valueless. Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.
What a week! The high level of discussion around the Online Retailer Expo & Conference 2010 should dispell any doubts about Australia's near-term future: Online and multichannel retail have entered a period of rapid expansion. That was the theme of my colleague Patti Freeman Evans' conference keynote. It was a theme of both of my sessions at the event. It will be a theme of research that we expect to release shortly. And it was a theme reinforced by countless private conversations we had in Sydney and Melbourne last week: Expect continued growth and increasing competition, from home and abroad, and from both traditional retailers and new entrants, including some firms you certainly weren't expecting. Indeed, there are exciting times ahead.
So far, so good. But how will we get there? As competition increases, how will online and multichannel retailers attract and retain the most profitable customers and increase their lifetime value? Marketing leaders must answer this question, and they must answer it with more sophistication than is common in Australian online retail today.
A common use would be to measure and compare the ROI on a range of acquisition tactics, such as search advertising and banner advertising. So far, so good — if acquisition is the start and finish of marketing.