In the digital age, consumers are always shopping around. New research shows that hooking them early is the strongest path to growth.
The CEO of a branded apparel company was troubled and began putting some tough questions to the marketing department. The company had spent substantially on promotions and loyalty-rewards programs to drive much-needed growth based on studies showing that targeting current consumers with marketing investments offered the highest return. Yet sales results were disappointing, and an alarming number of customers were drifting away after their initial purchases. They were often going to a rival with a different marketing approach, one that deployed social media to lure shoppers to its website, where—even the chief marketing officer had to admit—creative interactions were attracting new consumers to consider the rival’s brand.
If you’re the CEO of, say, a consumer-products company—or one in banking, travel, autos, or other categories where it’s easy for your consumers to compare products—you may be finding yourself similarly perplexed, and with reason. Powerful new currents are disrupting established patterns of behavior. And consumers, including those you may have thought loyal, are considering someone else’s offerings more often than you realize. With top-line growth at the top of every CEO’s agenda, cracking the code of consumer behavior is more critical than ever.
Since 2009, McKinsey has studied the emergence of consumer decision journeys (CDJs)—the often irregular paths consumers take as they move from brand awareness through to purchase and loyalty—as a critical lever to driving top-line growth (Exhibit 1). Like the apparel company described above, many have responded to nonlinear consumer behavior by doubling down on customer-retention and loyalty programs. Selling more to consumers who are already buying seems a dependable, low-risk, and potentially quick way to boost sales growth. Recent research shows a 26 percent increase in loyalty-program memberships between 2013 and 2015.
Read the original article: mckinsey.com