Understanding The Purchase Funnel, From Online to Offline And Back Again

Former Speaker of the House Tip O’Neill once famously stated that “all politics is local.”

It’s now more apparent than ever that so is most business. In fact 80% of consumer transactions happen within 15 miles of where people live.

The path consumers take to making these transactions follows a predictable course we call the “purchase funnel”.

purchase funnel

Stage One: Awareness

Starting with their basic need or desire, customers begin by searching for businesses, products and services that have the ability to meet their need. Traditionally, and in the offline world, that might have meant a Yellowpages search, or responding to a newspaper or television ad.

Now, it’s more common for the search to start online via a local search engine, exposure to mobile ads, email, deal websites and a multitude of other channels.

On the other side of awareness is discovery – the ability to be made aware of a product or service without explicit expression – e.g. Foursquare, Groupon.  This phenomenon has generated an immense amount of traction due to mobile – coupled with social and big data, the world is only waking up to the possibilities.

Stage Two: Consideration

Once a consumer has determined or been made aware of the possible options, they move to the consideration stage and begin to filter the results by criteria such as location, available incentives, recommendations, relevancy and ratings.

Stage Three: Transaction

Following a selection, consumers enter the conversion stage where a transaction is typically imminent. In fact 82% of local searches follow-up with an in-store visit, phone call, email inquiry or purchase. You’ll notice that throughout the process consumers move between online and offline channels along their purchasing journey.

Stage Four: Loyalty

After a transaction is made businesses have the opportunity to further a relationship with the customer and will ideally drive the customer into the loyalty phase. While some offline channels, such as punch cards, are still commonly used many loyalty initiatives are quickly moving online.

During the loyalty phase, businesses also have an opportunity to build information about their client base by looking at data on receipts & check-in’s (such as on Foursquare) and by storing such information in a CRM system for further analysis. Data, which can then be used to better connect with customers post-purchase by targeting ongoing marketing efforts to the actual needs and desires of customers as opposed to employing guesswork.

Great customer service starts with making it easy for your customers to find, understand and transact with you, no matter where they’re looking.

Stage Five: Advocacy

Finally, some customers will move to the advocacy stage and will be happy to support, recommend and even promote businesses with which they have built a relationship and internalized a sense of loyalty. While not every customer, even among the most satisfied, will become a true advocate, 90% of people report believing brand recommendations from friends, so those advocates become a very powerful resource as businesses build toward their 1000 true fans.

Advances in mobility also mean that customers can now move though the purchase funnel faster that ever and may enter or exit at any point.

For businesses, understanding the purchase funnel, its stages, and the various ways customers move between online and offline is essential to developing a competitive advantage and keeping up with the speed at which things move in a highly mobile society.

If you consider the places you spend your money, the ways you search and how you interact with local businesses it isn’t difficult to understand that survival in the digital age goes beyond great products and services. Great customer service starts with making it easy for your customers to find, understand and transact with you, no matter where they’re looking. And while there is a start to the purchase funnel, there is no end, because the purchase funnel is really a never-ending customer cycle where the gap between the online and offline worlds will be closed.

Stay tuned – the team at o2o will be diving into each phase in more detail over the coming weeks, or sign up below and we’ll let you know when the next post comes out.

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