The Sales Funnel is Dead

Article posted on September 17, 2013
on Direct Marketing News (DMNews.com)

The sales funnel is dead.
A circle of continuous engagement is born.

We all grew up with the sales funnel. You know, the one where the company was in control and pushed the prospect through the sales grinder. Well, it's dead.

The good news is that it's been buried by empowered customers who don't see the sale as a “close”, but as the beginning of deeper value and engagement.

According to voice of the customer research we conducted, ongoing value and engagement post-sale are critical for retaining today's empowered consumers. During the past 12 months we included the following question in many of our research efforts: Which has more impact on retention and repeat purchases: customer satisfaction or customer engagement/relationship?

The answer was consistent across our B2B and B2C research: Engagement/relationship strength has 12 times more influence on retention and repeat purchases than satisfaction. Basic satisfaction is now table stakes. Today's consumers expect that the sale is just the beginning of a journey of increasingly personalized and sustained engagement.

The Traditional Funnel

The traditional sales funnel was created to “drive a sale” to closure. It worked—until customers decided that they were empowered to exert their preferences regarding how, when, and where they wanted to engage pre and post-sale.

Circle of Continuous Engagement

Given the tough economic times, companies recognize that increasing retention and renewal rates is more important than ever. Therefore, ongoing engagement post-sale is critical. This has caused today's sales process to become a circle focused on driving engagement over time. This circle encompasses three key phases of the customer lifecycle:

Pre-Sale

• Focus on providing easy, hassle-free, personalized solutions.
• Learn customers' opt-in messaging and communication preferences.
• Engage customers across the multichannel mix.

Sale

• Don't “close.” Instead, think of the sale as the beginning of proactive, value-based relationship development.

Growth and Retention

• Develop a plan for ongoing proactive engagement, i.e. “How can we better serve you?”
• Provide an ongoing value –add, which justifies a price premium.
• Be relevant. Communications must be highly personalized, targeted, and delivered or accessed across the multichannel mix.

However, a note of caution: many companies are still not equipped to deliver this level of ongoing and multichannel engagement. In the 2013 benchmarking study by the Retail Systems Research (RSR) Institute, Retailing: Omni-Channel Approach Central to Strategies in 2013, 54% of respondents indicate that they do not have a view of customers across channels.

DHL Solves Problems to Grow

DHL is one company that has cultivated a commitment to being customer focused. It has developed processes that solve problems and create goodwill at every touchpoint—and and at every part of the shipping continuum. For example, it integrated formerly stand-alone business units to provide solutions and to support customers more effectively, and developed specific industry know-how and solution segments that specialize in providing niche service by industry to address specific customer concerns.  By adopting this customer-centric approach, the company increased profit from operating activities in the first half of 2013 by 7.8%.

The Key Takeaways

1. Shift from the obsolete sales funnel to a customer lifecycle view.
Focus on developing ever-deeper relationships with your customers across their ongoing customer experience with your company. 

2. Be actively engaged with prospects during their decision journey.
Provide easy-to-find information, access to reviews, etc., to enable prospects to evaluate your company, product, and services against others they're considering. Opinion influencers—such as product reviews, ratings, and testimonials—are critical. In addition, provide convenient contact resources, such as online chat that answers questions, while prospects are still on your website. This high-level of value and service sets an important tone at the beginning of the customer life cycle.

3. Understand your customer's journey from pre-sale to post-sale.
Understanding the factors that make customers want to purchase from you--and then stay with you after the sale—lets you highlight your company benefits and use these key selling points in your marketing. Put in place the means by which customers can easily access information and help along the way from pre- through post-sale phases.

4. Be easily accessible across channels.
Consumers are shopping via multiple channels and devices often at the same time. Don't create barriers by being unavailable or making it difficult to engage across the channels your customers prefer.

5. Don't forget about customers after you ring the register.
Keep customers actively engaged via preference-driven, personalized communications and experiences. Provide ongoing information to improve their lives, solicit feedback, and stimulate purchases of relevant new and add-on products. Make your customers feel as though they are a part of your company's community through a multichannel relationship-focused continuous cycle of engagement.

Transforming Intrusive Customer Tracking to Valued Information Exchanges

The Challenge: The bad news is that consumer resistance to unauthorized data tracking is growing. The good news is that many consumers understand that in order to receive more targeted and relevant communications, they need to provide companies with more of their personal information.

