The evolution of consumer behavior in the digital age
By: Bill Su
Tags: Business, Marketing, Digital Marketing, Startup, Critical Thinking

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” -Bill Gates

One of the best examples of how we both overestimate and underestimate changes in the future is the evolution of consumer behavior throughout this century.

Take a minute and imagine the world we were in 10 years ago (it’s hard to believe 2007 was 10 years ago). Facebook was still competing with MySpace for traffic, Amazon was primarily known for selling books, and the iPhone was just released.

Back in those days, the way we shopped for products was drastically different from the way we shop today. Most of us still trusted brick-and-mortar stores, we didn’t have price comparison services, and we were at the mercy of large corporations for discounts.

Remember a time before Netflix and iTunes, when we used to rent VHR tapes from Blockbusters? Good times. Video via The Onion.

How did we go from that “primitive” world of shopping to the consumer experience we have today in the digital age? More importantly, where are we going?

That will be the topic of this article.

Today, we will examine three primary paradigm shifts in the marketing world in the last 10 years due to the emergence of digital technologies and platforms such as Facebook, Amazon, and smartphones.

More specifically, we will talk about how, in just 10 years, we went from a linear, retail-focused model (the “first moment of truth”), to today’s iterative, digital-centric model of customer behavior (the “accelerated customer decision journey”).

But the goal of this article is not merely to explore the history of marketing frameworks. It’s also to project the future of marketing and consumer behavior. Based on the three paradigm shifts I mentioned, we will take a glimpse into the next decade to see how we, as business owners, can adapt to this new and ever-shifting world.

Paradigm 1: First Moment of Truth

Imagine yourself as a customer in the year 2005. You just walked into a grocery store to buy a bottle of shampoo.

You look down the aisle and see over 10 shampoos of different brands and types, and you need to make a decision on which one to purchase.

You may consider several factors when making this decision — the design of the label, the position of that shampoo on the shelf, and the detailed explanation on the label.

The decision process you are going through right now is what marketers at P&G call the “First Moment of Truth.”

Coined in 2005, the “Moment of Truth” model is one of the most celebrated marketing frameworks because it so accurately captures the customer’s decision process when buying a product (First Moment), experiencing a product (Second Moment of Truth), and eventually becoming loyal to the brand.

You can see an overview of these “moments” in this graphic:

As the shampoo story illustrates, the original “Moment of Truth” model does not incorporate digital technologies or the internet into customers’ shopping behavior.

For the purpose of this article, it serves as a starting point.

Now let’s add digital to the mix.

Paradigm 2: Zero Moment of Truth + Customer Decision Journey

Let’s go back to the shampoo story again, but in the year 2011.

Now, as a customer, you have sufficient access to smartphones and the internet to go beyond the shelf when evaluating the product.

In fact, you might not be at the physical store at all since ecommerce stores like Amazon and Walmart.com have also become significantly more popular, serving as viable alternatives to the physical retail store.

Therefore, when you need something like a shampoo, you are unlikely to go directly to the store to purchase, but rather go online to search something like “the best shampoo in the world” — and that’s the Zero Moment of Truth.

Coined by Google in 2011 (the entire ebook is linked below), the Zero Moment of Truth (ZMOT) describes how digital channels such as social media and search influence the customer decision journey.

The significance of ZMOT is that it is perhaps the first marketing framework that emphasized the importance of digital channels as a critical part of the customer decision journey. This encouraged companies to start considering “buzzwords” such as SEO and SEM (search engine marketing).

Whereas ZMOT signaled a turning point of the digital age in marketing, a new model popularized by McKinsey in 2009 gave marketers an even more up-to-date way to think about the new, iterative customer journey created by new technologies.

Under the traditional marketing mindset, customers behave in a funnel. They start by becoming aware of the product and brand. Then, they eventually go through several steps to purchase a product and become loyal customers.

In each of the stages, customers may “drop off” in the funnel. The marketer’s job here is to prevent these drop-offs by optimizing their messaging in each step of the funnel.

