Purchase Funnel vs. Customer Lifecycle

Ok, so, I’m not the only ignorant guy around, who’s confused about seemingly marketing 101ish concepts like - purchase funnel and customer lifecycle. In a recently published Forrester report “Make the switch to customer lifecycle”, the author Steve Noble says:

“The customer life cycle provides a better explanation of modern marketing than does the traditional marketing funnel, but most marketers have not yet moved their organizations to the customer life cycle. Problems with the traditional marketing funnel are quite visible, but the model is pervasive and entrenched, which inhibits change. To manage the necessary shift, marketers should start small and ask, “Where is the customer in our marketing effort?” From this base, they can gradually shift their entire marketing plan to the customer life-cycle model. As they progress, they must guide a process that involves mobilizing the three main marketing resources: people, tools, and agencies. To maximize momentum from the start, marketers should begin with steps that have the highest chance of success and/or the greatest business impact.”

He quotes 3 examples of why/how this is happening:

3 Pillars of Digital Business!!

Depending on where you are coming from, this may be so obvious to you that you’d wonder why anybody bothered writing it down; but it doesn’t hurt, does it? I think at least the notes (yellow) will be useful; notes are either sub-topics or references to what I believe are key resources for the topics. 

More traditional concepts such as marketing, positioning, pricing etc. apply everywhere, so, I’ve not mentioned them here. These pillars are more specific to digital business (though any interactive B2C business can benefit from these ideas). Hope it helps!!

Why “Social CRM” should be called “Social CEM”?

[Update (30-June-2011): There's another more insightful article written by Bob Thomson, CEO of CustomerThink, on this topic that you may want to check out - http://bit.ly/kKBlAK]

CRM essentially represents a transactional mindset. People who get CRM (a huge majority) generally have tough time getting CEM (customer experience management); it’s also one of the reasons why CEM isn’t as popular as CRM is but that doesn’t mean CEM is not as useful or as important. In fact, many studies have shown that managing/understanding customer experience is a more effective strategy for inspiring loyalty than just analysing transaction data from CRM.

In the old days, measuring experience was a challenge but things have changed now. Using social media monitoring tools or web analytics tools (e.g Tealeaf), you can measure customer experience to fairly sophisticated levels. The focus of CEM is experience (interactions), which is fundamentally different from transactions (CRM) in both how it is measured (time, volume) and how it is used (interactivity, designing experiences).

Great, so you’ll send us actionable (web/social) insights every week?

Well, if you have been living under a rock, every piece of web/social analytics that we show you will look like an actionable insight. “Delivering insights” is really really contextual folks!! I’ve been seriously thinking of a new name for our “insights delivery services” (suggestions?).

Also, if by looking at a web/social analytics report, you get a feeling that you are in control of things and that no immediate actions are required – then congratulations – you’ve been doing a great job!! Of course, it doesn’t mean you don’t need analytics anymore. One part of any analytics service is similar to an insurance (that helps you avoid/deal with surprises), it’s not always meant to deliver insights; especially if you’ve been doing analytics for a while and have taken strategic actions to fix things. In fact, if after 2 years of web/social analytics, you are still seeing huge “insights” in every report, then something’s wrong somewhere. Perhaps your “insights delivery provider” is playing tricks with you; you know, like Microsoft removing 25% features before a windows release only to add them back in the next release!!

So how exactly do you define Engagement & Customer Lifecycle?

I've spent days trying to understand the discussion about engagement that happened here. I’ve also read Drilling Down a couple of times but I still don’t seem to completely understand the meaning of engagement - I mean I do understand the part about realized value being different from potential value and why measuring the “likelihood of activity” is more important than measuring activity alone. I think I also see the point about “activity defines value” and “likelihood to continue defines engagement” but I know I’m missing something very basic... I do have a point to make here tho.

I think one of the reasons for this confusion is how customer lifecycle is defined in general and how Jim Novo and Regis McKenna define it. The general definition of customer lifecycle is based on AIDA  and is more inclined towards new customer acquisition; it’s about how a new customer goes through various stages of a purchase funnel before he makes a purchase. But for making a second purchase (for a similar product), I doubt if the customer would have to go through the entire decision cycle all over again. In this definition, the customer lifecycle is usually about a relatively shorter period of time that customer spends in the upper purchase funnel stages for making decisions.

Is Dimensional Hierarchy the Key to Web Analytics?

The process that a web analyst uses in developing a WA report and the process that a client manager uses while looking at a WA report are sort of diametrically opposite.

Someone looking at a WA report will probably always start with a KPI and then work downwards (using various dimensions for segmentation) to narrow down on specific items – for instance, if conversion (KPI) is decreasing, let’s look at various sources that are bringing us traffic; is there a specific persona that we are losing on? etc. etc.

On the other hand, a web analyst while developing a report will almost always start with dimensions and work upwards to KPIs –  five sources are bringing us traffic and our website has items to engage them, how do we measure (or define KPIs) for assessing the level of engagement and conversion etc. etc.