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We marketers spend much of our limited resources conditioning the market rather than getting customers moving along their journey toward a purchase decision.

The profitability of marketing depends on the path that customers take toward purchasing our products and services. Understanding how and where we can have the greatest influence on the buy cycle is ultimately the key to our effectiveness.

Yet much of what we do in sales and marketing is like jumping out from behind a rock to say, “I'm ready to sell, I hope you're ready to buy!” This must change.

Our objective should be to help buyers progress through the journey they take from first becoming aware of their problems to finally making purchases that solve their problems. Everything else is just happy noise that is most likely draining away a portion of our organizations' profits.

How Do We Decide What to Do?

Marketers are well versed in the art of conditioning the market: shaping buyers' thoughts and getting our brands into the considered set. Positioning has been the subject of endless scrutiny since Reis and Trout's book by the same name was first published in 1982. Branding is likewise a popular subject among practitioners and academics. Integrated Marketing Communications has been the subject of many books.

We like to call this Environmental Marketing to distinguish it from other marketing challenges. In markets where the buyer makes their purchase decision without lengthy interactions with sales people, Environmental Marketing plays a lead role. But when it comes to markets where interaction between a salesperson and the buyer is required to aid the buyer in the decision-making process, marketers have a somewhat shallow stream from which to draw their inspiration. The gap between Environmental Marketing and Sales is Demand Generation—getting buyers ready to buy.

So, with our heads full of great ideas from market conditioning books and courses, our ears full of Sales objectives and helpful advice about what we should be doing, our hands full of integrated marketing tactics, and our wallets full of limited (but largely unaccounted-for) cash, we head off to market.

In doing so, we select tactics to generate demand. Is advertising a valid tactic for generating demand (remember, this means “getting people ready to buy”)? Is PR a good tactic for generating demand? How about events? What about sponsorship?

Ambush Backfire

“Ambush marketing” is a term used to describe the process of gaining visibility at a sponsored event without paying for the sponsorship. What's the link between the daily wrestle for effective tactics for generating demand and ambush marketing? Nothing—and everything.

Think about most sales and marketing tactics. You send a catalog by mail offering specials to your list plus a list you've rented for the purpose. You know from experience that some proportion of the recipients is in the market for products like yours, and your DM piece is appealing directly to them. Or a salesperson is trained to make a cold call to a prospect to invite initial dialogue about your products or services.

Who are we ambushing now? Even really sophisticated marketers spend millions sending out their catalogs to rented lists, offering great reasons to buy, but appeal only to those who are ready to buy at that time.

For any prospects not ready to buy right now, many of our tactics do little to move them along their journey. The effect: we “ambush” our prospects.

Buyer's Journey

Let's think instead about the buyer's journey.

What do your buyers think first, well before the journey begins? Are they complacent, somehow satisfied about something for which you think they should be dissatisfied? And what do they think next, and next, and so on?

Maybe…

I don't have a problem, then

I do, then

I know who to talk to, then

I'm clear on what I need and why, then

I know who can do this, then

I know who is best, then

I have the support of my organization to proceed

We can think of this as a step-wise journey, a cognitive progression. The normal journey for one type of product might have dozens of stages, and another might have only a few. It might take years or it might take days for buyers to progress, but it can always be thought of in terms of a journey.

Funnel Logic

So, let's re-ask our earlier question, but change it a little: can popular tactics like advertising, PR, events and sponsorship play a role in causing buyers to progress? Absolutely! Remember, earlier we asked whether these tactics were good ways to generate demand.

We marketers spend too much time getting the market ready, and not enough time getting the market moving, and Sales eggs us on; they ask us to run more ads, more events, more PR.

Funnel Logic™ is the name we give to a very simple idea for getting people to buy. It has only four steps and can be practiced by the largest and smallest companies alike. Funnel Logic draws on the old metaphor of a funnel: many potential buyers at the top, only a few buyers at the bottom.

There are four steps:

Step 1: Identify the buyer's journey

We've discussed that above. For illustrative purposes, let's stick with our simple buyer's journey but use some shorthand: become troubled, acknowledge a need, identify options, identify payback, select preferred option, justify/gain agreement, buy.

Step 2: ‘Dimension' the journey

How many potential buyers do you need to have at each stage of the buyer's journey? If we assumed that there are 4,000 buyers in your market, and that 75% of the buyers will progress through each stage of the journey, the “dimensioned” journey would look something like this:

If, as we have said, at each stage 75% progress to the next stage of the process, then this is the same as saying that 25% will “leak.” That is, they fail to progress. You'll see the power of this subtle perspective shift in the third article in this series. For this article, though, we'll focus on another powerful perspective: time.

In the above example, we've assumed a progression rate of 75% for each stage. For planning purposes, let's now add an element of time and view our funnel progression on a quarterly basis.

Unless we have a flexible workforce and can handle massive variances in workload, the first step we will take is to spread our target of 4,000 prospects evenly throughout the year, so we introduce 1,000 new prospects to the top of our funnel each quarter.

Now let's say 50% of the buyers from the previous stage progress in that same quarter, 25% progress in the next quarter, and 25% leak. For example, of the 1,000 new prospects we contact, we are able to help 500 move to the stage of acknowledging their need in the immediate quarter, and 250 in the following quarter. The remaining 250 have leaked and are no longer on our path to a purchase.

