The Collapse of the Purchase Funnel: How Consumer Behavior is Changing Marketing Forever

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Collapse of the Traditional Purchase Funnel

The traditional purchase funnel model that marketers have relied on for decades is collapsing. 

We had an incredibly interesting conversation with Raja Rajamannar, Chief Marketing and Communications Officer of Mastercard about the collapse of the traditional purchase funnel on Scratch - a podcast where we interview the world’s best CMOs about the mental models behind their most successful marketing strategies.

Though the AIDA (Awareness, Interest, Desire, and Action) version of the funnel has held true for many decades, Raja explained why and how the traditional model of the funnel is becoming increasingly irrelevant in today's world.

Immediate Purchases With No Previous Brand Awareness

First, Raja delivers the point around the speed of purchase, and how much faster it has become to make a purchase. 

He gives an example of how he spontaneously purchased an electronic notebook after seeing an ad once, despite no prior awareness of the brand or product category.

As Raja explains,

"I have never heard of the name of the company before. I didn't even know the concept of an electronic notebook. I was new to the category, I was new to the brand, but I made the purchase and it was not cheap, it was $400 and I just bought it."

Just like Raja’s example, a lot of consumers today often go directly from first exposure to a brand to purchase, bypassing the traditional funnel stages of awareness, interest, and desire. The technology both to experience the product and to process the payment has made impulsive purchases like these commonplace thus removing any of the previous importance of “awareness” in the user journey. 

Intrusive Ads Are Destroying The Consumer Experience

Despite the effectiveness of ads, Raja argues that the way brands are currently advertising is actually detrimental to the consumer experience:

"When I watch a song, the song happens to be a long Bollywood song, five minutes long. At the end of three minutes, suddenly you stop my song to make me listen to some stupid ad that I don't care anything about and then I have to go back to listening to the rest of the song. By then you are destroyed"

He describes repetitive and intrusive ads as 'exhausting, irritating, and annoying.' Consequently, consumers are increasingly turning to ad blockers or subscribing to ad-free services like Netflix to avoid them. The impact of this is expressed through less deliberate touch points between the customer and brand; The customer will actively turn off or develop a negative interest in the brand if the ads become too intrusive. The end result? Fewer opportunities for brands to develop their messaging and therefore build the desire the customer would traditionally have for the brand.

Loyalty Programs Have Failed

Finally, the concept of loyalty programs is fundamentally flawed according to Raja:

"I'm fundamentally challenging the concept of brand loyalty itself...If people in their personal lives are not hardwired for loyalty, why would we as marketers believe that people will be loyal to us as in our brands? Because frankly, we rank so low in the scheme of things as far as consumers are concerned."

He argues that what brands mistake for loyalty is actually just sticky ecosystems that are hard to leave. True loyalty does not exist and therefore they don’t do a good enough job in a non-linear purchase journey. And when it comes to developing “true advocates” for the brand, that doesn’t happen because the customer simply feels trapped by the ecosystem and doesn’t enjoy the actual process of being a loyal customer. 

The Transformation from Purchase Funnel to the Consumer Decision Journey Model

As the traditional purchase funnel loses its relevance, what is the new model then? 

Consumers have evolved, driven by the digital age and abundant product choices, as well as their desire for well-informed decisions. In response, marketers need to embrace a more sophisticated approach. The Consumer Decision Journey Model by McKinsey offers an alternative pathway. This model recognizes that consumers don't follow a linear path from awareness to purchase but engage in a circular journey with four primary phases: initial consideration, active evaluation, closure, and post-purchase experience.

McKinsey's Customer Decision Journey Model

In the new consumer landscape, initial consideration isn't just about brand awareness; it's also influenced by brand strength and product quality. Consumers actively evaluate their options, and brands can enter this phase to make an impact, expanding their chances of being chosen. Empowered consumers now seek information actively, relying on word-of-mouth, online reviews, and recommendations from friends and family. This shift emphasises the importance of consumer-driven marketing over traditional push marketing.

Implications for Marketers

Furthermore, the post-purchase phase is vital as it shapes future brand loyalty and repeat purchases. Marketers need to understand that not all loyalty is equal; active loyalists who recommend a brand hold more value than passive ones. Expanding the base of active loyalists should be a priority. To succeed in this evolving landscape, marketers must align their strategies with the consumer decision journey whilst also realising that they’ll often get one attempt to engage the audience. 

This entails prioritizing objectives and spending, tailoring messaging for specific journey stages, investing in consumer-driven marketing (particularly online), and winning the in-store battle with compelling packaging and messaging. The integration of all customer-facing activities, from informational websites to loyalty programs, is essential to create a unified voice of the customer across the organization. The role of the Chief Marketing Officer (CMO) is expanding to oversee this transformation and realign marketing with the realities of consumer decision-making. The collapse of the traditional funnel is an opportunity for marketers to adapt, be present in the right place at the right time, and empower consumers with the information and support they need to make informed decisions. 

Given these realities, Raja believes marketers need to completely reimagine their approach:

  • Recognize that the traditional purchase funnel model is dead
  • Stop intrusive advertising that damages the consumer experience
  • Focus on driving preference and stickiness, not loyalty
  • Leverage new techniques like neuroscience and behavioral economics to truly understand customer decision drivers
  • Understand where you can leverage technology to create the path of least resistance for your customer 

To learn more about adopting a customer-centric approach and gain actionable insights from industry experts, tune in to our conversation with Raja Rajamannar from Mastercard on ‘How to Succeed in a New Era of Marketing’ on our flagship podcast - Scratch, where we interview CMOs of brands rewriting the marketing rule book.

FAQs

1. What led to the collapse of the traditional purchase funnel?

The collapse of the traditional purchase funnel is largely due to the digital revolution and the shift in consumer behaviour. With the advent of the internet and social media, consumers are now in control of their purchase journey. They actively seek information, compare different options, and make decisions based on a variety of influences, including peer reviews and online influencers. This dynamic, non-linear behavior doesn't align with the linear progression of the traditional purchase funnel.

2. How does the Consumer Decision Journey differ from the traditional purchase funnel?

Unlike the traditional purchase funnel, which is linear, the Consumer Decision Journey (CDJ) is a cyclical model. The CDJ accounts for the various touchpoints a consumer has with a brand, starting from the initial consideration to the moment of purchase, and even beyond that to include post-purchase experiences. It also recognises that customers can enter and exit this loop at different stages, creating a more realistic representation of the modern consumer's purchase journey.

3. What changes are marketing strategies undergoing due to the transformation of the purchase funnel?

With the transformation of the purchase funnel, marketing strategies are becoming more customer-centric. Personalization is a key element, with marketing messages being tailored to individual consumer needs and preferences.

4. Why is omni-channel marketing becoming important in the post-purchase funnel era?

Omni-channel marketing is becoming important because of the different ways in which consumers now engage with brands. They might research a product online and then buy it in-store, or vice versa.

5.Why has personalization become crucial in the era beyond the purchase funnel?

Personalization has become crucial because today's consumers expect it. They prefer brands that understand them and their needs.

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