Digital tools change loyalty rules
A new wave of digital tools is changing the dynamics of customer loyalty and presenting fresh challenges for markets, says a new report.
The US report from Catapult Action-biased Marketing, the In-Store Marketing Institute and Google, says that new technologies are teaching the modern shopper to be savvier.
Catherine Roe, Google’s head of consumer packaged goods, says: “She’s got prices, she’s got barcode scanning, she’s got everything right there at her disposal” while in the store, of today’s shopper. Brand marketers must react to this newfound empowerment, which to this point largely has been provided by outside forces.
The report outlines just a few apps that are changing the shopping dynamic:
Groupon: A “collective bargaining” tool, it e-mails daily deals to 11 million consumers worldwide. The deals only become valid if enough users agree to redeem them. In July, Groupon introduced personalized deals in six US markets.
GroceryIQ: It not only lets users create shopping lists (and get direct-to-card coupons), it also helps them order the items based on the category layout of their favorite store.
ShopSavvy: Users scan a product’s barcode to instantly receive comparative pricing and inventory information, and then can get directions to other nearby stores. They also can sign up for price updates on specific products. The service claims to have data on 20 million products.
Foursquare/Loopt: Ostensibly, “games” that let users track each other’s whereabouts, these location- based apps deliver rewards whenever users “check in” at a retailer or other location. The 3.4 million users of Loopt get 25% off their next purchase when they check in twice at The Gap; foursquare’s 1.4 million “players” can earn US$1 off Frappuccinos at Starbucks.
CauseWorld (right): Kraft, P&G and Sears are among this app’s sponsors, which lets consumers “do good deeds” by simply “walking into a store,” according to its iTunes description.
Shopkick: Launched in mid-August, the app (right) detects when smartphone users are approaching a particular store and sends them targeted offers. A barcode scanner supplies additional offers and product information once they’re inside. Best Buy and Macy’s were among the app’s launch partners.
Such tools are turning consumers into better- informed shoppers who can more easily base their trip and purchase decisions on factors other than brand preference. The shopping revolution is already taking place – with or without the participation of product marketers and retailers.
To take full advantage of this new digital era, the report says marketers need to:
Develop relevant content: “The most important thing you can do is think about building your own assets,” says Matthew Egol, VP for Booz & Co.’s Consumer, Media & Digital practice. Kraft has been an early bellwether of shopper marketing thanks primarily to its vast recipe library, which it leverages in numerous ways for the benefit of both shoppers and retailers.
Focus on insights: Consumers now have easy access to far more information and tools than they have time to utilize. The proverbial “clutter” that marketers have sought to avoid for decades has reached epidemic proportions: US consumers were exposed to 1.09 trillion online display ads in first-quarter 2010, according to comScore. Developing programs that will resonate with today’s shoppers requires a deep understanding of their needs and behaviors.
Look beyond the brand: For packaged goods marketers, resonating with shoppers – and aligning with retail partners– will often require a brand-agnostic philosophy focused on delivering solutions at the category or even store-wide level.
Don’t focus on technology: Although they provide the mechanism for shopper communication, specific technologies are relatively insignificant compared with their function: to directly influence decision-making. Marketers first must develop the message and identify the audience, then select the best technology for connecting the two.
Target: One serious drawback to shopper marketing in general is the logistical nightmare and potential cost of tailoring communications to even the regional (let alone store) level on a consistent basis. But marketers can leverage the digital tools discussed in this report to fine-tune their messages in an easier, more cost-effective way.
Many marketers are viewing location-based communication as the Holy Grail. Technology will soon let retailers “market by the aisle,” Geoff Sherman, Walgreens director of pricing, promotion and trade fund management, said at a recent conference. “That really expands the concept of off-shelf merchandising.”
In July, Google introduced a program that lets retailers place extended ads on Google Maps to reach mobile users searching for directions. In August, Best Buy was expected to upgrade its mobile app to engage users as they approach a store.
Commit the organization: For the most part, digital marketers still operate like media planners, and rarely coordinate activity with their shopper or customer marketing teams. Without a firm commitment within the organization, digital’s potential as a collaborative sales tool will not be realized.
Integrate activity: The concept of integrated marketing has been kicking around the industry for nearly two decades, but it has never been as important, because digital media makes it far too easy for consumers to spot inconsistencies. For it to be effective, digital shopper marketing must be coordinated with the rest of the marketing plan – from advertising down through product distribution.
Measure: Digital tools give marketers an unprecedented ability to measure consumer response and, in tandem with point-of-sale systems, sales results. Successful marketers will engage their research and analytics departments while designing programs (rather than after the fact) “to assure a higher level of confidence” in the accuracy of results, Diamond advises.
Scrutinise partnerships: As the in-store TV marketplace has shown, not all technology partners are equal, and it’s likely that many of the digital service companies emerging today won’t be in business tomorrow. Some of 2010’s most popular websites and social networks could quickly fade in popularity. All marketing agencies will claim to have digital shopper marketing expertise, but few have thus far truly become experts in the practice. And, many retailers aren’t yet capable of executing effective campaigns. Marketers must pick their partners wisely.
Be ready to adapt: Marketers barely had time to adapt their thinking to marketing via cellphones before the smartphone came along. Now, each passing month delivers mobile apps delivering more powerful shopping tools. Marketers will not keep pace unless they can react quickly to technological advancements and, more importantly, the ways in which shoppers are utilizing them.
“I can’t say the ROI is always apparent at this stage, but the media spend is small,” said Joe Jackman, acting chief marketing officer of drugstore chain Duane Reade at a recent conference. “So the experimentation is just fine.”
“This space is constantly evolving,” says Cooke. “To be effective, you need to be nimble, adaptive and have a hunger to learn. You must be willing to experiment with new and emerging technologies, and to take a few risks.”
The report concludes that the greatest risk, however, would be to hesitate at a time when the marketing industry is entering a major new cycle of its own, one in which mass media could become secondary to the targeted shopper communications that digital tools can facilitate.