Tuesday, July 10, 2012

The Marketing Funnel Is Dead. Let's Have Dessert.

Last week’s post on lead scoring attracted more positive attention than I expected. This was doubly surprising because first, I didn’t think lead scoring was such a hot topic and second, I don’t really agree with the approaches I described.

To clarify that second point, I’m not saying what I wrote was wrong or insincere. Rather, I consider it an accurate description of an approach I find problematic. The approach was using lead scoring as a way to define lead stages. My problem is the concept of lead stages themselves.

This verges on heresy, but I’m having an increasingly hard time with lead stages as a way to organize a marketing program. Of course, stages make perfect intuitive sense, and they’re ultimately based on the AIDA (Awareness, Interest, Desire, Action) model of the sales process that has been around for more than 100 years.*

But we all know in our heart of hearts that real buyers don’t follow such an orderly sequence. Indeed, there has been a fair amount of research questioning the validity of AIDA and similar “hierarchy of effects” models. The fundamental criticism is that decision making isn’t as rational as AIDA suggests because emotions play a much stronger part than AIDA allows. I’d also add – without a shred of empirical proof, thanks for asking – that B2B decision processes flit among stages in no particular sequence, depending on who asks what questions at any given moment. This randomness is abetted by the Internet, which makes information appropriate to all stages equally accessible on demand. But I suspect the process was always more chaotic than marketers cared to admit.

I’d further argue that buyers’ interests are especially fluid early in the purchase process, which is where marketers are involved. It may be more structured towards the end where salespeople can shepherd buyers through a defined set of stages. No, I don’t have any evidence for this either.

The point is this: if buyers don’t move through a fixed set of stages, then it doesn’t make sense to use lead scoring to determine which stage a buyer is at. Nor, for that matter, does it make sense to structure lead nurturing programs to lead (or follow) buyers from one stage to the next. As I said, heresy.

But any jackass can kick down a barn.** I wouldn't discard the funnel model without offering a better alternative – and by better, I specifically mean more effective at producing productive leads. Here’s my two-part modest proposal:

- within nurture programs, leads should be offered whatever materials they are most likely to select next, based on their recent behavior. This is exactly the same as offering customers the products they are most likely to buy (think Amazon book recommendation or Netflix’s movie suggestions) and it can be based on similar advanced predictive modeling technology. And, just as Amazon and Netflix offer more than one option, nurture programs should also offer several items – within limits, since too many choices can depress response. There’s an important humility in offering choices: it recognizes how poor we are at predicting what people want.

- for lead scoring, the goal is to predict which leads the sales force will like. I chose that word carefully – it’s not a question of whether sales will accept a lead, but whether they’ll decide it’s worth sustained effort. Yes, there could be a “like” button that lets sales rate the leads, but don't be so literal-minded.  It would be simpler and more effective to check how much activity sales has invested in the lead within, say, thirty days after they received it. Leads that sales is working are, by definition, leads that sales thinks is worthwhile. Leads they don’t work should never have been sent to them. This approach doesn’t magically solve the problem of connecting marketing leads to sales results, but it’s easier than tying leads to actual revenue.

Of these two proposals, the first one is the more radical since it implies a change in the structure of nurture campaigns. Today, sequential campaigns are the gold standard and complex branching structure are the mark of sophistication. A campaign that just presented the most relevant materials would have a vastly simpler structure – essentially a big loop that kept coming back with more messages, which would only differ in which offers they included. The sophistication would lie in the offer selection, not the campaign logic. Lead scoring's only role would be to run in the background and continuously assess whether a lead is ready to send to sales.

Even this choice-based approach doesn’t fully discard a sequential model. You need something to help decide what kinds of content to create, and the most logical tool is the content matrix that marketers already use to ensure they have content for all personas at all buying stages. But while you’re still cooking a full range of dishes, you’re offering them as a buffet rather than a fixed-course dinner. If a customer wants to eat dessert first, why argue?


* Usually attributed to Elias St. Elmo Lewis in 1898, although there is some controversy.

** Sam Rayburn, although I bet he didn't originate it.

1 comment:

Carlos Hidalg said...

David: As always a thoughtful piece and commentary and while I agree that customers do not necessarily follow a linear buying path, to say the funnel is dead or discredit lead stages I believe is throwing the baby out with the bath water. Why? Because while the customer will have more of a non-linear buying approach, we cannot overlook the fact that sales must have some kind of process by which to manage the buying journey and relationship. This is done by defining lead stages for the sales team and defining the larger full funnel visibility for internal use by marketing and sales.

So while we need to adjust to a buyers path to purchase, we have to define programs and stages based on what we know - as you say yourself "leads should be offered whatever materials they are most likely to select next, based on their recent behavior." That behavior should not be looked at in isolation, but be viewed within the context of previous behaviors and matched to defined persona's and then attributed to an internally defined lead stage. Without some kind of determination of this internally we will see lead abandonment rates and a decrease in sales conversion rates only increase