I'm unashamedly re-posting an entire paragraph from the recent McKinsey report on The Perils of Bad Strategy, as it's the most incisive comment on the prevailing mediocrity I've read in recent weeks, and further testament to the Law of Marketing Inequality.
'A final hallmark of mediocrity and bad strategy is superficial
abstraction—a flurry of fluff—designed to mask the absence of thought.
Fluff is a restatement of the obvious, combined with a generous
sprinkling of buzzwords that masquerade as expertise. Here is a quote
from a major retail bank’s internal strategy memoranda: “Our fundamental
strategy is one of customer-centric intermediation.” Intermediation
means that the company accepts deposits and then lends out the money. In
other words, it is a bank. The buzzphrase “customer centric” could mean
that the bank competes by offering better terms and service, but an
examination of its policies does not reveal any distinction in this
regard. The phrase “customer-centric intermediation” is pure fluff.
Remove the fluff and you learn that the bank’s fundamental strategy is
being a bank'.
Riddle me this... In reference to another nugget from the McKinsey 'consumer decision journey' report mentioned a couple of posts ago.. 'Our research found that two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family, as well as in-store interactions and recollections of past experiences.'
Surely then, proportionately two thirds of marketing budget would be best applied trying to add value and tip sales at those touch points?
Essentially McKinsey argue that the traditional 'funnel' analogy has several holes in it and no longer represents an accurate picture of the 'consumer' route to purchase.
The major spanner in the works has been the rise of consumer empowerment, the web has given consumers unprecedented ability to research and learn about products and services and then make decisions, often independently of marketing and advertising messages and increasingly following recommendations of other people, just like them.
Something we have all been talking about in this space for some considerable time, however it's interesting to see that these ideas are now finally permeating the mainstream.
In summary, McKinsey say:
You have a trigger of some sort (ie recognition of some unmet need), where people start across the decision journey — they are now going to move towards making a purchase.
They call the first stage initial consideration. In many categories, people start off with a fairly narrow list of potential brands.
However, once they move into a stage McKinsey call active evaluation, the number of brands they are considering increases. Which is exactly the opposite of the premise of the traditional funnel, which goes from broad to narrow.
This is the stage when we are intent on purchasing and we are actively researching the product.
Here's where the disconnect happens as much of advertising focuses on 'awareness' and trying to get into the 'initial consideration set', being the and yet, 'when the consumer reaches out during their active evaluation stage, they’re not providing the right facts and testimonials that the consumer is looking for'.
This is where content and consumer-driven marketing comes into it's own as it makes a brand findable, credible, believable and ultimately delivers value during this all important active evaluation phase, where sales are won or lost.
In all, it's conceptually similar to the 'Flipping the funnel' notion of Seth Godin's from a few years ago (turning the funnel into a megaphone so fans/advocates evangelise on behalf of the brand) though - at the risk of excommunication from the Church of Seth - I'm coming round to the idea that Advertising is still important, but in different ways from it's traditional top down role.
1 - in the initial consideration phase to build 'category awareness', before active evaluation, then 'two thirds of the influence came from consumer driven touchpoints — word of mouth, talking to friends and family, searching on the internet.' The other third would still be made up of brand driven communications and touch points, including advertising.
2 - As a 'reminder' in evaluation and, of course, post-purchase reassurance. An interesting example of this in action is Best Buy, who use Twitter as customer service and almost sales promotion tool and the TV ads advertise that, rather than products or services. I'm thinking the idea is that while in active evaluation you are more likely to pay attention to advertising from brands that have added value, been findable, and been credible during that phase. This encourages active 'loyalty' through service (passive loyalty being the juxtaposition - when a customer will be open to switching based on experiences encountered post-purchase or in evaluation)
So, it's official - there's a hole in the funnel, dear Lisa. People no longer make buying decisions in a linear way. People turn to peers, friends, and other users for advice above other media. The potential number of choices increases in active evaluation. The more reasons (value) you can give customers to stick or prospects to switch, you win.
