The Marketing Funnel's Finale?

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The traditional marketing and sales funnels have put in a full century of revenue generation, but companies are beginning to seek a new, more customer-friendly design.

They have ably served the world of commerce for more than a hundred years (designed by E. St. Elmo Lewis in 1898) through trillions of dollars of deals, but are the classic marketing and sales funnels ready to be retired? At the very least, they're due for a reengineering, according to Kathleen Schaub, VP of the CMO Advisory Service at International Data Corporation.

Schaub's unit predicts that, by 2020, one out of every five marketers will have abandoned the funnel in favor of a more customer-centric model fueled by customer data and cloud-based technology.The tops of funnels have become questionable, murky areas—especially at B2B companies whose customers have completed as much as 50% of their buying processes before stepping forward. Often, says IDC's Futurscape research, it's a waste of time to hand leads off to sales.

“The funnel's got a wide top [that's] filled with people who are anonymous. It requires a one-to-many approach, but now that we're moving into an era of high information and choice, the funnel's changing shape,” Schaub says. “Buyers have more information and vendors are starting to rethink this idea of casting a wide net. They're looking at ways to narrow that first approach so that it's less wasteful and more valuable to the buyer.”

Forward-thinking technology companies will continue to use the funnel to aid processes like forecasting, but will devote more of their marketing resources to forge go-to-market strategies and map customer journeys. Funnel-driven revenue generation will increasingly be replaced, IDC predicts, by flexible customer content, data-supported feedback, and ready-for-anything automation structures.

This change in traditional sales and marketing thinking at high-tech companies comes as they become swept up in what IDC has christened the digital transformation (DX) economy.The researcher sees digital business strategies swallowing up more than half of IT spending over the next two years. By 2020, expenditures on cloud services and digital technology will exceed $500 billion globally—triple what companies spend today, according to IDC.

Schaub says she's already noticing the needle move from traditional sales practices toward digital marketing at companies on the leading edge of the trend. "In IT companies, resources were always deployed about 80-20 in favor of sales, but we're now seeing that move to 75-25 at a lot of companies, and even to 60-40.”

Brent Leary, a partner at consulting firm CRM Essentials, says the trend extends beyond tech enterprises and is growing fast. “Customers are forcing companies to make the transition faster. They're quickly adapting technology to their lifestyles, and if companies don't keep up, they're going to feel immediate pain,” says Leary, who like Schaub, envisions an inevitable narrowing at the top of the funnel.

What is likely to get bigger and wider is the so-called “second funnel,” the one driven by loyal customers and brand advocates spreading the word. “This started in the B2C world and is creeping into B2B. Build loyalty first and then build on loyalty," Schaub says. "Build a fan base, even with things that are free, and have them sell for you.” 

If the long-discussed age of the customer—in which the CMO resides as full partner in the C-suite—is to come to pass, it will be under the auspices of the DX economy, according to IDC. Its forecast envisions customer-obsessed CMOs achieving unheard-of results and causing organizational chaos. “Listen with new ears to success stories over the next few years—especially those related to content marketing and sophisticated use of data,” reads the company's analysis. “In them, you'll hear the slow erosion of the rigid old funnel.

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