Mark Ritson: If you think the sales funnel is dead, you’ve mistaken tactics for strategy

Advertising Age published a fantastically unhelpful article last week. In it, the chief marketing officer at Publishers Clearing House, Jason John, recounts his recent purchase of a coffee maker.

John first describes realising that the weird noises and less-than-perfect coffee emanating from his coffee maker mean he might need a replacement. Next, he searches online for ‘best coffee makers’ and, as a result, on the way home that evening is greeted by targeted mobile ads for coffee makers during his commute. That weekend he heads into store to check out the options in person but is deluged with online coupons sent to his phone offering various deals. He decides on a brand and opts to order the machine online for a better price. That evening, once home, he places his order on his laptop.

After recounting this story John goes on to conclude: “People say the sales funnel is changing – that, in today’s digital world, the way customers buy is no longer a simple path from awareness to prospect to sale. That’s just not true. The sales funnel isn’t changing – it’s completely and utterly dead. It’s been brutally turned upside down, inside out, with little left to identify it as the clean, straightforward process it once was. Today’s shopper jumps in and out of channels, views alternatives to purchases, and searches for better deals – all at the tap of a screen, the click of a button, and oftentimes while standing right in front of the item she’s trying to buy.”

The sales funnel has been a cornerstone of marketing strategy for over a century. It was invented by E St Elmo Lewis in 1898 and is widely regarded as the first formal theory of marketing. It evolved throughout the 20th century, becoming better known as the ‘hierarchy of effect’, the basis for the Dagmar (defining advertising goals for measured advertising results) models of advertising planning and as a major structuring tool for large consulting firms. It’s rare to encounter a major McKinsey engagement that does not, somewhere near its heart, contain a purchase funnel of one sort or another.

Very simply, the sales funnel represents the yellow brick road of marketing. Having identified a target segment, the funnel charts the various steps in the buying journey and then populates the steps with the proportion of that segment at each stage in the process. With this analysis complete a marketer can use the funnel to decide where to focus their efforts, what the brand objectives should be, what tactical tools to invest in and what investment and return are expected. I am on about my 300th sales funnel, having built them for the last 15 years for a variety of clients. Each funnel is different depending on the product and, crucially, the segment being targeted.

I have grown used to, on an almost daily basis, encountering marketers and consultants claiming that the whole world of marketing has been changed by the new digital era. But it’s rare for an article disclaiming a particular part of marketing theory to actually disprove its own thesis in its opening paragraph.

Re-reading Mr John’s coffeemaker odyssey it is quite clear that his purchase is structured by a very simple set of steps. First came his awareness that he had the need for a new product. Next came the information search stage. After this, he formulated his preference based on product, price and some promotional offers. At the end of the preference stage he went home and made the purchase. The only step missing is his post-purchase reactions to his new machine which, alas, he does not include in his account.

The error that Mr John makes is looking at the tactical resources that he uses to traverse the various steps in the buying process, rather than the journey itself. Clearly today’s consumer is availed with a whole set of resources and influences unimaginable a decade ago. But that is not the point of the sales funnel, which charts the consumer journey, not the tactical attempts of brands to influence it.

Can I again remind the reader of the difference between strategy, in this case working out what the stages are and which one to focus on in order to increase sales, and tactics, the various actions I will invest in to execute the strategy. One of the great problems of the new marketing world we live in is that all these dreary marketers who feel it necessary to prefix their job titles with the D-word simply do not understand the difference between strategy and tactics.

The sales funnel precedes the invention of television, direct mail, telemarketing, cinema ads, the internet and smartphones. Each and every one of these technologies has changed the tactical options available to marketers, but the essential challenge of marketing strategy and the enduring value of a properly derived sales funnel remain undimmed.

Enjoy your coffee.

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