Thought Leadership

Investing in Path-to-Purchase Research to Maintain Loyal Customers During Inflationary Times

September 12, 2022
Author: Dyna Boen
Investing in Path-to-Purchase Research to Maintain Loyal Customers During Inflationary Times

Why Is It Harder to Justify Marketing Spend on Upper-Funnel Metrics When You Know It’s What You Need to Win More Customers?

Our experience doing path-to-purchase research tells us that the top of the funnel is where you need to focus if you want to win new customers, as illustrated by the high percentage of consumers who are Pre-selectors—buyers who aren’t shopping because they’ve already determined which brand or provider they want before the need to purchase arose. Investing in brand marketing to drive awareness and consideration should seemingly take a higher priority over performance marketing, yet this is rarely the case. Performance marketing has been winning the majority share of marketing dollars because lower-funnel metrics are easier to measure. Purchase intent and conversion are literally measured at scale because it’s easier to quantify clicks and taps that can show the path to purchase from a Facebook advertisement to adding something to your shopping cart and ultimately purchasing it online. This is called attribution—if you can attribute a purchase directly to an advertisement, you will spend more dollars directly with that advertiser. However, it’s not as easy to measure brand marketing from linear TV, magazine ads, billboards and the like—it’s simply a lot harder to measure ROI on advertising that’s designed to grow the top of the funnel.

What Trade-offs Do Consumers Make in an Inflationary Market, and How Does This Impact the Pre-selector, Validator and True Shopper Continuum?

In many markets, half or more of consumers are Pre-selectors. Another portion are Validators—these are essentially Pre-selectors who are comparison shopping to validate their choice. Only a small share makes up True Shoppers—customers who are evaluating all of their options after having identified a need. We have been studying consumer behavior and the path to purchase in our proprietary framework since 2016 across different industries, products and services. And, in recent years, we have noticed that the percentage of Pre-selectors is climbing.

The Real Profile of Would-Be Customers

During economic uncertainty, brand preference gets shaken up. We are seeing this now with record-high inflation, record-low consumer confidence and supply chain issues. There’s a correlation between inflation and consumers trading down—meaning consumers will suddenly give up premium brands and trade down for store brands to save money. When this happens, there is a great ROI on brand marketing and a greater need for awareness and consideration to sustain the brand during hard economic times. Barriers to your category and product will always exist, but brand marketing will help you to continue to invest in engaging the consumers who have traditionally been the most loyal to your brand.

What Does This Mean for How You Spend Your Marketing Dollars and Where to Focus Them in the Funnel?

This approach may be even more important for consumer goods and retail brands that are premium in a relatively inexpensive category such as coffee or makeup. Compared with a car, premium coffee beverages and designer lipstick are significantly less expensive. You may put off a new car purchase during inflation but splurge on a lipstick. I talked to a researcher from the beauty category about this, and she called it “the red lipstick effect.” Apparently, there is also a correlation between inflation and an increase in lipstick purchases. The point is, premium brands in relatively inexpensive categories have an opportunity to invest in brand marketing to combat being traded down to a store brand lipstick. Don’t let your brand get traded down.

Brand marketing firms up the Pre-selectors, preserves their loyalty to your brand, and prevents them from becoming True Shoppers during times of inflation.

Capitalizing on the Top of the Funnel

The top of the funnel is a complex place to compete. It’s a swirling mess of perceptions, biases and misconceptions about your brand, your offering and your competitors. But the marketing teams that are willing to explore that turf stand to gain big benefits. The trend toward preselection and shorter purchase journeys may be good for buyers, but it creates a world where it’s harder for marketers to make gains in their customer growth strategy. The true battle is to win over as many Pre-selectors as possible.

For more information, 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

Dyna Boen
Dyna Boen
Managing Director, Consumer Goods & Retail and Telecom

Dyna is the managing director of the Consumer Goods & Retail and Telecommunications practices at Escalent. She has a propensity for action and is on a quest to advise and inspire insights leaders across the world. Over the course of her career, Dyna has been on the executive team of multiple venture-/private-equity-backed start-ups, including two that she co-founded. On this journey, she’s experienced an IPO, scaled a company, and been through two acquisitions. She also co-founded the WIRexec Leadership Summit to promote collaboration among other female executives in her industry. Above and beyond, Dyna believes in diversity and inclusion as well as providing mentorship to young women. Dyna and her partner live in Northern California. They love to mountain bike, ski and do yoga when they’re not busy sorting drama between their two teenage girls, teenage boy exchange student, and rambunctious Frenchie named Matcha.