Marketing Funnel vs. Loyalty Loop: Comparison & Explanation

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

The well-known marketing funnel is being challenged by a new way of thinking called a loyalty loop. In this lesson, you'll learn more about each method and how they compare for business and marketing practices.

Building Loyalty

Imagine you own a growing e-commerce business. You've noticed that customers visit your website, make a purchase and then frequently don't return. You scratch your head, wondering how to inspire a level of loyalty in your customers that keeps them coming back, as well as singing your praises to their friends, family and colleagues.

Building relationships and providing great customer service can help build loyalty to your brand.
Building relationships and providing great customer service can help build loyalty to your brand.

Maybe you've been focusing solely on the customer's journey to when they hit 'buy' and their order is processed. A new type of process has been introduced to business owners and marketing professionals that puts the emphasis on the buyer's journey from the purchase itself to points afterward where you build a relationship with the customer, and they advocate for your brand on your behalf.

Let's have a look at the older method of a buyer's journey and see what the new method could do to help turn your e-commerce business around.

The Funnel and the Loop

For many years, the marketing and sales crowd has advertised and sold to consumers based on a funnel approach. The marketing funnel represents the different steps consumers go through during the buying journey. At the top, or widest point, of the funnel is where a buyer begins their journey with awareness of your product. The next step, consideration, is when they are considering buying your product and possibly weighing alternatives from competitors. Decision is when a consumer chooses to make a purchase, followed by the smallest point of the funnel, purchase. The funnel in action might look like this:

1. Sally visits your online store.

2. Sally views a product, and checks out a similar product on another website.

3. Sally returns to your online store and adds the product to her cart.

4. Sally completes her purchase.

The funnel theory has helped guide sales and marketing initiatives that tie in to various points of the funnel. For example, marketers might develop content marketing pieces or social media campaigns around a buyer in the consideration stage, and how-to videos and product demonstrations during the decision phase. These types of strategies can help educate, inform and work to solidify a buyer's decision, enhance their awareness and, ultimately, convert them to a sale.

The consulting firm, McKinsey and Company, has popularized another way of looking at a buyer's journey, called the loyalty loop. The loop is based on the notion that brands can not only react to customers as they make buying decisions, but they can also help shape the buying journey. It's a more proactive approach compared to the funnel's reactive approach, helping to guide consumers along as opposed to trying to influence them during a particular stage.

The model they developed compresses the buyer's journey from this approach:

Awareness > Consideration > Evaluation > Purchase

to

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