What Is the Customer Journey?
The customer journey is the sum of the touchpoints that customers have with a brand before a conversion occurs. Each customer journey is, therefore, unique – especially today, when customers interact with brands through a large variety of channels.
Conversion Is Every Customer Journey’s Goal
While the purchase of a product or service is the macro conversion of any customer journey, there are many other interactions with the brand along the way. There are two basic types of these so-called micro conversions:
- Process milestones are interactions that directly contribute to the macro conversion (the purchase), such as visiting a product page or adding a product to the shopping cart.
- Secondary actions are micro conversions that have no direct link to product purchases, but which reveal an interest or certain attitude towards the brand. These can be, for example, content consumption or product reviews.
Micro conversions are customer journey milestones, even if they don’t always have a direct impact on the buying process. In principle, at least one micro conversion can be assigned to each touchpoint. Customer-centric design for these touchpoints offers customers a fluid buying experience and increases the probability of macro conversions. In addition to technical factors, it is crucial for a good user experience that information is accessible at the right moment and in the right context, and that messages and offers respond to individual customer needs.
The Customer Journey Compared to the Customer Lifecycle
A customer lifecycle covers someone’s time as a customer from start to finish and includes a multitude of possible customer journeys. A lifecycle is divided into different phases that reflect the relationship between customer and brand. One such division could be a split into the phases engagement, retention, recovery, and advocacy. Each phase includes both specific and general touchpoints, as well as campaigns that can be run in a customer journey. At the beginning of the customer lifecycle, for example, there can be welcome campaigns that are part of a customer journey after the initial purchase. As another example, recovery campaigns à la “We miss you!” take place in the recovery phase. Other campaigns can be represented in different phases – for example, the purchase of an offer from a general newsletter, as long as the contents are not played out here in a phase-specific manner.
Customer Journeys Are Not Campaigns
While the customer lifecycle represents a superordinate framework, a campaign is usually more detailed than a customer journey. A customer journey may be completed with only one campaign, but it can also extend over several campaigns and touchpoints.
How Has the Customer Journey Evolved?
Through an increase in digital touchpoints, the customer journey has developed from a vague concept to a measurable one that can be modeled. Three major developments can be identified:
- Increasing digitalization has produced a multitude of digital and therefore measurable channels and touchpoints.
- In today’s platform economy, direct customer access and expertise in dealing with existing customer data are cardinal factors for marketers. They counteract a shift in margins towards platforms such as Amazon and Facebook and enable differentiation on these platforms.
- Higher customer expectations require customer-centric marketing and CRM.
To build and maintain direct customer access, companies must activate their proprietary existing customer data for customer-centric and personalized marketing. The goal is to deliver relevant and personalized messages at the right time and through the best channel to positively influence the overall journey’s ROI.
Customer Journey Models
There are different customer journey models. Customer journeys are traditionally thought of through the lens of the marketing funnel. The best-known funnel is the AIDA model and its numerous derivatives. However, despite the AIDA funnel still finding widespread usage after more than a hundred years and despite its practical benefits, it does not necessarily reflect the modern customer journey.
Since many business models depend on repeat purchases and thus require strong customer loyalty to be profitable in the long term, the question arises as to what happens after the conversion. Marketers have two basic options
- Loyalty: Customers remain loyal after their purchase and acquisition logic is replaced with CRM measures.
- Re-acquisition: there is not sufficient brand loyalty following a purchase, there is an increased probability of churn. Existing customers have to be re-acquired as they are again considering other providers and products for their next purchase. This is enhanced above all by the visibility of the competition in the context of the platforms and their advertising opportunities.
McKinsey’s Consumer Decision Journey
McKinsey’s suggests a framework for the Consumer Decision Journey that takes these factors into account:
- Initial Consideration Set: Consumers consider an initial set of brands or products. This is done on the basis of brand perception and product visibility.
- Active Evaluation: Consumers add or eliminate brands from the Consideration Set while informing themselves and evaluating what they want and need.
- Moment of Purchase: Consumers decide on a brand or a product when buying.
- Postpurchase Experience: After buying a product or service, customers build expectations based on their experience of the product or service, which then influences their next purchase decision.
In this framework, the immediate goal is conversion, but there is a second and more important goal: Shortening the decision journey by the loyalty loop. The primary goal is therefore to strengthen brand loyalty after the purchase has been made to such an extent that, ideally, no other brands will be considered for the next purchase decision.
“When consumers reach a decision at the moment of purchase, the marketer’s work has just begun: the postpurchase experience shapes their opinion for every subsequent decision in the category, so the journey is an ongoing cycle. More than 60 percent of consumers of facial skin care products, for example, go online to conduct further research after the purchase — a touch point unimaginable when the funnel was conceived.” – McKinsey
The generation of the loyalty loop, i.e. of strong customer loyalty, is much more sustainable and profitable than re-acquisition of existing customers. That’s firstly because CRM methods are generally more cost-efficient than re-acquisition of existing customers and secondly because existing customers buy more and more often than new customers.
