REVIEW: FLIP THE FUNNEL: Joseph Jaffe (John Wiley & Sons)

I’ve read Joseph Jaffe’s book across multiple air journeys, nationally and internationally. I agreed with the principles described and saw parallels with excellent services businesses over the past few years. However, the implications didn’t quite strike me in the gut until I realised – while writing this on board an aircraft – that the journeys I had taken with this book had also been with just one airline.

My loyalty to this airline is not because of the mileage card I hold, although their mileage programme is certainly among the best in the world. It is not because they were the cheapest or the most on-time, though they compete favourably with other comparable airlines.

My loyalty to them is because of what they did during the Mumbai floods in July 2005. Those who remember the chaos, through personal experience or through media, wouldn’t blame airline staff for abandoning their counters, and leaving the airport to try and reach home as early as they could. Certainly most of them must have felt helpless in the face of increasingly desperate passengers who couldn’t expect to depart any time soon. Jet Airways stood out as being the only one in Mumbai’s Terminal 1-B whose team felt responsible enough to stay back at the airport to be available to the passengers. Not only did they ensure that the passengers stuck in the terminal were safe, but that all waiting passengers got three meals a day! Whether or not they were flying with Jet Airways.

Now, in telling you about incident, I have closed the loop and given you a living example of the “flipped funnel” that Jaffe describes in the book.

The normal marketing funnel is described by the process Awareness, Interest, Desire and Action (or “AIDA”) which underlies the spray-and-pray approach of traditional marketing. The result of AIDA is that a lot of customers become aware of a business, brand or product. Some are interested enough to seek out the product. However the number who move on to the next stage of actually expressing desire to buy is lower, and those who actually buy are fewer still, as amply demonstrated by carts being abandoned before actually checking out.

Jaffe points out that the AIDA principle was created in times of abundant growth in the US, but is a suicidal funnel to fall into when resources are scarce. It is lopsided, with more money being spent on customers who will not buy. It is linear and does not capture the complexity of buying behaviour. It is open and incomplete because it only handles potential customers up to the point where they become actual customers, but does nothing with them thereafter. AIDA also inherently assumes customer churn, hence the opening focus on creating awareness among potentially new customers.

The alternative principles Jaffe describes are simple: getting more customers to buy from us and more often (repeat purchases), to spend increasing amounts with us (loyalty), and finally, to recommend us to their friends and associates (referrals). However, to do this requires dramatically different thinking from AIDA spray-and-pray. Jaffe’s alternative model – ADIA (Acknowledgment, Dialogue, Incentivisation and Activation) – focuses on customers more than prospects.

Acknowledging customers itself is such a major stumbling block for so many companies, such as the retailer whose front-line staff would prefer to fold and put away garments than meeting the eyes of the customer who has walked into the store. In some cases it may be about using technology effectively rather than as a barrier. When the taxi company can recognise the number you are calling from and close your order in less than 120 seconds, why does the telephone company that issued that number make you jump through burning hoops for 5-10 minutes before they will allow you to request a duplicate bill?

That acknowledgement should lead to an on-going dialogue, before, through and well after the purchase is done. This would be supported by constant incentives for the customer to buy more from you. It is not about having a loyalty programme, as Jaffe quotes studies that demonstrate that loyalty programmes alone don’t produce loyalty; in fact there are enough businesses that do not run loyalty schemes but have what can only be called fan followings.

The final link in that funnel is building that community of evangelist enthusiasts who will carry your brand message farther and far more effectively than any traditional form of marketing could. Religious organisations have known this for thousands of years – it is high time that businesses and other organisations recognised the power of the community as well.

Jaffe acknowledges that Seth Godin actually came up with the term “flipping the funnel” over 3 years ago, when he released the e-book of that name (available on sethgodin.typepad.com) primarily about using social media effectively. Jaffe, to his credit, has applied the principles more fully across the marketing and customer service process.

Jaffe recently sold his business, crayon, but has kept his title “Chief Interruptor” at the acquiring company. If you want to make your marketing really pay, you’ll find it worthwhile letting “Flip the Funnel” interrupt your normal marketing thought-process.

(This review was written for Businessworld.)

Diwakar Kumar

IndiaRetailing, June 2, 2010

Customers visiting a store are looking for either the width of merchandise – the variety of product lines offered – or the depth – the number of each item or particular style of a product on offer. For most department and brand stores, a superior merchandise width generates better sales results, especially if the target audience is trendy or style conscious.

In a bid to satisfy the discerning customers, large format retailers generally focus on the width of merchandise. And for them it becomes mandatory to give the ‘feel of everything’ in a store; small format retailers, on the other hand, need to be little more strategist and know how to utilise the shelf area.

But, what is more important – width or depth?

In a poll question asked by IndiaRetailing, ‘Retailers need to focus on width – rather than depth – of merchandise to attract new customers’, 79.33 per cent of the audience supported ‘width’, 17.33 per cent went with ‘depth’, while the remaining 3.33 per cent preferred to remain neutral.

Devangshu Dutta, chief executive, Third Eyesight, says, “Depth and width are two facets of ‘variety’. For a retailer, whether depth is more important than width or vice versa depends on the retailer’s format and business model. For most large-format stores, it is certainly important to give the customer the feeling of ‘everything is available under one roof’ and initially width rather than depth is more important. However, even for large-formats, to avoid comparisons of ‘sameness’ with other large-format competitors, depth begins to become important once the initial market presence has been established.”

Dutta emphasises, “More importantly, the merchandise depth – varieties within a product category – enables the retailer to address different segments within the customer base. For a speciality retailer and its customers, clearly depth is more critical.”

“Customers are increasingly looking for novelty in product experience and this can only come through width rather than depth. One has to, however, ensure that the new offerings are relevant, otherwise this could result in increasing the working capital and possible write-offs,” thinks Viney Singh, MD, Max Hypermarket India.

Gopalakrishnan Sankar, chief executive, Reliance Footprint, says retailers need to focus on the width of collection (as well as the depth) because today discerning customers require choice in terms of brands, designs and price points. “This will cater to the varying tastes of different customer segments and also different moods of the same customer,” says Sankar.

“Depth-oriented merchandising strategy works better for specialised stores. Most apparel and FMCG-buying decisions happen within three feet from the merchandise. By that information, the visual merchandising can trigger an impulsive reaction by how the merchandise is presented – both in terms of style and value. Value comes with abundance: displaying merchandise in larger quantities reduces the perceived value and hence would be more attractive to the value-centric consumer and vice-versa,” observes Ashmit S Alag, director, Academy of Applied Arts.

“Width-based VM strategy focuses on vignette settings, where coordinated merchandise is displayed together to show how things can go together or match in design or utility. While this display technique enables the consumer to gauge the ‘width’, for the retailer it leads to more number of SKUs sold per transaction,” concludes Alag.

So, clearly, as experts point out, one doesn’t take precedence over the other. Both width and depth of merchandise have their roles to play and which one to focus on depends solely on the retailer’s format and business model.