However, with an enormous amount of decision power and information unlocked by smartphones and the internet, customers no longer interact with companies in the linear manner described above.

Instead, the modern customer’s decision process is much more iterative. Customers today hop between different stages of the funnel between multiple companies, thanks to the power granted by the internet. Their decision journey looks closer to something like this:

From trigger, to initial consideration set, to active evaulation, to moment of purchase. Then we do it all again in the ongoing postpurchase experience and loyalty loop. Image via McKinsey.

The significance of this new McKinsey model is that it no longer views the customer’s journey as their interaction with one individual company.

Instead, it introduced the idea of a “consideration set”: a basket of products that customers are considering that may meet their needs.

This “consideration set” model showed companies the importance of providing their customers with enough information for them to make the purchase decision, instead of “plugging the funnels.”

This framework, combined with ZMOT, is the most popular marketing framework of this decade. It has been evangelized by countless online courses, and used by businesses ranging from Fortune 500 companies to small ecommerce stores.

However, even these two models are being challenged by digital acceleration.

Paradigm 3: The Accelerated Loyalty Journey

One of the biggest problems of the two previous frameworks is that they are too slow.

Nowadays, customers are bombarded with thousands of pieces of information every single day over the internet, and their attention span has deteriorated rapidly.

What this means to marketers is that a customer’s evaluation cycle is significantly crunched from a stage of multiple days or hours to a matter of minutes or seconds. If your product does not convince customers to buy right now, you have lost that customer’s attention forever, and they will probably not come back no matter how much you bombard them with ads.

This simple fact led McKinsey to update their customer decision journey to an updated model, illustrated below:

From classic customer decision journey to the new “accelerated loyalty journey.” Image via McKinsey.

The significance of this new “accelerated loyalty journey” is that it doesn’t just focus on providing information to help customers evaluate the company’s products.

It also emphasizes the importance of delivering that information in the shortest amount of time to the most targeted customer segments. This allows marketers to get these customers to take immediate action and convert.

In other words, having the information is not enough. You need to push that information aggressively in front of the customers at the exact moment their needs are generated.

Enabled by advanced technologies such as machine learning and artificial intelligence, more and more companies have started to conduct this type of “hyper-speed targeting” to their audience. This marks a new age of marketing automation and acceleration.

Where are we going?

Now that we have examined the three shifts in marketing paradigms in the last 10 years, it’s time to talk about where we are going next, and what we can do as modern marketers to stay ahead of these trends.

While these shifts in marketing may seem very different, the underlying theme is the same: customers are becoming more powerful in making their own purchasing decisions.

Gone is the time when we could say, “advertise it and they will come.” Now is the time when we have to make products WITH and FOR a specific customer audience in order for them to become a loyal customer.

As the information available to customers proliferate, this trend will only accelerate in the next decade, making “customer-centric” marketing even more important for companies to succeed.

So as marketers, here are some key steps we should take to prevail in this new digital age:

Co-create our brand and product with customers: it’s time to talk to our customers face-to-face to understand what they need, what drives them, and how we can best serve them. It is time to stop hiding behind the facade of digital ads. We must develop genuine conversations and relationships with these people that we truly care about. Invest in employees that really care about your cause: the key to modern marketing is to be authentic and genuine. You cannot achieve true authenticity until everyone in your company deeply cares about what you build and believe in your values. Only by hiring these people who are aligned with your identity can you build deep connections with your customers. Invest in technology to accurately target your audiences: the only way to make sure you send the right message to the right audience at the right time is using technology. Machine learning and artificial intelligence platforms are getting cheaper and easier to use every day for non-technical marketers. Take advantage of these technologies and elevate your marketing to the next level. Experiment constantly: the great thing about digital platforms is that they are inexpensive and easy-to-use. This opens up opportunities for a large volume of testing and experimentation in your company. So leverage these new testing opportunities to figure out the best way to reach the people you want to reach.

Do you have any other ideas on what else we can do to stay ahead of the upcoming paradigm shifts in marketing? Comment below!