Archive for May 20, 2013

Making Digital Coupons “Less Invisible”

Updated 10-13-13

We live and shop in an age where apps and websites are designed to improve the way we shop, including reducing the use of paper circulars and coupons we use to save money.  To that end, I am amazed as to how many new smartphone apps are now available, most designed to deliver many of the same tangible benefits of the past, but now in a more flexible and consumable fashion.   But despite the obvious advantages of both cost efficiency (of eliminating paper) and consumer ergonomics (of not having to clip and carry coupons), the adaption rate of digital coupons, while increasing each day, still represents less than 3% of all coupons redeemed.   

Further, adaption rates of shopping apps are also growing, but look around the store the next time you shop for groceries and count the number of shoppers using their phones to either shop or pay.  You may grow old trying to find one.  So if “digital” is so wonderful, so flexible, so efficient, why do we not see more digital use?

In my mind, one of the key deterrents of digital coupon adaption lies in one of its inherent advantages.  It’s INVISIBLE!   Yes, without the muss and fuss of clipping coupons, load-to-account, digital offers are “clipped” electronically, placing them in the shopper’s account, requiring the shopper only to identify themselves at the store through a card or account number and purchase the said item related to the offer.  Pretty simple.  But brands are still balking at the efficacy of digital coupons, all the while taking advantage of the targeting flexibility and perhaps more importantly, the ability of “capping” the markdown expense by simply “deactivating” the offer once a threshold of coupons have been either redeemed or “digitally clipped”.  The fact of the matter is that brands very much like the “advertising equity” that paper coupons and  paper circular placements provide, elements that digital coupons do not typically offer.

No one should criticize the brands their right to cap their exposure vis-a-vis digital coupons, at least until more data is available that yields the response history needed for reasonable comfort in letting the digital coupon run until a pre-determined expiration date is reached.  But ultimately it will be important to eliminate these caps in favor of a prescribed expiration date, if digital coupons are to reach critical mass.

Accordingly, what we have today are digital offers that “float”  invisibly and out of the stream of consciousness of the consumer, coupled with the possibility that the deal could “vaporize” at any moment, at the discretion of the brand making the offer.

So it would seem to me that if we could retain all the benefits of “invisibility”, but yet provide more tangible reminders and evidence of digital offers, we just might see the engagement rates of digital offers increase significantly.

PublixDigitalEnter the retailer.  While the fate of digital coupons is widely thought to be in the hands of the brands that create the vast majority of the offers, it is the retailer who can provide the single most salutary support mechanism, namely in-store offer recognition.  This “recognition” may manifest in various forms.  It could be an app that senses where you are in the store, or a targeted SMS text message, a printed shopping list loaded at the retailers website or at an in-store kiosk, or a number of other new “at the shelf” message venues.  But more often than not, this recognition will be a good ol’ sign.  That’s right, a shelf sign (or tag) that is sufficiently intrusive to break out of the clutter of  thousands of messages thrown at the shopper each time they venture in a retail store.

Realizing that targeted offers cannot be signed with item and price as they are often directed to subset of shoppers, support signage can come in the form of general information about the ability to receive offers by signing up for the program.  However,  it is important that a digital specific price and item program anchor the digital program.  This can be accomplished by the retailer offering  and showcasing each week an array of digital deals that either are stand alone offers and even more effective, bolster existing traditional offers as a “digital bonus”.  Other more overt options for digital offers are waiting to be created.

Like all things retail, digital coupons must compete with the many other cost containment programs the retailer offers.  If digital content remains largely invisible and “behind the scenes”, the odds are that the program will never reach a significant amount of shoppers.   In obscurity, digital content will never be in position to truly change the retailer’s connection to the shopper, a connection that the shopper is looking for, and will find at a competing retailer if necessary.

 

 

 

 

JCP–Back to the Future??

In the life cycle of any retail brand there are watershed events that provide a venue for re-invention.  In the case of JC Penney’s, the venerable retailer is in the midst of one such opportunity.  Having recently fired CEO, Ron Johnson after the unsuccessful re-branding and merchandising campaign, JCP has predictably launched a “recovery campaign”, complete with an opening mea culpa and a plea for their shoppers to return.

We can debate the merits of such a strategy but on the surface it would seem to make sense to admit the sins of the past and ask for forgiveness, at least as an initial message.   The first salvo of messages in this recovery campaign has done just that.  But that’s the easy part of the process.  Now on to the task of winning back old shoppers and bringing in new ones.  But unless I have missed my guess on this one, JCP, new CEO, (which just happens to be the CEO that was fired in favor of Ron Johnson), will be tempted to immediately get back to being the Penney’s of old.

If that is true, all bets on a successful and sustainable recovery are off.

backtofuture-16an3nd

Clearly, the merchandising schema of days-gone-by of heaving “”percentage off” discounts, one day sales and day part sales should be considered in the mix of marketing elements that Penney’s uses to re-engage shoppers.  But if returning to the ways of the old is both the alpha and the omega of their strategy, they will be missing out on important opportunities.

  • First, re-invention of the retail brand creates an opportunity to embrace new merchandising elements whether they be new on-line services and policies,  new store-with-a store offerings, new co-branding relationships with famous brands.  “Something New”  not only can lure some of the old guard back through the door, but can serve to attract, new younger shoppers, who were not seemingly enthralled with the Penney’s of the past.   In short, big changes and big announcements, done thoughtfully,  provide real reasons for shoppers to return.
  • Secondly, and equally as important, this is an opportunity to re-invent the culture of the company, from the sales associates on the floor up through the corporate ranks. Becoming truly shopper-driven remains a marketing position opportunity that Penney’s cans cease, albeit not an easily achieved and sustained.  Solicit and listen to shoppers every step of the way.  Make investments into products and services that shoppers want and competitors are not providing.

