Definition & introduction
The purchase / purchasing funnel is a model which describes the theoretical customer journey from the moment of first contact with your brand to the ultimate goal of a purchase.
This model is important when marketing your business as it provides a method of understanding and tracking the behaviour of an average customer throughout the sales process. This can help with the following:
- Planning marketing campaigns
- Highlighting areas in order to improve your conversion rate (from potential to actual customers)
- Evolving the sales process
- Designing customer relationship management (CRM) system
The shape, number of stages and duration of the process can vary depending on both the consumer and the nature of the product, as well as many other factors. Many different versions have been published, but the fundamental stages remain the same. A funnel shape is used as is describes the natural loss of potential customers at each stage – many people may be aware of a particular brand, but this does not mean they’ll purchase the product.
Note: The purchase funnel focuses on the decision making path of a typical consumer. This is a different evolution of the sales funnel, which describes the typical active process a salesman can take in order to close a potential deal.
The modern purchase funnel:
The diagram below summarises the modern purchase funnel, taking into account the emergence of internet research and includes post-purchase behaviour, and is explained below.
At this stage, the consumer has had no previous contact with your brand.
People can be made aware of your brand with or without the desire to purchase. Awareness can be based on a communications message, word of mouth or independent discovery.
Purchase intent trigger
The moment at which the consumer starts thinking about a purchase could be triggered by an event, a change in circumstances, a pay rise, a need, or even an advertising message.
3. Research & familiarity
At this point, the potential customer has decided they want or need a product similar to yours. They are likely start reading reviews, learning the features, making comparisons, asking for opinions, and using the internet to research their options in detail. This phase of the process can be lengthened or shortened depending on the value of the product – people are unlikely to spend time researching economy baked beans.
4. Opinion & short list
Decision on the most likely purchases, this could be in the form of a written list, a mental note, or book marked websites.
Deciding between the most likely purchases, taking test-drives, going to a product demonstrations, asking the opinion of people who have already purchased.
6. Decision & purchase
Final decision on the brand and product and whether they can afford it. Then taking the plunge, online or in a more face to face environment.
7. Brand / product advocate (or saboteur)
Once the consumer has bought, they will very quickly form an opinion on the product. Were there hidden costs? Did it scratch easily? Did it use too much petrol? Did it go mouldy quickly? If the opinion is especially positive they may spread the news of your brand via word of mouth promotion and positive reviews. This process is made especially easy on the internet.
8. Repurchase intention
It’s an established marketing fact that existing customers are significantly easier to convert than a completely new prospect, so bear this in mind when designing your marketing strategy. At some point in the future, it is likely that the product will need to be replaced or upgraded. If they are pleased with their purchase, there is a high likelihood they will consider buying from you again, but the battle isn’t won yet.
Preconceptions and experience
Did the previous buy provide an excellent user experience, or break after a month? If it broke, customers may defect to your competitors. If your customer was happy, they may re-enter the funnel at Stage 3 – Familiarity.
Although the customer probably has a good idea about your brand, they will want to familiarise themselves with your current product range, and with your competition.
Should they upgrade to the next item in the product range, stick with the most recent version or swap for competitor?
Now customers continue through the funnel as before, with final considerations, a decision, and eventually a second purchase.
Purchase funnel as a marketing communications model: an automotive case study
The purchase funnel can be used to guide your marketing communications strategy, and this approach is can form the start of a customer relationship marketing (CRM) programme. By understanding where customers are in their decision process, you can make your messages more personalised and more relevant. As an example, we’ll consider some typical stages in the automotive purchase funnel. As cars are a high value purchase, most consumers will take time to evaluate their options carefully before deciding on the best course of action.
Marketing communications strategy for a fictional automotive business
Before the potential customers has even started looking for a car they will probably be aware of some of the major car brands and may even have an idea of the model they’re looking for. However, lesser known brands may also offer a suitable product, and at this point it’s critical for these companies to focus on brand awareness to ensure they make the list of potential considerations. Kia is a good example – a relative newcomer into the American and European markets with a surprising range of models. The customer notices an advert while watching evening TV and realises that Kia are selling cars in their country.
Once the brand has gained some attention, more specific information will need to follow quickly. What does the current model line up look like? Do they have any seven seaters? What makes a Kia special? Are they in the right price bracket? Is there a dealership nearby?
- Research & familiarity
If the customer is interested in an SUV they will need some further product information on the Kia offering, so they turn to the internet. How much does it cost? What engines are offered? How long is the warranty? What do the press think about it? Is the website easy to navigate and professional? Are there any horror stories in an owner’s chat room?
- Opinion & short list
The Kia SUV has made it on the short-list and a brochure is ordered, but they still need to make it clear why they are better than the competition. Kia makes a point of their impressive 10 year warranty which certainly stands out from the crowd.
Time for a test drive. Is the dealership well presented? Does the salesman know what he’s talking about? What options are available? Is the car impressive on the road? Is there room in the back for the kids?
- Decision & purchase
Ok, the customer is convinced and is ready to part with their hard-earned cash. Is the transaction smooth? Are the finance deals reasonable? Does the salesman do a thorough hand-over?
- Brand / product advocate (or saboteur)
A few years go by, and if things do go wrong, is the warranty process easy? Is the repair center helpful and quick? Is a courtesy car provided? The customer is happy, and convinces their neighbour to try out the same car.
- Repurchase intention
It is now three years later, and a surprise mailing pops through the door inviting the customer to a special event at a racing circuit to experience the new product range.The customer is impressed with the warranty, customer service and reliability and adds the model up to their short-list for a new car.
In this case study, Kia have identified the relevant customer touch points and ensured the relevant information is presented in a way that is personalised for each stage in the customer journey. All elements of the marketing mix have been used to successfully convert a prospect into an advocate. Success!