The consumer decision journey
David Court, Dave Elzinga, Susan Mulder, and Ole Jorgen Vetvik October 23, 2009
If marketing has one goal, it’s to reach consumers at the moments that most influence their decisions. That’s why consumer electronics companies make sure not only that customers see their televisions in stores but also that those televisions display vivid high-definition pictures. It’s why Amazon.com, a decade ago, began offering targeted product recommendations to consumers already logged in and ready to buy. And it explains P&G’s decision, long ago, to produce radio and then TV programmes to reach the audiences most likely to buy its products—hence, the term “soap opera”.
Marketing has always sought those moments, or touch points, when consumers are open to influence. For years, touch points have been understood through the metaphor of a “funnel”—consumers start with a number of potential brands in mind (the wide end of the funnel), marketing is then directed at them as they methodically reduce that number and move through the funnel, and at the end they emerge with the one brand they chose to purchase (See chart The Traditional Funnel). But today, the funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the Consumer Decision Journey. Our thinking is applicable to any geographic market that has different kinds of media, Internet access, and wide product choice, including big cities in emerging markets such as China and India.
Our research showed that the proliferation of media and products requires marketers to find new ways to get their brands included in the initial-consideration set that consumers develop as they begin their decision journey. We also found that because of the shift away from one-way communication— from marketers to consumers—towards a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth.
How Consumers Make Decisions
The funnel analogy suggests that consumers systematically narrow the initial-consideration set as they weigh options, make decisions, and buy products. Then, the postsale phase becomes a trial period determining consumer loyalty to brands and the likelihood of buying their products again. Marketers have been taught to “push” marketing towards consumers at each stage of the funnel process to influence their behaviour. Actually, the decision-making process is a more circular journey, with four primary phases representing potential battlegrounds where marketers can win or lose: initial consideration; active evaluation, or the process of researching potential purchases; closure, when consumers buy brands; and post-purchase, when consumers experience them. The funnel metaphor does help a good deal. Nonetheless, in three areas, profound changes in the way consumers make buying decisions call for a new approach. Brand Consideration. Imagine that a consumer has decided to buy a car. As with most kinds of products, the consumer will immediately be able to name an initial-consideration set of brands to purchase. In our qualitative research, consumers told us that the fragmenting of media and the proliferation of products have actually made them reduce the number of brands they consider at the outset. Faced with a plethora of choices and communications, consumers tend to fall back on the limited set of brands that have made it through the wilderness of messages. Brand awareness matters: brands in the initial-consideration set can be up to three times more likely to be purchased eventually than brands that aren’t in it.
Not all is lost for brands excluded from this first stage, however. Contrary to the funnel metaphor, the number of brands under consideration during the active-evaluation phase may now actually expand rather than narrow as consumers seek information and shop a category.
Empowered Consumers. The second profound change is that outreach of consumers to marketers has become dramatically more important than marketers’ outreach to consumers. Marketing used to be driven by companies; “pushed” on consumers through traditional advertising, direct marketing, sponsorships, and other channels. In today’s decision journey, consumer-driven marketing is increasingly important as customers seize control of the process and actively “pull” information helpful to them. Two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family. A third of the touch points involve companydriven marketing (See Where It Counts). Traditional marketing remains important, but the change in the way consumers make decisions means that marketers must move aggressively beyond purely push-style communication and learn to influence consumer-driven touch points.
Companies like Chrysler and GM have long focussed on using strong sales incentives and in-dealer programmes. The real challenges for them are the initial-consideration and postpurchase phases, which Asian brands such as Toyota Motor and Honda dominate with their brand strength and product quality. Positive experiences with Asian vehicles have made purchasers loyal to them, and that, in turn, generates positive word-of-mouth that increases the likelihood of their making it into the initial-consideration set.
Two Types of Loyalty. When consumers reach a decision at the moment of purchase, the marketer’s work has just begun: the post-purchase experience shapes their opinion for every subsequent decision in the category. More than 60 per cent of consumers of facial skincare products, for example, go online to conduct further research after the purchase—a touch point unimaginable when the funnel was conceived.
Of consumers who profess loyalty to a brand, some are active loyalists, who not only stick with it but also recommend it. Others are passive loyalists who, whether from laziness or confusion caused by the dizzying array of choices, stay with a brand without being committed to it. Despite their claims of allegiance, passive consumers are open to messages from competitors that give them a reason to switch.
