Over the holiday I read an interesting article in the Harvard Business Review. In the article "Branding in the Digital Age: You’re Spending Your Money in All the Wrong Places," David Edelman highlights some research conducted by one of his colleagues at McKinsey & Co.
The thrust of the article centered on understanding the process customers use to engage with a brand. The term used to describe this process is "consumer decision journey."
Edelman sets up the decision journey in opposition to the common funnel metaphor. I think he’s wrong about that, but let’s start by looking through the concepts and how they might apply to real estate.
The funnel metaphor
We’ll start with the funnel metaphor. You’re probably already familiar with it. The idea is that a customer is faced with a choice of many brands to choose from — and in real estate this would be magnified by brand and also agent personalities.
The customer then does a little research and whittles away the choices of who to work with down to one.
That’s the funnel in the find-someone-to-sell-my-house task. It starts with a lot of choices and narrows down to one. The marketing efforts of the agent hoping to help people sell houses are focused on making this funnel as wide as possible and eliminating bottlenecks.
In terms of helping customers find a house to buy, the funnel is pretty much built in to the majority of real estate search sites: Start with a list of all the houses for sale, narrow down search by a variety of factors, then limit it further based on pictures or other details. Again, start with a wide selection then narrow it down to one.
The real estate practitioner hoping to help people buy a house tends to focus his or her efforts on getting people to the search function of the website and then getting the potential buyer through the process of winnowing down the options.
The customer decision journey
For those heavily engaged in social media these past few years the customer decision journey will look pretty straightforward. In this model of customer behavior the customer goes through several phases: Consider, evaluate, buy, enjoy/advocate/bond, and repeat.
- At the consider phase of the customer decision journey, the customer is looking at the widest number of choices — like the top of the funnel. Given that there are often a large number of choices available, the customer will likely move quickly to the next phase.
- At the evaluate phase, the customer begins seeking information to help guide the ultimate purchase decision. This outside information can come from all sorts of places: friends, reviews, marketing materials, and so on. It’s important to note that during evaluation, the customer is adding as well as subtracting potential purchase candidates. For the real estate practitioner, this is where much of the marketing activity occurs to attract and influence people who are wanting to buy or sell a house.
- The next phase of the customer decision journey is to actually buy something. Edelman’s article focuses primarily on retail items. But the main feature of the buy phase is that there’s a touch point with the customer. According to Edelman, customers are putting off their final decision of what to purchase until they are in a store. I know I’ve heard my clients and friends in real estate talk about how customers come to them much more educated about what they want than in the past. So this decision-making procrastination is perhaps applicable in real estate as well.
- Enjoy/Advocate/Bond is all the stuff that happens after a purchase. The knowledge that people often buy several houses over their lifetime has certainly motivated real estate practitioners to work on marketing to their past clients as well as future clients. If the service was great and the relationship can be maintained then, hopefully, the next time the customer is looking to buy or sell a house the consider and evaluate stages will be skipped.
Apples and oranges
Edelman sets up the funnel as a relic of traditional media-buying: Buy advertising to increase the size of the funnel. He then presents the customer decision journey as the result of a change in the nature of consumer engagement.
I think he’s not entirely correct there. I’m not sure that customers are changing the way they behave or make decisions about purchasing. I would think this would require some studies performed over time in order to measure.
The customer decision journey makes sense, though. In fact, it probably accurately describes how people have always interacted with brands or made decisions.
This is really where the difference between funnel thinking and decision-journey thinking, I believe. The decision journey is describing something from the customer’s point of view. The funnel is describing something from the marketer’s point of view.
The funnel is a one-time event, and real estate marketers can take action to make the funnel wider. The customer decision journey is a cyclical process that encourages real estate marketers to think beyond the sale and work on loyalty. They both have their place.
The funnel is perhaps more tactical and the decision journey more strategic. You can think of the funnel as a tool for understanding behavior within the phases of the decision journey.
Here are some thoughts to consider in applying the customer decision journey in concert with funnel thinking.
- Edelman recommends allocating budget based on phase of customer decision journey instead of by media channel (TV, print, Facebook, search, SEO etc).
- I would encourage you to use funnel-thinking to measure the outcomes and improve the performance of initiatives at each phase of the customer decision journey.
- Edelman (and all other inbound or content-based marketers) recommends shifting budgets to your own media and away from paid media.
- I would encourage you to use funnel-thinking to measure the outcomes and improve performance of your own media.
Understanding the difference between the customer decision journey and the funnel, and when each model is more useful, can help real estate practitioners understand their customers better and make better use of their marketing.
Much of the decision journey stuff is going to be familiar to those working heavily in social online spaces. If you think you’ve already absorbed this fully, here’s a test.
Which can you answer quickest:
- How much money did you spend on succeeding in the customer decision journey’s buy phase?
- How much money did you spend on newsprint or TV or online advertising?
Edelman’s suggestion of focusing on influencing your customer instead of focusing on where you are buying your media is dead on.
In order to do that well, you’re going to have to spend some time understanding what their decision journey actually is — for you, for your type of real estate, and in your geographic area.
The customer decision journey in New York City is very different from the customer decision journey in Ashuelot, N.H. And I would encourage you to use funnel thinking to measure and optimize your progress.