Customer Adoption Model

What is it?

The Customer Adoption Model reflects how customers pass on a journey from being unaware of your products to being ardent champions.

The key aspect of this model is to quantify this journey by defining clear stages with trigger actions that mark the transition of customers from one stage to the next.

When is it useful?

The strategic adoption funnel is most useful for subscription or frequently purchased items, less so for one-off purchases. Essential in B2C it is also useful in B2B with stages marked by milestones like Requests for Proposals (RFP).

Use it in strategic analysis in order to identify the highest leverage opportunities for growing your business. Focus resources on the “bottleneck” in the funnel – where is the biggest % drop from one stage to the next? A small improvement here will make the biggest difference to sales, providing the %s in the rest of the funnel remain unchanged.

How do you do the analysis?

We can create a snapshot of the customer adoption funnel:

  • Start with an estimate of the full target market that your brand wants to serve
  • Estimate how many to target market are aware of your brand through a market survey. Aided awareness is usually the most valid metric, since unaided awareness is only a high % for the biggest brands. If awareness is low, it can be built through low impact, high reach marketing activities like Billboard ads or TV advertising
  • Similarly, U & A surveys will also capture interest %. If interest is low, it can be built through improved messages that connect the product benefits to the target customer needs better ¬†
  • Next is the % of the aware target market that have trialed the product. If this is low, it can be targeted through marketing activities like sampling, introductory offers and call-to-action promotions
  • Some customers who trial your product reject it – a separate category of “rejectors”. Marketing activity aimed at rejectors is rarely cost effective
  • Set a frequency bar to define regular ¬†customers – for example, customers who have purchased within the last 3 months. Some companies divide between light and heavy users – it is only at this point in the funnel that sales volumes become meaningful. If trials are not converting to regular use, we probably have a product problem that must be solved with product development not marketing communications
  • It is critical to note the % of regular users that lapse to become “ex-customers” each year. , . This % “churn rate” has a huge impact of the Lifetime Customer Value of each regular user. Churn rates can be reduced through by habits and switching costs though effective loyalty programmes
  • The final category is “adorer”. With the rise of social media, these customers are more and more valuable – they do not just use your brand, they proactively recruit other customers through their contributions. If this is low, targeted VIP programmes can design exclusive experiences to turn regular users into champions for our brand. The influence of adorers can be amplified with careful social media investments.

Critical for this analysis is to have clear metrics that define transitions between each stage.

The snapshot analysis is valuable for identifying potential high leverage wins. Even more valuable is a dynamic analysis to identify how these % change from one year to the next, and correlate this to the marketing investment against each stage. Effectiveness of marketing activities can be evaluated using their relative cost to move customers from one stage to the next.