All marketers should make expanding the base of active loyalists a priority, and to do so they must focus their spending on the new touch points. That will require entirely new marketing efforts, not just investments in Internet sites and efforts to drive word-of-mouth or a renewed commitment to customer satisfaction.
Aligning Marketing with the Consumer Decision Journey
Without such a realignment of spending, marketers face two risks. First, they could waste money. Second, marketers could seem out of touch.
Four kinds of activities can help marketers address the new realities of the consumer decision journey.
Prioritise Objectives and Spending. In the past, most marketers consciously chose to focus on either end of the marketing funnel—building awareness or generating loyalty among current customers. Our research reveals a need to be much more specific about the touch points used to influence consumers as they move through initial consideration to active evaluation to closure. By looking just at the traditional marketing funnel’s front or back end, companies could miss exciting opportunities not only to focus investments on the most important points of the decision journey but also to target the right customers.
In the skincare industry, for example, we found that some brands are much stronger in the initial-consideration phase than in active evaluation or closure. For them, our research suggests a need to shift focus from overall brand positioning— already powerful enough to ensure that they get considered— to efforts that make consumers act or to investments in packaging and in-store activities.
Tailor Messaging. For some companies, new messaging is required to win in whatever part of the consumer journey offers the greatest revenue opportunity. A general message cutting across all stages may have to be replaced by one addressing weaknesses at a specific point, such as initial consideration or active evaluation.
Take the automotive industry. A number of brands in it could grow if consumers took them into consideration. Hyundai tackled precisely this problem (in the US) by adopting a marketing campaign built around protecting consumers financially by allowing them to return their vehicles if they lose their jobs. This provocative message, tied to something very real for Americans, became a major factor in helping Hyundai break into the initial consideration set of many new consumers. In a poor automotive market, the company’s market share is growing.
Invest in Consumer-driven Marketing. To look beyond funnel-inspired push marketing, companies must invest in vehicles that let marketers interact with consumers as they learn about brands. The epicentre of consumer-driven marketing is the Internet, crucial during the active-evaluation phase as consumers seek information, reviews, and recommendations. Strong performance at this point in the decision journey requires a mindset shift from buying media to developing properties that attract consumers: digital assets such as websites about products, programmes to foster word-ofmouth, and systems that customise advertising by viewing the context and the consumer. Many organisations face the difficult and, at times, risky venture of shifting money to fundamentally new properties, much as P&G invested to gain radio exposure in the 1930s and television exposure in the 1950s.
Finally, content-management systems and online targeting engines let marketers create hundreds of variations on an advertisement, taking into account the context where it appears, the past behaviour of viewers, and a real-time inventory of what an organisation needs to promote. Digital marketing has long promised this kind of targeting. Now, we finally have the tools to make it more accurate and to manage it cost effectively. Win the In-store Battle. Our research found that one consequence of the new world of marketing complexity is that more consumers hold off their final purchase decision until they’re in a store. Merchandising and packaging have, therefore, become very important selling factors, a point that’s not widely understood. Consumers want to look at a product in action and are highly influenced by the visual dimension: up to 40 per cent change their minds because of something they see, learn, or do at this point—say, packaging, placement, or interactions with salespeople.
Integrating All Customer-facing Activities
The necessary changes are profound. A comprehensive view of all customer-facing activities is as important for business unit heads as for CEOs and chief marketing officers. But the full scope of the consumer decision journey goes beyond the traditional role of CMOs, who in many companies focus on brand building, advertisements, and perhaps market research. These responsibilities aren’t going away. What’s now required of CMOs is a broader role that realigns marketing with the current realities of consumer decision making, intensifies efforts to shape the public profiles of companies, and builds new marketing capabilities.
Companies need an integrated, organisation-wide “voice of the customer,” with skills from advertising to public relations, product development, market research, and data management. It’s hard but necessary to unify these activities, and the CMO is the natural candidate to do so.
The shift in consumer decision making means that marketers need to adjust their spending and to view the change not as a loss of power over consumers but as an opportunity to be in the right place at the right time, giving them the information and support they need to make the right decisions.
The authors wish to acknowledge the contributions of Mary Ellen Coe, Jonathan Doogan, Ewan Duncan, Betsy Holden, and Brian Salsberg. Edited and reprinted with permission. Full version of this article was first published in The McKinsey Quarterly 2009 Number 3 and is also available on the McKinsey Quarterly Website, www.mckinseyquarterly. com. Copyright © 2009 McKinsey & Company. All rights reserved.