Businesses today rely heavily on growth ideas to remain competitive, and the automotive industry is no exception. Quarterly growth rates judge long-term stock market veterans like General Motors, and conventional approaches are no longer enough to drive growth and ROI. Today, most CEOs (about 78 percent) bank on their marketing leadership, including the CMO, to embrace new capabilities and achieve profitable growth.
Automotive OEMs (Original Equipment Manufacturers) must keep aside their traditional toolbox and study the changing consumer behavior to review and adjust their marketing strategies. In other words, they must develop new skills to help them deploy the appropriate investments and resources.
Why the funnel metaphor is misleading
First, what is the funnel metaphor?
When consumers purchase a car, they begin with several brands in mind, symbolically like a large circle of options. Their choices and elimination of brands are guided by their preferences and marketing inputs, which push them down the funnel’s chute to end at a brand.
Marketing teams use the movement to attract, engage, and convert prospects as consumers go through the choices. But the funnel metaphor is now under scrutiny.
Today, consumers are not necessarily diving into the funnel’s head (multiple choices) to scale down its chute (final selection) in a traceable path. Many consumers bounce in and out of the funnel’s head before heading down to the decision stage. It is called conversion in marketing speak. There is also the possibility that having dived into the funnel head and traveled to the bottom, seemingly armed with a choice, consumers vanish.
What causes this phenomenon? The overabundance of options and digital channels and the rise of sophisticated, well-informed consumers. It can baffle consumers. The funnel concept fails to capture the touch points and critical factors, leading to stalled buying decisions.
What should marketers do? They should devise a more sophisticated approach to tackle the buying environment that is turning less linear and more complex. Marketers need an online strategy that works in any geography, aligns with different media, and makes product options less intimidating.
Owning consumer touchpoints
The consumer journey in the automotive industry involves four phases:
- Initial consideration.
- Active evaluation or potential purchase research.
- Post-purchase satisfaction.
All four stages are critical, and marketers must penetrate them to influence consumer decisions.
What influences a consumer’s purchase? Advertisements, news reports, family and friends’ input, and product experiences. These combine to create a pool of considerations.
The funnel analogy says initial considerations are systematically narrowed. To influence consumer behavior, marketers push marketing content at each stage of the funnel process, and the post-sale phase serves as a trial period to determine consumer loyalty. However, McKinsey’s qualitative and quantitative research shows that something entirely different is happening now in automotive purchases: Marketing campaigns can win or lose during the four-step phase.
The funnel metaphor does not provide an understanding of a brand’s strength compared with its competitors during the four stages. It does not necessarily highlight the bottlenecks that stall brand adoption to help focus on different aspects of a marketing challenge.
Let’s say a consumer decides to buy a car. In most cases, consumers can immediately name a few brands worth considering. In a sea of choices and communications, consumers tend to rely on a small number of brands that survive the marketing chaos.
There is a correlation between brand awareness and purchase likelihood: brands that appear in the initial consideration are three times more likely to be bought eventually.
The second profound shift is that consumers are reaching out to marketers more than marketers are reaching out to consumers. In the past, companies led marketing; consumers were “pushed” through advertising, direct marketing, sponsorships, and other channels. Marketers tried to sway consumers’ decisions by narrowing their brand options down the funnel. Because of this imprecise approach, marketers could not reach the right consumers.
Today, a marketer’s work doesn’t end when consumers make a purchase decision: the post-purchase experience shapes their opinion for future choices in the category, so the journey continues. When the funnel concept was conceived, consumers could not imagine the internet as a resource to conduct research after purchase.
It is essential to learn how consumers make decisions. A significant challenge for most marketers is mastering strategies and spending on influential touch points. There may be occasions when the marketing effort must change directions, such as shifting from first-impression advertising to digital information heritage to assist consumers in comprehensive brand evaluations.
Marketers may need to retool their loyalty programs by focusing more on active purchasers by spending money on in-store activities or word-of-mouth marketing.
Consumer decision journeys are becoming complex, forcing companies to adopt new methods of measuring attitudes, brand performance, and marketing expenditures. With its highly aspirational products, automotive manufacturers must work harder to cut through the marketing clutter. The funnel metaphor has ceded to the direct path of the consumer’s decision-making.