What we now get is a progression through the buyer's journey, over time. Remember that even though we are showing this from the buyer's perspective, our marketing tactics are aligned with motivating prospects to move to each successive stage in the buy cycle.

The resulting table might look something like this:

 

Q1

Q2

Q3

Q4

Become troubled

1,000

1,000

1,000

1,000

Acknowledge a need

500

750

750

750

Identify options

250

500

563

563

Identify payback

125

313

406

422

Select preferred option

63

188

281

313

Justify/gain agreement

31

109

188

227

Buy

16

63

121

160

Step 3: Plan tactics

With the numerical goals clear, the task now is to select a tactic or group of tactics that are good enough to cause that number of buyers to progress to the next stage within the agreed timeframe.

Funnel Logic is about embracing marketing tactics, processes and measures that cause buyers to progress along their journey—and toward a purchase decision. Environmental Marketing is important, but not nearly as important as getting buyers closer to a purchase decision.

Some of the stages will cause a challenge. Helping buyers to identify and become concerned about a problem is anathema to some marketers. We naturally want to communicate the virtues of our product, but unless the buyer has a problem that our product solves the purchase decision will be in the “nice to have” category.

Here's an example of the tactics that a company might be drawn to use when faced with the progression table above. To get the first quarter's segment of 1,000 buyers to become troubled, we might use a combination of white papers and seminars, and use advertising to promote both. The language of each of the three tactics would be crafted around the problem, not the company or the solution.

To have 75% of those who are now troubled acknowledge that they have a need, we might offer workshops and need audits. To have 75% of those with a clear need identify us as one of the options, we might offer case studies crafted around each of the problems we have built the campaign around.

Our next stage is to help 75% of those that consider us as an option to identify their payback, and we might build an ROI calculator to help this progression. To help 75% of those still in the funnel at this point to select us as their preferred option, we might use reference site visits or calls; and to get 75% of those who prefer us to justify their decision and gain agreement from other stakeholders, we could offer template-driven business cases, and encourage prospects to let us present to their board or to whoever the other decision makers are.

For our last step, to help 75% of those still in the funnel to buy, we might remove the risk by offering a “like it or leave it” guarantee.

Clearly, these sample tactics (drawn form real-life examples of companies using Funnel Logic) are not a recipe for every business, but they serve to illustrate how tactics we are already familiar with can be narrowly purposed to achieve progression along a single stage of the buyer's journey.

Our plan, designed to move prospects through the buy cycle, nets a 9% close rate based on converting 75% at each stage (a bit high, but kept simple for the example).

Stage in buyer's journey

Full-year total

Share of starting population

Marketing tactics used to help buyer progression

Become troubled

4,000

100%

White papers and seminars promoted via advertising
Acknowledge a need

2,750

69%

Workshops and audits
Identify options

1,876

47%

Case studies
Identify payback

1,266

32%

ROI calculator
Select preferred option

845

21%

Reference site visits and calls
Justify/gain agreement

555

14%

Template-driven business cases for internal selling
Buy

360

9%

No-risk guarantee

Step 4: Measure

How effective are your tactics at actually causing that progression? Measure that effectiveness, and benchmark your measures internally or externally so you know what to improve and what to leave alone.

What Next?

In this article, we've looked at the focus that we marketers give to conditioning the market rather than getting people moving along their journey toward a purchase decision. We borrowed a little from the topic of ambush marketing, and twisted it to point out that much of what we do ambushes the buyer (instead of our competition).

We looked at how buyers move along a journey, and how we can plan and measure the activities of Sales and Marketing to help them effect that movement. In the process, we suggested de-emphasizing market conditioning.

In marketing, it's not about what you do but about what happens as a result. Sales operates on similar principles. Our objective is to help buyers progress through their journey and our funnel. Everything else is just “happy noise” that is most likely draining away a portion of our organizations' profits.

Marketing ROI teaches us how to guide the decision-making process for marketing with clear insights into their effect on profits. By understanding the effectiveness of your funnel tactics, you're a part of the way there.

In our next article, we'll explain how to reduce the leakage of profits from your business. This is where marketing ROI and Funnel Logic—the two principles that underlie this article series—get to bring out their big guns. The size of the opportunity in your business to simultaneously spend less and generate more business will alarm you.

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ABOUT THE AUTHOR

image of Hugh Macfarlane

Jim Lenskold and Hugh Macfarlane Jim Lenskold is President of Lenskold Group and author of Marketing ROI, The Path to Campaign, Customer and Corporate Profitability (McGraw Hill, 2003). The Lenskold Group (www.lenskold.com) offers consulting services in the area of strategic marketing, marketing ROI, customer relationships, customer profitability and market analytics. Jim can be reached at jim@lenskold.com or 973-598-1911.

Hugh Macfarlane is CEO and founder of the demand generation consultancy MathMarketing (www.mathmarketing.com). He is also author of The Leaky Funnel: Earn more customers by aligning Sales and Marketing to the way businesses buy (Bookman, 2003). Hugh can be contacted via hmacfarlane@mathmarketing.com or +61 3 9690 7600. In the US, contact Hugh via Lenskold Group.