The rise of the multichannel route to purchase has led to a dramatic change in consumer behaviour, forcing brands to combine their existing marketing techniques into new shopper marketing strategies. Brands recognise they need to develop new shopper marketing strategies but are unsure how to define this as a separate discipline.
“Shopper marketing is about making the customer journey through the channels seamless,” says Sean Galligan, marketing director for furniture retailer Dwell. “Customers move from one channel to the other without giving it much thought. It is up to us as marketers to improve that journey.”
The key to shopper marketing is the ability to treat the customer as an individual. It is recognising that consumers may belong to a certain target group but within that, they all have very different shopper journeys, he adds.
The latest figures from a Booz & Co report estimate the value of shopper marketing in the US at $60bn (£38.2bn), but there are no equivalent figures in the UK. The Institute of Promotional Marketing is due to launch a shopper marketing committee to provide UK businesses with advice in this area.
Matt Tab, chairman and managing director of promotional marketing agency Wax Communications, explains that the agreed definition of shopper marketing is “influencing a shopper to complete the path to purchase, leveraging behavioural insights, brand equity and retailer dynamics to deliver increased sales and return on investment while building brand and relationship value”.
He adds that shopper marketing is distinct from overall consumer marketing in that “there is a different mindset when a consumer is in purchase mode rather than simply consuming advertising”.
The best staff will respond intuitively to customer need
Insight into shopper behaviour is key to successful shopper marketing, either through customer relationship management (CRM) analysis in specific brand purchases or monitoring the overall traffic of shoppers through a store. This informs how retailers design the store and position product on the shelf and directs brands in terms of packaging and point of sale promotions.
When FMCG giant Procter & Gamble noted that its Swiffer mop had high levels of awareness in the US but lower than expected sales, it used insights from WalMart shoppers to display the fully assembled product on shelf to demonstrate what it looked like. This resulted in an immediate uplift in sales.
Tracking shopper behaviour has led to a number of brands using cutting-edge technologies to examine how their customers interact with the physical retail space. Products such as the UK’s Eyetracker and B-Top in France have been used by big-name brands to analyse true customer behaviour.
However, Dwell’s Galligan suggests that it is the theory of observing the customer, rather than the opportunity to install high-tech monitoring equipment, that is most important.
“Technology is wonderful but it’s just a more complicated way of managing human interaction. A good store manager will know where shoppers go and what they look at. They notice if customers routinely avoid a certain display. They are able to react immediately – it could be something as simple as moving a sofa one metre to the left – to alter the merchandising. I can see the sense for technology in very large supermarkets but sometimes these toys can get in the way,” he warns.
Having people on the ground to observe shopper habits is vital, but so too is the data that can be gleaned from ecommerce. Buying online has provided more detailed information on customers’ individual purchasing habits, their typical path to purchase, how and why ‘dropped baskets’ occur and what promotions are most likely to turn a dropped basket into a fulfilled order.
Smartphone data has added a further layer to this insight, delivering location and time-specific insights as well as bridging the gap between digital and bricks and mortar shopping habits. Pulling this together to deliver benefits to shoppers already in the purchase mode is increasingly driving sales both on and offline.
Gap Inc has recently completed a trial with Visa around real-time customer promotions via mobile, called GapMobile4U, which was rolled out across the company’s Banana Republic and Old Navy clothing brands. Gap customers who participate in an opt-in service and are also Visa users receive money-saving discounts or promotions in real time while shopping.
The offers were sent when shoppers made Visa transactions meeting pre-determined programme criteria, such as shopping at a specified location or during a certain time period. The offers were redeemed by presenting the text message displayed on their mobile devices to the Gap cashier.
“It provided us insight into our enrolled consumers that we never had in the past, which improved the targeting of our promotional offers and the timing of communications,” says Amy Carr, director of CRM strategy at Gap Inc.
With 2012 identified as the year that near-field communication (NFC) technology will go mainstream, this may provide the impetus for brands to fully integrate shopper marketing into their multichannel strategy.
NFC tags can deliver localised marketing messages to consumers while in shopping mode such as those tested by JC Decaux on ads around the Oracle shopping mall in Reading, Berkshire. However, these are still not targeted enough to fall under the umbrella of shopper marketing.
More specific is the integration of shopper marketing into the burgeoning NFC-enabled mobile payments sector. Already active in the US, Google Wallet is looking to partner with brands to deliver targeted coupons, loyalty and marketing that integrate fully with the mobile payment mechanism.
