How to Break Out of the Funnel

The aged marketing funnel paradigm is due for a reboot. No longer can we capture customers with awareness campaigns and then pull them down closer and closer to a conversion in a linear fashion. Today’s customer journey is more like a kid browsing around a fair than it is a straight plunge down a slope.

Several factors are contributing to this meandering customer journey. First is the increase in digital information, including product reviews, pricing information and social media recommendations.

Second, mobile is affecting in-store behavior. Showrooming and on-the-spot searches for discounts or coupons can influence whether that shopper picks an item off the shelf or leaves the store empty-handed. Deloitte says digital interactions will influence 64 cents of every dollar spent in retail stores by the end of 2015.

Finally, more mobile interactions are adding to marketing complexity. Mobile usage exceeded desktop usage in 2014. However, mobile isn’t replacing the desktop; instead it’s adding more overall minutes that consumers spend with digital media. That means more opportunities for brands to stay in touch with consumers.

The modern path to conversion has serious implications for attribution. Traditional attribution methods weren’t designed to account for a meandering customer journey. Last-click or conversion-event attribution encourages more traditional lower-funnel tactics like retargeting, while undervaluing the impact on conversions of awareness tactics, which traditionally have been used at the top of the funnel.

The attribution dilemma

First-click or last-click attribution is a simple and popular way to measure attribution, but there are dangers for marketers.

This simplistic approach can eat into marketing ROI by leading brands to credit – and pay – more than one vendor due to an inability to conclude which vendor is responsible for the final conversion, for example, a search agency and a display agency. Or, the company may incorrectly assign credit for the sale. In most cases, the contributions of awareness activities are ignored. Worse, it keeps marketers from getting a clear picture of the conversion. If you don’t understand the combination of marketing activities leading to a sale, it’s difficult to identify the best channels or strategies for future investment.

When the brand uses the last-click model only all upper funnel activities are missed, and only lower funnel activities are accounted for.

Marketing optimization is another problem for brands trying to reach consumers moving nimbly among different digital channels, call centers and stores. With many different vendors, agencies and platforms delivering marketing messages – each with its own slice of brand data – it’s hard to get a valid understanding of the entire customer journey.

A better paradigm

It’s time to split the funnel, separating prospecting and retargeting activities. On the upper half of the funnel are all the awareness activities. Once a consumer visits a brand’s website, he or she is moved to the lower half of the funnel, where retargeting begins. Every converter touches the site at some point, so this is a natural way to separate awareness from conversion tactics.

Splitting the funnel this way lets you optimize spend not just on first- or last-click metrics, but also on lower-funnel retargeting and nurturing activities.

There are three advantages to this approach:

• More actionable data: Analyzing data from each part of the funnel separately will improve the media decision-making process. If activities in the top half of the marketing funnel contribute more than the bottom, you might increase the spend there and/or better optimize lower-funnel activities. In the ideal case, you should be able to track consumers across all engagement channels and platforms.
• Weeding bots: Another benefit is that the split funnel can separate most bot traffic from human traffic if the split is defined as the first interaction on the website. A recent study by the Association of National Advertisers found that bots accounted for between 5 and 50 percent of traffic to websites, costing global advertisers $16.5 billion this year alone. Brands can waste valuable dollars retargeting fraudulent clicks with the standard funnel model. Marketing dollars aimed at the lower half of the split funnel, after the first site interaction and removal of bot traffic, are much more likely to deliver ROI just for this reason.
• More accurate crediting: With a split funnel, you can give last-click credit to one source at the top of the split and one at the bottom. This allows you to focus certain media buys on prospecting and others on retargeting.

To achieve agile and effective marketing, it’s critical to understand the value of each channel and then create the best marketing mix that delivers the right offers, at the right time, on the right platform, and to the right audience to achieve desired conversion rates. Modernizing the marketing funnel is one big step toward meeting our customers one-to-one on their circuitous customer journeys.

These four concepts are core to the relevance and effectiveness of every retargeting, optimization, personalization, acquisition and retention program. And they are not only about meeting short-term revenue goals. They will help drive brand loyalty and customer lifetime value, the nirvana for all marketers.

*Sponsored content in collaboration with Ensighten. Views expressed in this article are those of the guest author and do not necessarily reflect ClickZ’s opinions.