Small Business

Long Live the Funnel

Contrary to what you might have heard, rumors about the Marketing Funnel’s demise are greatly exaggerated.

The Funnel is alive and well. And it should be leveraged extensively by Marketers. It provides a consistent and universally understood (and somewhat accepted) framework. The funnel does come in a variety of shapes and sizes and colors – with different twists and turns. Despite this variety, few Marketers really leverage this powerful model.

The funnel enables Marketers to have an almost universally understood visual representation of various customer touch points, and makes it easier to track and score a person’s behavior. The Marketo funnel provides a good (although, not the only) framework and consists of six key stages:

  • Awareness: This is the universe of people who know anything about Marketo no matter what social network they participate on, what articles they read, etc.

  • Inquiry: This is when we finally know something about the person; we know at least their their name and email address.

  • Prospect: This is when the individual has taken some sort of action.

  • Lead: Finally This person is treated as a lead and can be shared with a sales organization.

  • Opportunity: The sales team has accepted these leads and added them to their pipeline.

  • Customer: The person becomes a customer and they are passed on to a new revenue cycle for upsell and retention.

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Of course, each of these stages include multiple marketing tactics and scoring approaches.

It’s important, though, to understand the difference between a contact (or a prospect) and a true lead (someone who has explicitly engaged with the company). Obviously, the relationship does not end after an individual becomes a customer. At that point, you can upsell or cross sell them.

You can determine the value of a customer based on the different products they purchase, if they adopted your product sooner than others or if they are part of a referral program, etc.  As Seth Godin points out – “Customers are traditionally undervalued, and prospects are all treated the same.”

Godin continues:

“Once you see the funnel, it’s easy to understand how valuable your existing customers are, and easy to think about how you want to spend time and money in promoting and building your site. Most Marketers are running a flat campaign. Embracing the funnel changes the way you treat people. And treating different people differently is what consumers demand.”

Having a model like the funnel and a good marketing automation tool enables you to measure and understand the cost of each interaction. Sharing this information with the rest of your organization helps build a Marketer’s credibility in a company, especially with the CFO.

The funnel also provides a learning framework for Marketers to test out different messaging and creative at each stage of the funnel. This gives Marketers the option to fine-tuning his current program.

Since I started my first big marketing job in American Express in 1992, I have heard lots of critiques of the funnel. Marketers love the catch phrases, such as ‘The Funnel is Dead.’ Well, I disagree. It’s advantages have has evolved since 1898 when E. St. Elmo Lewis developed a model which mapped a theoretical customer journey from the moment a brand or product attracted consumer attention to the point of action or purchase. (St. Elmo Lewis’ idea is often referred to as the AIDA-model – an acronym which stands for Awareness, Interest, Desire, and Action). Let’s address some of the funnel naysayers’ concerns, most of which apply to any marketing or sales model:

  1. It fails to take into account the ‘feedback loop between existing customers and prospects.’ Whether it is the funnel or another framework (such as a Life Preserver Ring of unique  ‘Awareness, Interest, Desire and Action areas’), there always exists the challenge of tracking all the interactions among people (customers and prospects ). It’s always difficult to uncover each discussion about your brand online.

  2. The funnel is too linear. According to these critics, the primary problem with the funnel is that the buying process is no longer linear. Well, I was always taught that the shortest distance between two points is a straight line.  Most of the companies I work with, however, do have the majority of their customers follow more or less a linear process. They can be broken down into the different stages described in the Marketo model above.

  3. If fails to track retention or repeat business. I must confess this might be the weakest part of most funnel models. But that doesn’t mean you should ignore the simplicity of the Funnel’s approach. Most frameworks do not go into any great detail about ‘Retention’ or ‘Lifetime Value’ anyway. The bottom line is that good Marketers constantly score their customers over time. American Express might be the masters at this. They leverage all their great Cardmember spending data to model, score and customize online and offline programs.

