The Digital Path to Purchase, Part 1
June 18, 2013
“The nature of the digital challenge is evolving rapidly and challenging traditional business models,” write McKinsey & Company analysts Francesco Banfi, Paul-Louis Caylar, Ewan Duncan and Ken Kajii. “The initial wave that propelled the dramatic rise in consumer digital usage has already turned into a transformative surge – reshaping the ways consumers buy new products and services.” [“E-journey: Digital marketing and the ‘path to purchase’,” McKinsey & Company Telecom, Media, and High Tech Extranet, 16 January 2013] If the authors are correct and the business landscape is being reshaped, businesses must also change if they are going to traverse the new terrain successfully. “The challenge today is much bigger than simply building an efficient online sales engine,” the McKinsey analysts insist. “Instead, it involves creating brand engagement through digital media and platforms, turning that brand engagement into brand preference, and leveraging it to drive sales and loyalty.”
What most people call the “digital path to purchase” (DP2P), the McKinsey analysts call “the consumer decision journey (CDJ).” Whatever you call it, it “describes the iterative and circular process shoppers go through today when selecting brands, products, and services.” The analysts assert that the CDJ “has four phases: consideration, evaluation, purchase, and post-purchase.” Frankly, there is nothing new about that conceptual framework. What’s new, the authors report, is that digital media “has made this already complicated process even more complex.” They explain:
“The traditional channels that typically influence consumers during the consideration phase include the ‘big three’ above-the-line (ATL) media – TV, radio, and print advertising – along with word-of-mouth recommendations from friends and family. With the advent of digital channels, the list expands to include brand Web sites, mobile apps, online advertising, social networks, price comparison engines, as well as blogs and forums. … Pulling this tangled knot of complexity even tighter, digital touch points themselves have spread far beyond traditional personal computer platforms to include those behind smartphones, tablets, gaming devices, TVs, and even smart applications.”
Dion Hinchcliffe agrees with the McKinsey analysts that complexity now characterizes the consumer’s journey to purchase. “Businesses planning today to improve their connection to customers in digital channels,” he writes, “are increasingly looking at the discipline of mapping out what’s being called the ‘customer journey’.” [“The new digital customer journey: Cross-channel, mobile, social, self-service, and engaged,” ZD Net, 19 May 2013] He continues:
“Over the last ten years, the fragmentation of customer engagement across dozens of channels has turned into both a highly vexing problem and an increasingly disruptive challenge to businesses that still keep doing what used to work, but are getting sharply falling off results from old touchpoints like TV, phone, and e-mail. This fragmentation of customer touchpoints cuts across marketing, sales, customer service, and even product development. In short, customers have moved to the digital world en masse, and companies have not kept up.”
The McKinsey analysts note that not all “customer touch points” are equal. They concluded, “A brand’s Web site has by far the highest touch point ‘quality’ – or the ability to positively influence a customer toward a particular brand.” They claim that “mobile apps also show solid potential.” What about social media? The analysts conclude that despite the “impressive growth and strong hype” they have received, “social networks do not appear to drive brand preference among consumers.” To learn more about the importance of brand engagement, read my posts entitled Targeted Marketing and Brand Engagement, Part 1 and Part 2. Hinchcliffe agrees that now and in the future it is “imperative for companies to shift from transactions to engagement.” Traditional marketing solutions, he believes, “have long been channel-centric, instead of customer-centric. While the majority of companies certainly do have modern call centers, social media marketing plans, e-mail campaigns, a mobile app strategy, an SEO policy, and so on, they are frequently unsynchronized and siloed. It’s also highly likely these channels are also not monitored well and fall far short of the participation levels required to achieve ROI.” Anytime you hear or read the word “silo” associated with business, you can be assured that alignment challenges are lurking nearby.
Keeping marketing strategies aligned across channels is important because consumers are likely to use several digital touch points during their path to purchase. Just as importantly, they are likely to jump in or depart the path to purchase at any time. As the McKinsey analysts conclude:
“The consumer decision journey is not a onetime process. Customers are continuously engaged and in various stages of multiple processes at any given point in time. For an individual brand, the importance here is its ability to keep customers coming back. Active loyalty plays a significant role in driving repeat purchase decisions – particularly in most developed markets. A broad shift in the way consumers are engaged online becomes apparent – even after the purchase. This can positively influence the repeat purchase decision.”
Banfi, Caylar, Duncan and Kajii recommend that companies keep three key considerations in mind when establishing a digital path to purchase strategy. First, identify “the most critical touch points across the consumer decision journey for their own products and services.” Second, “have a multichannel orientation and [don’t] focus on one digital channel exclusively or on digital at the expense of traditional channels.” Finally, balance activities between obtaining new customers and retaining old ones. “Since the consumer decision journey applies to both the retention and the acquisition phases,” they write, “the relative focus on digital in either of these phases is organization-specific.” Hinchcliffe points out that simply identifying critical touch points is not as easy as it may appear. “New digital channels,” he asserts, “are accumulating faster than many companies can integrate them into their customer experience.” He continues:
“New social networks, mobile devices, app stores, online touchpoints like fan sites, customer communities, Facebook pages, Twitter accounts, etc. seem to emerge on a weekly basis. If that wasn’t enough, customers are more ready to interact than ever before, further creating challenges of scale: Even if a company could integrate a new digital engagement channel into their efforts, these new venues are far more two-way. Customers expect a meaningful response to their attempts to connect with the companies they are interested in or otherwise desire involvement. So this is the opportunity and the challenge combined: Engaged customers generate more revenue and stay more involved with the companies that respond in kind. Yet it’s very challenging to meet their demands for engagement without fundamentally changing the rules of how companies connect with them.”
Because there is such a dizzying array of touch points for consumers to use on their path to purchase, Hinchcliffe recommends that companies look at each of them with three things in mind. First, use them to “solve a problem. Make a pain point go away, such as seamlessly conveying the current status of orders in any desired channel, or providing an innovative new way to participate in the co-design of a new product or service.” Second, “make life simpler. Remove the time, effort, and/or friction the customer has in engaging with you.” Finally, “engage the customer. The core of the problem companies have in onboarding new digital channels such as social media, is that customers will then expect the company to respond and participate in conversations. And engagement at scale is one of the hardest things for companies to do as they are organized today.” He concludes, “The one thing that is ultimately untenable is ignoring customer needs.”
Hayden Sutherland believes that the traditional path to purchase is dead. “The path to purchase is dead,” he writes, “long live the path to purchase.” Just like royal succession, he knows that something is always ready in the wings to ensure that business moves on. [“The digital path to purchase,” Press 2.0, 4 March 2013] He continues:
“Today’s shoppers now have a number of tools at their fingertips to help them chose which products to buy and consumer technology has been the facilitator of this. Research from Google Analytics has found that over a two-day period customers now interact with a brand 4.3 times before making a purchase. Furthermore the average U.S. shopper now interfaces with a total of 10.4 traditional and online media sources prior to purchasing. That’s a lot of browsing before buying (or looking before booking, if you’re in an industry such as online travel). Furthermore, according to further research by Google, online customers are now making the majority of their purchasing decision before engaging with a sales representative. There’s no doubt that the traditional way that shoppers purchase has now evolved and the marketing to these people has changed with it.”
You might ask yourself, who are “these people” to whom Sutherland refers? That is the subject that I’ll address in Part 2 of this series.