Customers move from one channel to the other without giving it much thought
Many industry experts suggest that the mobile wallet is not a compelling enough consumer proposition without the enhanced shopper marketing element. In a 2012 study of the mobile payments market, M for Mobile identified that two-thirds of mobile owners would use a mobile payments wallet if they could integrate loyalty points, vouchers and couponing.
NFC mobile payments help the shopper marketer deliver the means, motive and opportunity to convert consideration to purchase and fully integrates the on and offline world for both product and retail brands.
Research from the US has shown that an integrated shopper marketing approach can deliver returns on investment if marketers are able to integrate CRM analysis, observational research, point of sale promotion, digital communications and one-to-one direct marketing into a meaningful proposition for the consumer when in purchasing mode.
But the UK seems to be playing catch-up with many brands admitting that no person or department is co-ordinating shopper marketing efforts. With a tough economic climate more marketers will need to construct a more cohesive shopper marketing strategy to enable them to boost sales.
Shopper marketing to me is merely the understanding of who you’re targeting and how your customers interact with and shop your brand. However it’s not really a term that can be explained instantly and the idea that it is targeting the consumer in purchasing mode is a good one.
The single most important part of successful shopper marketing has to be understanding the customer in the different segments and different channels. Being an own-brand retailer forces you to make that effort to understand your segments and what they require from a product category marketing perspective.
For us, there are three overriding segments that define how we market to our customers, not just on a product but right down to a time-of-day basis. We know that our trade customers are likely to shop first thing in the morning and look for quick service, the DIY customer is a weekend visitor and our kitchen and bathroom products require significant consideration and interactions at multiple touchpoints.
But the alternative way to understand how to target the shopper effectively is researching them by attitude and behaviour across those broad segments. Category teams have to get very close to the shoppers in their area to manage the on-shelf promotions accordingly. Simply accompanying shoppers on a buying mission is not an exact science – the customer will behave slightly differently than if they were unaccompanied – but it’s a very useful way of getting close to them. And it’s just as valid to do everything you would in-store online – tracking the customer journey and experience and doing exit surveys to understand why they eventually left without purchase.
But shopper marketing in retail comes down to the fact that the best staff and the best marketing will respond intuitively to customer need. I feel that there is nothing particularly new about shopper marketing per se. However, if it drives the various silos across customer insight and marketing to deliver a more intuitive service, targeted product line and overall seamless experience, then couching this activity under the banner of shopper marketing will deliver results.
- In the US, annual spending on shopper marketing is $50-$60bn (£31.8-38.2bn). Ninety five per cent of grocery brands with a $5bn-plus (£3.18bn) annual revenue carry out shopper marketing activity.
- Vouchers/coupons have experienced the biggest increase in consumer use in 2011/12 – 53 per cent of shoppers use vouchers or coupons now – an increase of 6 per cent since 2009.
- Growing in popularity are loyalty card offers, link saves such as meal deals and added value promotions like free gifts or competitions – all up 3 per cent on 2009 scores.
- 63 per cent of consumers would also welcome targeted vouchers and promotions sent direct to their mobile wallet.
- Sources: M for Mobile, Shoppercentric, Booz & Co and Grocery Manufacturers Association
The IPM defines shopper marketing as: Understanding how one’s target consumers behave as shoppers, in different channels and formats and leveraging this intelligence to the benefit of all stakeholders, defined as brands, consumers, retailers and shoppers.
Case study: Dwell
Dwell furniture started as an almost completely catalogue-based operation but with the growing influence of ecommerce, mail order started to drive customers to the company’s growing retail presence.
“We’ve always aimed to be multichannel,” claims Dwell marketing director Sean Galligan. “With 23 stores now, we see an increase in foot and web traffic when we mail out a catalogue. Customers move from one channel to the other without giving it much thought.”
Dwell’s shopper marketing tactics have rested on making whichever way the customer wants to purchase as seamless as possible. “People’s pressures are different. If they use the website and then want to pop into the shop, their records are visible across all channels. If they place an order online and then go into the shop, the salespeople are able to make them offers based on their existing activity.”
Galligan insists that shopper marketing should be invisible to the customer. He states that the company aims to be channel agnostic, allowing customers to generate quotes in-store and complete orders online at home. By matching the segmentation that Dwell’s CRM systems provide with staff observation of customer behaviour in-store and salespeople’s ability to identify which customers need an incentive to complete the purchase, Galligan believes that Dwell is able to communicate in a relevant and personal way.
He adds: “You can forget that the numbers you are dealing with are actual people. Customers are human.”