According to McKinsey, two types of loyal customers can be identified: Active and passive. Active loyal customers actively recommend the brand or product, while passive ones stay with a brand merely out of convenience. This makes the latter receptive to the competition and they have a higher churn probability. However, passive loyal customers have potential, as they can become active brand advocates through customer-centric measures.
Modeling the Customer Journey
In order to win in the decision-journey and turn customers into actively loyal customers, companies must respond to individual customer expectations and needs. Those who know their customers best and who can run personalized campaigns have a clear competitive advantage. Activating first-party data to reach customers consistently with relevant messages across all channels is essential, especially in the post-purchase phase. But even when customers need to be re-acquired, first-party data is helpful, as existing customers can be targeted on platforms and even statistically similar profiles can be addressed for new customer acquisition.
One possible approach when planning and implementing customer journeys is to identify touchpoints and conversion targets or to map the corresponding customer journeys based on the phases of the customer lifecycle. Ideally, the corresponding customer journeys should be covered for all phases of the customer life cycle. This does not mean, however, that a comprehensive customer journey over the entire customer life cycle can be mapped out. Trying to map everything in a customer journey will cause more problems than it will help. Instead, a set of customer journeys with a defined macro conversion for each makes more practical sense.
Marketers should answer the following questions for each customer lifecycle phase:
- Which touchpoints are there? And for each touchpoint:
- What is the conversion rate?
- What are the customers’ needs and expectations?
- To what extent can and should you personalize?
- To what extent can and should you automate?
- What content and resources should you provide?
- What data do you need to collect?
Whether upper or lower funnel, every point of contact between brands and their customers allows customer data to be obtained, although it will vary in significance and benefit. The effect of out-of-home or TV advertising can often only be measured by a relative uplift and can at best be attributed to individual customers through corresponding surveys such as “How did you hear about us?” Touchpoints via third-party providers, such as in the case of paid ads, immediately provide more insights, however without logins and links to permanent customer IDs it is not possible to draw conclusions that go beyond a potential customer’s interests and intentions. A more detailed context is missing and users remain largely anonymous. It’s a different story with your own channels and touchpoints such as email, push notifications, or the login area of a website or online shop. Here, proprietary first-party data can be generated and used to provide context for your customers’ online behavior. Through profile data, purchase data, and behavioral data, individual customers’ characteristics can be leveraged with precision in customer communication.
Data, Personalization, and Automation
To address individual customer needs and ensure consistent customer journeys across all touchpoints and channels, marketers require centralized and unified customer data and a real-time data infrastructure. A customer data platform (CDP) fulfills these requirements, enabling scalable cross-channel personalization. This can cover the following dimensions, whereby cost and benefit must be weighed against each other:
- Consideration of individual preferences regarding channel, frequency, and timing
- Recommendations based on past behavior
- Personalized content and advertising material design
Both historical customer data and real-time data on current user behavior must be included. Automated campaigns that can be triggered by current user activities ensure the scalability of the personalized approach.
Connecting Touchpoints to Customer Journeys
Customer journey maps can be created to display all your identified touchpoints in the context of possible customer journeys. A customer journey map is a visual representation of the touchpoints that customers can pass through during the customer journey leading up to conversion and it usually contains further dimensions that take into account, for example, customer needs or emotions.
With the help of such a map, missing or expandable touchpoints can be identified and optimized. The process usually starts with the definition of typical personas and behavioral patterns in order to understand exemplary customer journeys and particularly to discover critical touchpoints. On this basis, potential for improvement can be systematically identified, implemented and tested.
Since the modern customer journey is generally not linear but rather contains a large number of touchpoints and channels, data-driven modeling and automation is essential for meeting individual customer behavior. Some CDP providers, therefore, provide corresponding features that allow customer journeys to be planned and personalized intuitively with a visual user interface.
Optimization of the Customer Journey
Analysis and optimization of cross-channel customer journeys is not trivial – especially since complexity increases exponentially with each additionally added channel. As a rule, it makes sense to first optimize channels and touchpoints on their own and to only then optimize their interaction. In some cases, however, it is precisely the certain synergy of different channels that brings about the desired performance improvements – so in general, there is a lot of testing to do. This can be data-based, but it’s sometimes a gut feeling or assumption that leads to the desired improvements. When testing you will ideally change only one variable to obtain a meaningful amount of data with significant results. If too many variables are changed at the same time, it is difficult to assign positive or negative effects on KPIs to the test variable. Too small data sets can falsify the results.
While engagement KPIs are often channel-specific, it is important when considering ROI to align them with the overall journey. Sophisticated, data-based attribution models can help here, but cross-channel attribution is very complex with many pitfalls and potential sources of error.
Making customer journeys customer-centric is not a trivial task, however it is a must for today’s marketers. Rising customer expectations, the increasing number of channels and devices, and the growing importance of direct customer access require data-based modeling and personalization in the customer journey. Companies that offer their users and customers positive and useful interactions and buying experiences will have a lasting positive impact on their marketing ROI and thus ensure their survival in today’s platform economy.