Marks & Spencer (M&S) has cut its marketing budget as it looks to get ‘more bang for its buck’ through an increased focus on social media and its Sparks loyalty card.
The retailer spent £162.7m on marketing in its financial year to 1 April, £23m or 12.6% less than the year before. And while its CFO Helen Weir would not be drawn on budgets for this year, she said effectiveness is improving, with M&S getting more for less from its advertising campaigns.
She used the example of its ‘Mrs Claus’ marketing campaign, where she said the retailer had spent less than in the previous festive season but saw a “greater impact” by amplifying its traditional channels with social media. The main TV spot was accompanied by social media activity including Mrs Claus taking over M&S’s social media accounts and the creation of a special emoji. All of this activity was connected via the hashtag #lovemrsclaus.
“Because we were able to make use of social media, the customer views and customer impact was actually greater,” she explained to Marketing Week at a press conference this morning (24 May) following its annual results.
“Its about using both the traditional advertising through traditional media and overlaying that with social media that enables us to get more bang for a buck.”
Using loyalty to drive effectiveness
It is not just social media that has helped M&S improve the effectiveness of its marketing. Its Sparks loyalty card has enabled it to speak directly with customers and reduce waste.
The scheme now has 5.8 million members, with CEO Steve Rowe stating there is plenty of room for more growth given 30 million people actively shop with the brand. And he said Sparks has helped reduce promotional marketing by enabling the retailer to personalise offers. M&S cut two of its big clearance events last year, and has moved away from promotional lines that were not working during events such as Black Friday.
“One of the key points about Sparks is that we want to move away from promotional discounts, big discounts, and use that money much more carefully to give customers the right promotions that extend their loyalty to the business and move them up the value chain,” he told Marketing Week.
“Part of that decrease in marketing is due to the reduction in promotional marketing and using Sparks in a much more sensible way.”
Promoting M&S’s similarities, not its differences
This financial year marks Rowe’s first full year in charge of M&S and the retailer sees it as something of a transition year as it looks to refocus priorities. Revenues were up 2.2% to £10.6b, but pre-tax profit fell by almost two-thirds (63.5%) to £176.4m due to restructuring and impairment costs.
Despite this significant drop in profits, Rowe is bullish on how his strategy is strengthening M&S for the longer term. He cited NPS scores, saying style perceptions for its clothing are up 6 points.
Its about using traditional advertising and overlaying that with social media that enables us to get more bang for a buck.
Helen Weir, M&S
Nevertheless, like-for-like sales at its general mechandise division, which includes clothing and home, fell 3.4%, disappointing after growth in the Christmas quarter. That drop was blamed on its strategy to reduce promotions, with M&S claiming full-price sales were up 2.7% and market share stabilised. Food sales fell 0.8% on a like-for-like basis, although much of this was due to the different timing of Easter.
M&S wants to “recover and grow” clothing by improving quality, style and authority, while at the same time continuing to grow food. And the retailer claims Sparks is helping it better understand its customers and their shopping habits and therefore to solidify its strategy.
The retailer has carried out more than 700,000 customer interviews either online or in person over the past year, now speaking to a customer “every 5 seconds”. And it used that insight to inform the launch of its new unified brand message ‘Spend it Well’, which launched earlier this month.
What that research threw up is that there are more similarities than differences across M&S shoppers and its different departments and it needed to start celebrating those, according to Rowe.
“Lots of people talk about the differences [in our brands] but we talk about the similarities. But I think we have probably exaggerated those differences by having two different marketing campaigns,” he explained.
“What we’re saying is we’re one business, customers see us as one business and so its right to have one unified campaign.”
While the campaign has only been in market for a couple of weeks, Rowe said he is pleased with how it has landed and that it has had the bst reaction of any of its campaigns on social media, with 86% of responses positive.
M&S has already followed up the brand campaign with activity for its food business and the plan is to use Spend it Well across its marketing, from departments such as clothing to events like Father’s Day and for its sustainability communications around Plan A.
“What’s really good is Spend it Well is a banner that we can use for any one of our different departments. We’ve had a brand ad, we’ve had the food ads go out that pick up the best of the ‘Adventures In’ adverts and consolidate that, then what you’ll see in the next phase is how it runs in clothing and indeed in Plan A,” said Rowe.
“Spend It Well really plays to those values that customers see in us. Spend It Well is about value, its not about cheapness. Value equals satisfaction minus price. Its an important step change in what we’re talking about.”