  4. It fails to paint a pretty picture, nor does the word funnel doesn’t sound great. I never did judge a book by its cover or a person by their name. If this is what a Marketer is worried about, then they are focused on the wrong things. There are many powerful Six-Sigma names and diagrams, for example, that don’t convey a powerful image such as SIPOC (Single Point of Contact), DPO (Defects Per Opportunity), PD (Proportion defective)

  5. It fails to take into consideration the powerful feedback loops between existing customers and newly arriving prospects that search and social media have wired up. I beg to differ. If you have some of your word of mouth programs coded properly you should be able to track shares, referrals and other types of influencer programs.

  6. It fails to consider some products, such as iPhones, where marketing is integrated into the product. I think it comes down to how you set up your programs. You should be able to track cross-sell and upsell, and even referrals from within a product. With Flurry, for example, you can track your customers behavior when they use a mobile app. It tracks the big 3: taps, tasks and transitions.

  7. The Funnel fails to capture all touch points. Over time, a good Marketer should be able to define these, however. They also should ensure they are in learning mode so that they can constantly update their list of sources. This means they should be tracking referral links, surveying their customers and analyzing where their competitors get their leads from.

And then there’s the McKinsey Consumer Journey (see below) which attempts to demonstrate that the buying process is not linear and that several steps repeat themselves. For the real digital practitioner, however, it’s too simple to say someone goes from Bond to Buy:

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While brands may put the decision maker, the Customer,  at the center of the McKinsey Customer Journey, the above excludes the importance of the experience the Marketer and the company are having with the customers. Life is not all about the transaction. For example, at Marketo, our energy goes into building relationships with Marketers as well as connecting Marketers together. In addition, you don’t have to be a customer to recommend a product. I am probably the biggest promoter of Tesla, but I can’t afford one. I have only tried it via a Freemium ride provided by a neighbor and have read great reviews about it on Edmunds.com. Does that mean I can’t recommend the vehicle to others? Obviously not.

In sum, CMOs and their teams need to know that the funnel is alive and kicking. Rumors of its demise are greatly exaggerated. The Funnel is an easy to use, easy to remember approach to tracking individuals who interact with your brand – either directly or indirectly. It’s simplicity is what makes it special – and it provides the most universally understood way of thinking about an individual’s interaction with your brand. It works not only in a B2C environment, but also in a B2B environment. Marketers should always feel free, however to add their own creative twist on things and rename all or parts of it.  Long-Live the Funnel.

Disclaimer: I am currently an employee at Marketo, so yes ‘I bleed Marketo Purple.’

Note: This will be the second of a series of posts that look at CMO’s evolving role in companies, especially as the “run and gun” campaign approach moves to building longer-term customer relationships. My next article will focus on How to Build a High Performing Band of Marketers.

Employee Engagement: What’s the ROI

Clock is ticking for Small Businesses to leverage Social Media. Can they speed up time.

Clock is ticking for Small Businesses to leverage Social Media.
Can they speed up time.

A few years ago, I was called into my supervisor’s office because of her “concern” about my commitment to the company. When I asked what triggered this concern, she said I did not have any “pictures of my family or plants” in my cubical. Instead of telling her that she was looking at me an old-school corporate  lens different than her own (my last two years at Intuit, I worked out of a locker and didn’t even have an office), I uploaded some pictures of people from Google Images and put them on my iPad, which I displayed by my desk. Ironically, that seemed to do the trick.

When it comes to engaging employees, the biggest ROI is to think of your staff just like you would a customer: seek to understand their interests, their rituals, and their ways of communicating as well as how they want to be treated.

Your employees are key stakeholders in your company’s success. Several studies show that an engaged and happy worker can reduce a company’s overall health insurance costs and take less vacation time (not sure that’s a good thing). There’s an even more important impact, though. As a recent Tempkin Employee Engagement Study showed, high employee engagement impacts the bottom line:

  • Companies with strong financial results report employees to be engaged 75% of the time —compared to organizations with weak financial results, which report an employee engagement rate of 47%.
  • Engaged employees are more than twice as likely to go the “extra mile” at work. These folks stay late, collaborate with colleagues, and recommend organizational improvements.
  • 96% of engaged employees responded that they “always or almost always” try their hardest on the job (while 79% of non-engaged workers responded similarly).
  • 75% of employees at companies who report better-than-average customer experience levels are highly or moderately engaged, while only 34% of employees in companies with lesser customer experience levels are highly or moderately engaged.