Extensive research conducted by our company, ERDM, over the past 12 months has shown that BtoB and BtoC customers are willing to provide in-depth information if they see the value and are assured of improved levels of personalization and customer engagement. This research finding has emerged so consistently that we refer to this as the Reciprocity of Value Equation. This fundamentally reframes data privacy concerns as a beneficial exchange of information that improves the customer experience.

Furthermore, customers have said that they will update and refresh their information as long as they keep receiving value from marketers. Therefore the significant takeaway for marketers is that:

» BtoB and BtoC customers will supply deep levels of information if they trust the brand and see value.
» Consumers will actively opt-in to sharing detailed personal preference information in exchange for the marketer’s promise to deliver relevant information and offers.
» Marketers need to understand how their customers define the Reciprocity of Value Equation with their company.

CVS-Caremark, a 2013 Apex Customer Award Winner understands the power of providing value in exchange for personal information and responsible behavior tracking.

They worked hard to improve consistency, reliability, and accountability in Member Communications – both across the organization and within the communications sent to Members. This heavy emphasis on putting customer needs front and center boosted CVS’ revenues in the pharmacy services by 7.2% to $11.5 billion, and in the retail pharmacy segment by 13.9% to $13.5 million.

This growth is due in part to a benefit-based reciprocal data exchange with customers.

• Within the Pharmacy “Information center” are details of all current and past prescriptions filled by a family at CVS. It allows subscribers to monitor all medications with pictures of each pill, dosage, refills remaining, and which medicines are due to be refilled or need a renewal prescription.

• Customers can order refills online and be altered to pickups by email, text, or both.

• Subscribers have one loyalty card and login to the prescription and retail sections of the stores, allowing them to add reward points for future discounts in both areas of the store.

• CVS sends personalized emails to members based on their current point levels and past buying history.

Takeaways

1. Customers want to be reassured that when they turn over their personal information, it will be used responsibly and for their benefit. Companies that reward customers for data by providing relevant offers and enhanced customer experiences will gain loyalty because customers expect a reciprocal value exchange.

2. Have an action plan for how you will use this precious customer data. If customers do not see obvious and immediate benefits from providing their information, not only will they unsubscribe from the service, they may also stop being a customer.

3. Understand what questions customers feel are appropriate to ask...and at what points in the lifecycle. Increasingly deeper levels of information must be earned.

Preference-Driven Personalization; What Men’s Wearhouse Can Teach Us

The Challenge: Many companies are still not using preference based personalization. This compromises relevance and sacrifices engagement and potential sales.

40% of consumers say they prefer buying from retailers that cater to their preferences. According to research firm The E-tailing Group, respondents said they:

» Find it valuable if the retailer offers product recommendations tailored to their personal tastes and shopping histories.
» Purchase more often when retailers send e-mails that are personalized based on a shopper's past interactions.

One retailer who has embraced preference based personalization is Men's Wearhouse. With more than 1,100 stores nationwide, Men’s Wearhouse prides itself on providing personalized service to all of its customers. “Customer satisfaction is our highest priority, across all of our channels,” said Susan Neal, EVP, E-Business, Marketing and Digital Technology. “Just as our in-store tailors alter garments to perfectly fit each customer, we plan to deliver personalized emails individually tailored to each recipient."

• Men’s Wearhouse captures data from every customer touch point, mines behavioral signals using advanced predictive algorithms and overlays deep retail domain knowledge.

• They are extending their personalized experience to email as well.

• The company has in-store wardrobe consultants to help its customers. This service continues the online experience which offers a website for its full offerings as well as a separate website just for tuxedos by type of occasion. The Tux Sites features a dedicated Wedding Planner that can be contacted online or via an iPhone app.

• Overall Men’s Wearhouse is an example of a forward-looking retailer that understands the importance of delivering clients a consistent, personalized experience.

According to our firm’s VoC research on the Preference driven Reciprocity of Value Equation, consumers are willing to share personal preference information with trusted brands in exchange for “reciprocity of value” — in other words, receiving highly targeted and relevant offers and communications based on their individual preferences. This represents a powerful opportunity for marketers to transform how they engage with customers and prospects.

3 Research-based Takeaways

1. 59% of shoppers said that it is easier to find what they’re looking for when retailers personalize the shopping experience. So make it easy for your customers to find and buy what you have to sell.

2. 40% of consumers said they buy more from retailers that personalize shopping across all channels. So make sure your personalization experience extends to every aspect of your customer experience and interactions.

3. Retailers that remember the shopping behavior of individual consumers and use it to personalize future experiences are being rewarded — consumers are more engaged and purchase more. So be sure you have in place accurate and easily updated CRM practices and technology.