It's Time To Bury The Marketing Funnel

A few months ago, I asked marketing leaders: Does the funnel still work for you? Or are you moving onto something else?

This led to some very interesting briefings and an enormous amount of thinking and debate. The upshot: It's time to bury the marketing funnel.

The marketing funnel, shown below on the left, is a simple and broad-ranging model, which is part of its appeal. However, it's from an earlier era and does a poor job of summarizing how we think about customers and marketing today. Luckily, the customer life cycle, shown below on the right, is as clear and usable as the funnel but provides a far better fit with marketing in the 21st century.

I could write an entire report about why the customer life cycle should replace the funnel — and in fact, I have — but here are just some of the reasons:

  • The role of marketing. At its worst, the funnel portrays marketing as a conveyer belt with the job of delivering a continuous supply of customers to the business. On the other hand, the customer life cycle portrays marketing as the function that is responsible for orchestrating the total brand experience. 
  • The value of the customer. In the funnel, a prospect is a prospect, and a sale is a sale. It's a volume-based model. On the other hand, every customer group has its own life cycle, including its own lifetime value, and its own journey.
  • The acceptance of complexity. In the funnel, the customer moves linearly from awareness to loyalty. But in the customer life cycle, the journey never ends, as customers continually engage with brands and their peers and process new information and experiences. 

I am now researching how companies manage the transition from the funnel to the customer life cycle. The result will be a report tentatively titled "The Customer Life Cycle Action Plan." If you're a CMO or marketing leader and you're willing to discuss the opportunities and challenges you've experienced in making this transition, please email me so we can discuss the possibility of a briefing. All of the participants in the briefing process will receive a complimentary copy of "It's Time To Bury The Marketing Funnel" as well as "The Customer Life Cycle Action Plan" when it is ready.

Comments

At its worst... really?

This is an excellent post (and a good paper for those that are Forrester clients). But I disagree with this statement:

"At its worst, the funnel portrays marketing as a conveyer belt with the job of delivering a continous [sic] supply of customers to the business..."

At worst?? The great thing that the funnel does is provide a point of conversation with sales and the business about how marketing is delivering value, aka sales. And the funnel has a linear flow that allows you to show progression and conversion. How does your model improve on this?

Thanks again.

Ian Bruce / Novell
http://ianbruce.blogspot.com/

Distinction between b-to-c and b-to-b?

I like the post and completely agree that in a b-to-c products context it applies more and more. The channels of interaction available to consumers is such that marketers need processes and tools that fit into the more complex way consumers research, browse and buy products.

I do think that for b-to-b products, especially ones more complex or designed to impact a company's sales or efficiencies, the more traditional funnel rules more often than not. Buyers as a group are risk averse and so will gravitate to whatever appears the most simple and accountable process for choosing to buy something for their business, especially if it's software or technology.

Consider as well that buy decisions in most companies are owned by an older generation of traditional managers who’s success is in part based on taking a traditional approach to decision making, and I think the distinction becomes more clear. Over time, I think this will certainly change but I do think differences persist that are worth highlighting.

Spot on

Hello Steven

You have written about the problem I have noticed a few years ago.

Fantastic.

Steve

It's all about the customer lifecycle

At a high level, I like the idea of the customer lifecycle diagram that you created here. At Acquia, we are in the subscription business and our marketing and sales interaction with a customer is not a one way process. It's very engaging, very cyclical and involves continuous engagement. It's not a one way street.

Happy to participate in your survey and share our successes.

As marketing technology

As marketing technology becomes prevalent we are seeing that there is a need for both approaches - to measure the RoI and effectiveness of a campaign there needs to be a beginning and end aka the funnel, however rather than the long drawn out traditional process agile campaigns are being built using the cycle you describe.

The successfull fusion of the marketing pipeline and customer life-cycle and the technology and marketing capabilities is the nirvana we are seeking.

@Gib, @Ian

@Gib, @Ian -- Thanks for your comments. I see where you are coming from.

@Ian -- The report encourages the marketer to measure conversion, at every touchpoint and across every hand-off between channels, touchpoints and stages.

Within some B2B markets with very high order values and very long lead times, it might feel like the conversion point that matters more than all others is the transmission of qualified leads from marketing to sales, but in truth there are a host of conversion points in every business. For B2B markets with very high order values and very long lead times, these will include internal take-up off the product after the sale, and take-up of add-ons like additional training and support, all of which might contribute to customer retention and positive professional word of mouth. The customer life cycle encourages the measurement of conversion points throughout the life cycle, not just at the point where marketing is believed to pass the qualified lead on to sales.

@Gib -- If one could find a business where the marketing and sales was still very simple, then the funnel would be "less broken" for that business than for many others. Nonetheless, the customer life cycle would still do what the funnel does for that business, while encouraging the marketer to always consider a larger view and to prepare for future complexity.

The marketing debate of the moment

Thanks Steven. I think you've hit a nerve here.

First, I think there was always an acknowledgment that the classic funnel was a simplification. Real life is convoluted and nonlinear and irrational. Customers don't behave is a fixed pattern.

Second, things definitely have changed in marketing - customer behavior may have changed. For sure, that behavior is more transparent and measurable in our always-online world, which also draws attention to certain attributes of prospects and customers that may have been hidden in the past.

But you're right to focus on the marketing model, which will inform process, programs and metrics. Look forward to more on this, and let me know if Novell can help -- we're certainly debating these issues.

Ian Bruce / Novell.

The funnel implies fallout

This is a great discussion, with valid points being raised. In a traditional B2B setting, the funnel has held up because it provides a way to measure performance of marketing campaigns and sales execution via volumes and conversion rates. But B2B marketers should also use the customer life cycle to make sure you are taking an outside-in approach to looking at the entire experience you are providing.

@Ian – there’s no reason why you can’t measure conversion rates in the customer life cycle, and imagine how much more valuable your conversations with sales will be when you start talking about the customer life cycle, and not just individual transactions. The funnel implies that a majority of buyers leak out along the way, and are therefore not relevant to your firm anymore. In fact, the biggest reason people fall out of the funnel is because the situation and conditions within their company are such that they have chosen not to address the pain right now. Using the funnel, we “qualify them out”. B2B marketers today should continue to engage and nurture people who are not currently in an active buying cycle because you never know when those conditions will change.

@Gib – risk-adverse B2B buyers spend much more elapsed time acknowledging that a problem exists and assessing whether to address it, than they do researching and evaluating solutions, so another advantage of the customer lifecycle is that it better represents the customer’s problem-solving process and can get marketers thinking about how we can interact with people before they start looking for vendors.

We’ll be doing much more research on this “pre-funnel” buyer behavior in the coming months, let us know if you want to be involved.

The funnel focuses attention on the right things

Thanks for the comments Jeff. I understand the value of a lifecycle approach, I'm just not sold on the idea that the funnel needs to go. My argument is here: http://ianbruce.blogspot.com/2010/11/is-it-really-time-to-bury-marketing...

Thanks for new insight

I give marketing lectures for undergraduates and it's always easy to teach about simple linear models. However, my students have questioned AIDA and funnel models for consumer products but especially in service marketing. I'm pleased they have, because business life is not this simple anymore. We in Academia are again lagging behind recent business practices.

Customer life cycle together with consumer decision journey by Court, Elzinga, Mulder & Vetvik (2009 published in McKinsey Quarterly, June) are not necessary completely new ideas but today they are more current than ever.

Thanks, Steven for the great post! I'm looking forward your next study.