Putting a finer point on the matter, Penney’s can either chose a path to recovery, or a path to re-invention.  If recovery is their goal, they will likely find themselves only slightly better off than today despite spending big bucks on media and message.  If true re-invention is the goal, innovation and shopper centricity will guide their decisions and the odds on not only surviving, but actually thriving ……increase substantially.

Store Layout….Is There Gold to be Mined?

Colleague and shopping pundit, Herb Sorensen (www.shopperscientist.com), will tell you without hesitation that there is much to be gained by enhancing store layouts, particularly those that impede fluid shopper mobility within the store.   As just one example, we known from past studies on the topic that the more aisles and barriers a store has, the slower the pace of shopper spending.  This is particularly important when coupled with the knowledge that shoppers do not have an infinite amount of time to navigate through a store.

heatmap

Heat Map Depicting “Dense and Sparse” Shopping in Store.

In fact, after a few minutes into the trip, shoppers consistently speed up their pace, and accordingly decrease the rate in which they buy, speeding by aisles and categories that appear to be irrelevant to the shopper’s immediate needs or more commonly just represent too much time and energy to explore.

Most retailers are oblivious to these shopping tendencies.  In fact they design and stock their stores with the mindset that more aisles and products mean more sales opportunities.  It is just a matter of manipulating the shopper into spending more time in the store to take advantage of all of these great new products and departments.  Nothing is further from the truth.

Retailers who have taken the time to track their shoppers through the store…whether it be by personal observation or by technical means, are often surprised by many of the discoveries, including the following:

1.  How deep into the shopping trip, aka how long it takes for the shopper to select their first item for purchase from the time they enter the store.

2.  The miniscule percentage of time shoppers actually spend “shopping” as opposed to the time they spend traversing the store getting from one “shopping event” to the next.

3.  How little of the physical store shoppers actually traverse on any given shopping trip.

4.  How few aisles shoppers actually fully navigate as opposed to “diving into an aisle” quickly for a planned purchase and then revert quickly back to the perimeter of the store.

5.  How shoppers migrate naturally to open space, where they can clearly view the entire store, and conversely how consistently shoppers avoid tight, confining alcoves and aisles

Each of the aforementioned shopping tendencies represent opportunities for the retailer to embrace.  By understanding these consumer practices, retailers can make both subtle and overt changes to their layout and merchandising plan, resulting in a more efficient shopping experience for the consumer and larger baskets sizes for the retailer.

 

 

 

 

 

Shopper Loyalty…No Longer the Natural State of Things

I have often wondered how many loyal, dedicated shoppers there truly are.  I suppose it comes down to how one defines loyalty itself.  One definition could infer that loyalty means displaying a preference for where you shop or what you buy due to a certain set of attributes of  the retailer or the brand you prefer.

In the past, being loyal or having a distinct preference for where you shop was built upon a foundation of several key elements.  These elements included some level of perceived value (comprised of attributes such as price, assortment, service, ambiance, convenience, etc).  Roughly translated, the retailer that did the best job of providing the shopper the highest level of perceived value, received more of your business than others.

multi-channelFurther, being loyal to a particular retailer was the “natural state of shopping and the default position of the shopper”.   This was particularly true with supermarkets as shoppers coveted being able to get as much of their needs fulfilled at single retailer as possible.  To that end, loyalty programs, promotions, assortment, and services simply determined where the inherently loyal shopper spent most of their dollars.

The burning question of the day perhaps ought to be “Is loyalty still the natural state of shopping”?  …..Evidence abounds that it is not.

Data shows that shoppers are spending an increasingly larger share of their requirements on line, and when they shop in the physical store, the number of stores in their “consideration set” is expanding.  The contemporary shopper is also changing demographically and technically.  Millennials are becoming “critical mass”.  Further, their ways and technology is influencing how  “Boomers” and “X’ers” and even seniors shop.  This new shopper leverages applications, websites, and shopping options that actually discourage loyalty to anyone retailer, but rather have become de facto advocates of the consumer.

Sourcing groceries from multiple sources is no longer heresy, but rather in vogue.  Getting the best deal or product, whether it be from the growing number of bricks and mortar sources, or the emerging e-commerce options no longer is in conflict with the comfort and serenity of shopping one store again and again for the consumer’s requirements.

So if you “buy” my premise that loyalty to a single dominant retailer is no longer the “natural state of shopping”, then we must also agree that the tactics by which retailers and brands win in this environment must change as well.  

In the old model, securing loyal shoppers meant you were competing with other retailers for shopper.  Now you are competing with the shoppers themselves as they are becoming “naturally” disposed to being disloyal to any one retailer or store.   In this new environment, instead of securing loyalty which typically involved investing upfront in securing shoppers and then “coasting” after the shopper was entrenched, marketing must now be about “disruption”.  Disruptive marketing is a very different beast.  Disruption implies being intrusive, compelling, and standing out from the pack.  That takes thoughtful and creative planning, not recycling the same promotions year after year.   Disruptive marketing does not lend itself to spending heavily upfront and then “coasting”, but rather demands a constant drum beat.

More to come on the topic, but in the world of retailing the game is changing, and so must its players.