Thought Leadership

How Tech Ecosystems Dictate the Purchase Journey and Block Customer Growth Strategies

September 12, 2022
Author: Paul Hartley
How Tech Ecosystems Dictate the Purchase Journey and Block Customer Growth Strategies

In the US, just 25% of consumers are True Shoppers—those who evaluate all options before they make a purchase. Within the technology sector, that figure is far lower due to the tech ecosystems that create purchase journey barriers by ensuring 90%+ of consumers are Pre-selectors—those who have already decided what they will buy before they need to make a purchase.

The Path to Purchase Includes Fewer True Shoppers Than You Think

Years of conducting path-to-purchase research and analyses highlights the strategic importance of emphasizing upper-funnel brand metrics such as awareness and consideration in the consumer purchase journey. We have found that marketers often over-index their customer growth effort on the conversion portion of the brand funnel, yet only one-quarter of would-be customers ever reach this point—way fewer than you might have thought.

This is because 60% are Pre-selectors, meaning they already have a chosen brand before their need even arises, and a further 15% are Validators, meaning they are likely to do some comparison shopping but only to verify the brand choice they have already made.

In reality, only the remaining 25% of consumers are True Shoppers actively evaluating their options with an open mind when a need arises. This is particularly an issue for categories where the decision to buy:

  • is considered a significant spend or decision
  • is often made based on brand trust or loyalty
  • is made based on high awareness of the options

The Tech Sector Has a Fourth Barrier to Customer Growth

For the technology sector, home of some of the largest and most valuable global brands, each of these factors applies to the purchase decision process almost all the time. Just think of the last item of technology you purchased. Chances are it was a significant spend and/or a complex decision that you made with high awareness of your brand options and with a healthy dose of brand loyalty.

Right away we know that these factors play a major role in the consumer decision-making process and are particularly present in the technology sector. But there is also a fourth factor that is almost unique to the sector: technology ecosystems.

We are all very accustomed to technology ecosystems. If you’re a Gen Xer like me, you grew up knowing that your dad needed to get a VHS and not a Betamax machine if you ever hoped to rent a movie, and you couldn’t swap PlayStation games with that geeky friend that got the N64 for its “superior graphics.” These largely isolated, incompatible tech ecosystems are still prevalent today—just think of iOS and Android—and they represent a fourth, and perhaps the most significant, barrier to there being meaningful numbers of True Shoppers in the technology sector.

Indeed, while True Shoppers may represent 25% of purchasers in sectors such as retail, automotive or financial services, it is very likely that they are just a single-digit percentage in tech. Consider a few current day examples as proof of this:

  • Smartphone purchases are a virtual lock.
    The US smartphone market is dominated by Apple, with approximately 55% of smartphone users having an iPhone. Samsung follows with about a 30% share and the remainder of the market is made up of smaller Android brands such as LG, Motorola and Pixel. But this market is largely a lock: Escalent’s experience and data show that 93% of current iPhone owners fully intend for their next phone to be an iPhone (i.e., they are Pre-selectors), with just 5% contemplating evaluating competing Android options (i.e., the True Shoppers).Samsung users are only marginally more flexible: 84% are Pre-selectors who intend to replace their current Samsung device with another one, but the rest are largely Validators rather than True Shoppers (at least from an Apple perspective) because the vast majority are comparing to alternative Android devices, and if they do switch, it’s within the same ecosystem—just a different OEM. It’s clear then that in the smartphone market, the iOS and Android ecosystems have such captive users that they have reduced the percentage of True Shoppers to low single digits. Don’t just take our word for it, PC Magazine reported on this very topic with very similar numbers.
  • For home printers, it’s all about the ink.
    Think it’s just smartphones? Not even close. We see the same high percentages of Pre-selectors in other tech purchases such a laptops or tablets where the OS creates the ecosystem and the artificial barrier to conversion. Sometimes the ecosystems aren’t that obvious. Take the mundane home inkjet printer, for example. At face value, the big four OEMs in the space (HP, Canon, Brother and Epson) offer remarkably similar products that should be easy to switch between, so the dominant conversion factors should be things such as device features, print quality or price. But they are not.Ink cartridges are the expensive part of home printing and are incompatible across brands, thereby creating a virtual ecosystem. The OEMs know this, which is why they push their loyalty programs (e.g., HP Instant Ink) so heavily to lock customers in. So, if you were to replace a printer or buy a new one tomorrow, you are very likely to stay brand loyal so that you get one that is compatible with the cartridges you have in stock at home or are subscribed to. Small wonder then that market share hasn’t varied by more than a couple of percentage points for any of the big four OEMs in the past five years.
  • Smart homes? Also tied up.
    A more recent emerging area of tech has been smart homes: The devices that drive our media consumption, intelligently heat and cool our homes, turn the lights on and off, or answer the door. Here, too, we have ecosystems that are driving consumer behavior, dominated by Amazon, Google and Apple.Amazon was the early leader with Alexa. Alexa quickly became pervasive in the majority of American homes via smart TVs and speakers, driven forward by the enduring appeal of Amazon Prime content. It was no coincidence then that Ring led the smart doorbell market, being an Amazon product that integrated with the Alexa ecosystem. As Google plays catch-up (and it is catching up), it is leveraging its ecosystem to create cross-product stickiness, bringing together Android and Nest.

Nobody wants multiple devices and services that can’t integrate or communicate with each other or to have to run their smart home off 10 different apps. The appeal of a single physical hub and a single app is huge from both a convenience and aesthetic perspective. So, it is safe to predict that this area of tech is also coalescing into an ecosystem-driven market where True Shoppers are increasingly rare and Pre-selectors dominate.

Look to the Top of the Funnel for Customer Growth

For tech marketers, it can be considerably dispiriting to know that you are fighting for such a small slice of the pie. But there are ways to create a greater number of genuine True Shoppers. The Escalent path-to-purchase guide urges marketers to look up-funnel to get ahead of the decision-making process to attract the effective awareness and true consideration of Pre-selectors and Validators—which is much harder to do, but it has the potential to provide a much higher benefit.

What does this mean in reality? Maybe it’s a shift from the conversion battle over who’s got the best smartphone camera to creating upper-funnel effective awareness as to how easy it is to switch between iOS and Android. Or maybe it’s overcoming artificial ecosystems such as the ink cartridge dilemma by putting in place trade-in programs that remove friction and risk.

Our award-winning path-to-purchase approach gets you there, helping to highlight the length of the customer journey, the trigger groups and how to win with them, as well as bridging the larger-than-expected leap from awareness to consideration. This is critical in any industry sector, but none more so that the technology sector, where overcoming the ecosystem barriers to grow the percentage of True Shoppers is critical to growth, even survival.

To find out more about understanding your consumers’ new path to purchase, download Want to Win More? Your guide to boosting customer growth using our award-winning path-to-purchase approach.

Download Want to Win More? Your guide to boosting customer growth using our award-winning path-to-purchase approach

Paul Hartley
Paul Hartley
Executive Vice President, Technology

Paul Hartley is executive vice president of the Technology practice at Escalent. He has more than 20 years of experience in the global tech and telecom sectors, with the last decade focused on the US market, where he has led large research projects with clients such as AT&T, T-Mobile, Google, Intel, Sprint, Comcast, Charter, Time Warner Cable, CenturyLink, Cisco, Oracle and IBM. Over the course of his career, Paul has built up deep subject matter expertise in a number of areas, including wireless and wireline telecom, cloud computing, database, mobile development and virtual reality. He is particularly dedicated to ensuring that his team delivers the very highest levels of service to its clients, complete with actionable research insights that allow them to truly ‘move the needle’ when it comes to growing and improving their businesses. Paul lives in Atlanta and teases that his hobby is collecting children—he currently devotes all of his free time to five of them (20, 8, 7, 6 and 5).