Turning the Loyalty Loop

The McKinsey Decision Journey & social marketing

 

Turning the Loyalty Loop

 

 

In 2009, McKinsey famously killed off the venerable funnel metaphor for purchase decisions, replacing it with the Consumer Decision Journey, fit for a digital age. It's a compelling model based on deep and recent research into how people use the Internet when shopping. Obviously, social media plays a huge role in that digital journey, but my experience at both Pluck (social SaaS) and Spiceworks (an awesome vertical community) taught me that many marketers have a long way to go in understanding the CDJ. I'd like to share some insights I've gleaned in over 7 years working with social marketing teams.

Taking the journey

This graphic neatly encapsulates McKinsey's concept:

the McKinsey Consumer Decision Journey diagram

Before going further here, you can dig into it with this brief summary, or this in-depth explanation.

It's obviously quite different from the traditional funnel, but the critical elements McKinsey added were the Loyalty Loop—a dramatic shortcut to subsequent conversions—and how the post-purchase experience leads to it.

Social marketing is more than lead generation; social marketing is less than lead generation

Many marketers (and the bosses in control of their budgets) seem to see social marketing as a traditional lead gen activity. This is a recipe for disappointment. Social is both less measurable than lead gen, and more meaningful to sustained success. It's that first fact that throws off many well-intentioned efforts. If a marketer's understanding is limited to the traditional funnel, it's easy for them to quantify the impact of each touchpoint, and even easier to miss the real point of social marketing.

While ROI may be harder to measure directly in the new model, the dividends should be obvious. Much of the spend on social has to be thought of in terms of building brand affinity rather than simply shoving people into the top of the funnel. Let's take a look at its role at each step of the decision journey:

  • Initial consideration: Being included in the consideration set results from brand awareness. This comes from various forms of advertising, word-of-mouth, and nowadays, content marketing and social marketing. (In my way of thinking, social fits under the content marketing umbrella anyway.) Tweets, Facebook posts, live-blogged product announcements, a presence on Quora, Pinterest boards, forums on a brand's site—these and similar interactive channels add substantially to brand awareness. Their impact on conversion, however, is notoriously hard to calculate. If a tweet contains a link to an e-commerce site and a sale is completed, there's an obvious attribution strategy, but social marketing doesn't always have such a direct path to conversion. Businesses need to understand that absence of evidence isn't evidence of absence.
  • Active evaluation: As the consumer gathers information about their intended purchase, they increasingly turn to online communities, user-generated reviews, video demonstrations, and blogs. A brand's failure to participate in these venues is a fantastic way to remove themselves from the consideration set.
  • Towards the moment of purchase: As the evaluation phase proceeds towards conversion, it's important to understand how the impact of social media interactions changes. For instance, forum discussions have a big impact on early evaluation ("do I need an SLR camera?", "what are some good camera brands?"). As the question narrows toward "which SLR camera should I buy?", user-generated reviews play a much larger role. Smart brands will invest across a variety of interactive channels, but tailor that investment to fit consumers' particular needs at each stage of the journey.
  • Post-purchase experience:
    • Enjoy: You might think that using the product is an experience beyond marketing's reach, but that's not so. While call centers and other support systems might not come out of the marketing budget, big-picture thinkers should absolutely understand these touchpoints as part of the consumer experience that either builds or erodes brand affinity. Responding with kindness to customer questions (in a GetSatisfaction forum, for instance) is one way to directly impact the owner's enjoyment. (Call deflection and prevention of returns are a huge benefits of social media presence, and it's almost a shame that customer service and marketing budgets aren't rolled together. Folks who need to build a case for social marketing should emphasize excellent tangential benefits like these.)
    • Advocate: If the "enjoy" phase has gone well, it's time to turn a happy customer into a brand advocate. Soliciting the user to leave reviews and participate in Q&A about the product is key here, as is social amplification by way of making such user-generated content easy to share on Facebook and the like. (This is also where gamification can play a big role in increasing the volume of UGC and social sharing. I'll get into that in a future post.)
    • Bond: brand affinity continues to build from post-purchase engagement in this phase. For example, having a place where users can gather together to enhance each other's experience is a great way to develop brand advocacy. Three examples of many possibilities: a Pinterest board, a Facebook group, or a photo contest on the brand's web site. The goal isn't necessarily to create a space specific to any one product, but to build a space around consumers' passions. (Think Armor All® hosting a photo contest for gleaming and well-protected classic cars.)

The big payoff is in the Loyalty Loop

As you can see in the graphic, if a brand can get its customers into the Loyalty Loop, subsequent sales are much more likely. Happy customers will dramatically shorten their future evaluation phases. Brand fanatics may completely remove competing brands from the consideration set. (Do Android fans even bother to think about iPhones when it's time to upgrade? How often do those of us locked into Apple actually investigate alternatives?)

This is a great place for a brand to be (even better than a game of Snakes and Ladders!), and social marketers should crow about their outsized impact on customer loyalty and advocacy. When building a truly sound plan around social marketing, as well as continuing to justify the spend, there's no substitute for understanding the decision journey.

Don't be afraid to teach this to marketers

My experience is that those of us involved in selling social software and services will find that this 2009 invention hasn't penetrated nearly as much as one would hope. Fortunately, I've also found that marketers are really very grateful for help from experts. They know social is important, they want to do it well, and they need to make their bosses understand its often-indirect ROI. If you help them build a case, then create and execute a plan, you'll move them into your Loyalty Loop.

Further reading:

"What has changed is when—at what touch points—[consumers] are most open to influence, and how you can interact with them at those points."

"I think the funnel is kaput. The psychology of choice is widely agreed to be far more complex, and far less linear. Research into consumer purchase habits, which started in 2005, reveals that consumer decision making about brands is constant."

"How do we get to the soul of omnichannel customer interaction? Omnichannel [marketing] success entails having the right customer interaction for the current mood, mode, and moment."

"Less than 9 percent [of appliance shoppers] ever went to the manufacturer's own site. So the company moved away from general advertising to content development for retail sites, a shift that led to a 21 percent lift in e-commerce sales."

Questions? Rebuttals?

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