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:

Organizational structures have been built on funnel thinking - Traditional organizations have been created to allocate responsibilities to teams based on stages of the funnel. The marketing team is responsible for awareness, consideration, and preference, while purchase belongs to sales in a business-to-business (B2B) environment or retail in a business-to-consumer (B2C) one. Loyalty is the province of customer service and retention marketing teams. Within most companies, incentives and lines of reporting reflect these structures. The result? Marketers focus on issues like the volume of qualified leads they can funnel to sales, rather than the complete brand experience before, during, and after a sale.

Popular tools reinforce the traditional funnel view of the world - Within the marketing team, channel specialists use sophisticated tools like CheetahMail to track customer responses in specific channels like email marketing. Likewise, an event marketer will use salesforce.com to see which prospects who attended a seminar converted to customers but will gain no insight into other relevant behaviors such as online search. Even tools like Adobe System’s Omniture or IBM’s Coremetrics show how a large number of visitors to a website funnel down to a small number who make an online purchase, but they provide little insight into how use of the web store translates into a sale at a retail store, let alone spanning the two channels to identify loyal customers regardless of how they buy and research products. (Is anyone from the web analytics community listening to this??)

The model shapes marketing thought but discourages change - For some marketers, the old way is the only way, even if they recognize that the funnel no longer explains all interactions. Customer activities that occur outside of the funnel — like channel hopping and word of mouth — can be hard to see and easy to ignore in a funnel-driven marketing environment. The funnel is the basis of current marketing thought for so many marketers and modelers, which will persist until proof points emerge for the usefulness of the customer life cycle.

There’s a lot more relevant stuff in the report but I can’t plagiarize all of it here-:)...If you have access to Forrester reports, this is a must read.

Also see - So, how exactly do you define engagement and customer lifecycle?


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