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Tuesday May 1, 2012
by Karen Freeman, Patrick Spenner and Anna Bird
To Keep Your Customers, Keep It Simple
They don’t want a “relationship” with you. Just help them make good choices.
You’re probably familiar with the purchase funnel, invented in 1898 by the colorfully named St. Elmo Lewis: he proposed that consumers go from awareness to interest to desire to action, gradually reducing the number of options or brands they consider along the way. This has been adopted, with some changes, as the standard across industries. But the funnel model is fading. Decades ago, consumers may have methodically winnowed their choices as the funnel describes. But today’s consumers, barraged by information, are adapting their shopping habits to cope with the noise — and that has profound implications for marketers
In a survey of 7,000 consumers worldwide, we found the funnel is no longer the most common purchase path. In fact, only one third of consumers now use the funnel approach when they shop. Why the decline? The biggest reason, our research shows, is cognitive overload. Consumers are overwhelmed by the volume of choice and information they’re exposed to, and marketers’ relentless efforts to “engage” with them.
Their response to this overload has been two-fold: About 30 percent of consumers now anxiously embark on an open-ended purchase path, adding and dropping brands, caught in a loop and compelled to continue researching alternatives. Meanwhile, another 30 percent abandon the considered search altogether and simply zero in on a single brand. We call this latter path the “tunnel.” In our survey, the majority of tunnel purchasers were buying the product or service for the first time, so this wasn’t an expression of loyalty to a particular brand; rather it was a response to overload, a way to simplify what’s become a frustratingly complicated process. Either way, these 60 percent of consumers are responding to the bombardment in ways that can lead to poorly considered decisions — or no decision at all.
At first blush, the tunnel approach may seem like an efficient strategy that benefits consumers. And it may on occasion. But there’s an important downside: Have you seen the “I want an iPhone 4” video (warning, strong language)? In the animation, a customer insists she wants an iPhone even as the store clerk repeatedly tells her about better alternatives. An electronics store employee made the video to mock Apple fans’ single-minded pursuit of iPhones with no regard for the superior features and benefits of competing products. But that’s precisely the reaction consumers are having to cognitive overload in all purchase categories: self-imposed simplification of the decision process.
Brands suffer as well because tunnel purchase means tunnel vision. What do you do if your product is not the iPhone 4? Well, the fact that these changing purchase behaviors are a reaction to cognitive overload suggests a smart response. Because marketers have some control over the customer’s purchase experience, they can appeal to consumers by, simply, making it simple for them. In fact, we found that the single biggest driver of “stickiness” — customers’ likelihood of following through on a purchase, buying the product again, and recommending it — was, by far, “decision simplicity,” the ease with which consumers can gather trustworthy information about a product and confidently and efficiently navigate their purchase options.
The bottom line: These days making a purchase decision easy is what makes customers choose your brand.
Read our HBR article here to see how savvy brands are making it easy for consumers to navigate and trust information, and weigh options, on the path to purchase. That’s the winning formula for making consumers stick in today’s chaotic marketplace. Or, you can watch customers tunnel right by your product on their way to a competitor’s offering
Learn how simple — or complex — the decision journey is for your customers with this decision simplicity quiz.