Page 213 - Electronic Commerce

Chapter 4

strategies to determine which of the strategies is the most effective at attracting and
retaining customers. The funnel model of customer acquisition is used as a conceptual
tool to understand the overall nature of a marketing strategy, but it also provides a clear
structure for evaluating specific strategy elements.
The funnel model is very similar to the customer life-cycle model you learned about
188 earlier in this chapter; however, the funnel model is less abstract and does a better job of
showing the effectiveness of two or more specific strategies. The funnel is a good analogy
for the operation of a marketing strategy because almost every marketing strategy starts
with a large number of prospects and converts fewer and fewer of those prospects into
serious prospects, customers, and finally, loyal customers. One example of a funnel model
appears in Figure 4-6.

Conversion of
Search for and Evaluate shoppers into
gather information alternatives loyal supporters
Needs about alternative and make of product, service,
identification products or services selections Purchase and brand

Learning

Cengage
500,000 ads 10,000 ad 900 Web site 500 Web site 80 purchasers
are shown on viewers become visitors become shoppers become loyal,
Web pages Web site visitors shoppers complete repeat customers 2015
their purchases ©

FIGURE 4-6 Funnel model of customer acquisition
In this funnel model, repeat customers are on the right side of the figure. The top of the
figure explains the increasing level of commitment that occurs in each step. Using market
research and past history as a guide, the marketing manager develops the numbers that
show the effectiveness of the planned strategy. The wider the right end of the funnel, the
better the strategy—that is, the more prospects are converted into loyal customers. The
funnel model can be used in planning marketing strategies by comparing the projected
results shown in the diagram with the results for alternative strategies shown in separate
diagrams. The funnel model can also be used to show results that can then be compared
with the costs of running the marketing campaign. Either way, the model gives marketing
managers a tool for conceptualizing and evaluating alternative strategies.

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