Last year, I was hired by a major software company to help them use social media in their recruitment of college graduates. Like a good consultant, I convinced the company to expand its focus and concentrate on understanding their potential employees as a unique tribe (audience) and to reconsider how the company treated them. I pointed out that even if we did great job-recruiting candidates, the biggest challenge is engaging them in their work (a Gallup poll reports that 70% of first year employees do not feel invested/engaged at work).

Based on my recommendation, the company realized that to achieve a higher level of employee engagement, it needed to think of its staff as a human beings or ‘tribes’ of humans, who have specific and diverse needs, desires, and wants.  The company understood that employee engagement starts during the recruiting process, continues through training, on board, and even after the employee leaves the company. Yes, there is even a possible ‘reincarnation’ phase when an employee returns for a second tour of duty. Schwab calls these “Boomerangers.”

Besides looking at the employee through a realistic life cycle lens, there are several factors that improve employee engagement, a few of which I learned during my tenure at Intuit:

  • Create a Learning Environment. Today, when older employees have to reinvent themselves and learn new skills and younger employees have a desire to absorb information and learn new technology, it’s important to give employees the room to do this. Intuit had a great approach called “Learn-Teach-Learn.” It was a modified version of Noel Tichy’s virtuous teaching cycle. While Tichy and others focus on management playing this role, Intuit was able to bring this philosophy to the front line workers, meeting one of the key needs of its employees.
  • Believe in Voice of the Employee: After working with more than 10 Fortune 1000 companies in the last two years, it’s clear that very few of them allow their employees to have a voice at the table. Although corporate business decision-making is not always a democratic process, it’s important to let every group be heard, otherwise, you could find yourself in the middle of an Arab Spring. (OK, maybe that’s a slight exaggeration : )
  • Create a creative environment: Employees from any department at Intuit, for example, could sign up for ad-hoc problem-solving pow-wows called “Idea Jams” that lasted a couple of hours. This “unstructured time” ultimately proved productive, enabling workers to apply their brainpower to any challenge that interests them.
  • Reward does always require money : While everyone loves to make an extra buck, sometimes symbols and rituals can go a long way. Intuit created custom imprinted poker chips that were small, easy to carry, and colorful, with each one highlighting one of its 10 company “core values.” When employees witnessed a co-worker living an intuit core value, they awarded them a poker chip. According to Brand Alliance , employee engagement scores increased 10% after their introduction.
  • Identify their personal goals. First time employees on my teams are always shocked when I ask them: “What are your career goals, and what skills sets do you want to learn for a future job at our company or somewhere else?” Google attempts this with their 20% time, but I try to get the employee to be more specific about what skill sets they want to acquire.
  • Allow Social Media participation. Years ago, I presented a How-To-Blog workshop at Dell to a large group of employees. Afterwards, the VP of Marketing stood up and reminded everyone that they could blog “only if corporate reviewed their content first.” When I heard that I felt sorry for Dell’s staff, especially because I came from a corporate culture that encouraged employees to participate in social networks. It is important to trust your employees (after all, why did you hire them in the first place?) and to know that whether you like it or not, they, like everyone else, are social media ambassadors for the company. For better or worse, many people spend a great part of their day expressing their views on social networks. So instead of constraining them, provide guidelines, guardrails, and guidance so they know the implications of posting online.

High employee engagement scores will reduce the potential employees’ misbehavior in social networks. After all, you don’t want your staff bad mouthing you on Facebook or Twitter. Imagine how a happy and engaged employee might represent the company on social networks. At Intuit, we provided an opt-in training program for employees that focused on how to participate in the latest and greatest social network as well as information on the legal and privacy implications of their online activities.

I hope old-school managers, like the one I referred into the first paragraph, reads this blog post, and realizes they need to wake up to the needs of today’s employee.