Archive for April 2014

How Good are Our Loyalty Programs at Keeping Shoppers Loyal?

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Loyalty Programs – Walk in Your Customer’s Shoes
Pre-posted with Permission by author, Jack Kennamer

March 2014

When it comes to loyalty programs, we know what we love and what we’d change if we could. We love the deals, offers, and rewards. What we hate is being aked for personal information, filling out registration forms, having to go to websites and create yet another account.Juggling shopper

We know what it feels like giving a complete stranger our e-mail, phone number, address and more; or being asked to recite this sensitive information in front of a line of complete strangers. All of this hassle just to receive yet another loyalty card to add to our ever-growing stack or adding another mobile app we’ll probably never use more than once. We have all been there, and most the time we just say “no thanks”.

If, by some chance we do sign up, we are then faced with the aftermath of joining…e-mails, tons of them, day and night with no rhyme or reason.

For those of us in the retail business, as soon as we leave work we become a customer with the merchants we shop. We all deal with these exact same issues day in and day out. I don’t think we’d find a consumer out there that loves the current “linear” loyalty system of today. Just Ask. So, why not make it as easy as possible for consumers to enroll and participate?

What if we, as consumers could go into any merchant offering a loyalty program and enroll with the swipe of a single card, or the scan of a single app? Just one! Not a deck of loyalty cards or a smartphone full of apps. Would that make us more likely to participate? No forms, no personal questions, no websites to hunt for to enroll in, just a single swipe! Of course it would!

And what if we, as a consumer, knew that our personal information was safe and secure, wouldn’t that make it easier and safer and less of a concern to join a merchant’s loyalty program? We all know the answer – it is an emphatic YES!

What if we knew that our e-mail box was not going to explode when we joined and offers would come to us in way that makes them useable and specific to who we are? Would that make it easier to join? Of course it would!

How You Measure Success Sometime Determines Whether or Not You Achieve It!

By Mark Heckman, ACT4Value Contributor 

More than a few years back, I had the special privilege of being a part of a strategic discussion with Feargal Quinn, the iconic Irish grocery retailer. During that discussion, the question was raised as to how Mr. Quinn prioritized his day. Without hesitation he noted that the very first thing he did each morning was to look at how many customers he had the previous day. He would then look at them in the context of last week, last year. For him, it was not about sales but rather answering the question, “Are my customers coming back to shop with us.”

Certainly he eventually looked at sales and other metrics, but his personal prioritization of “Customers” set the tone for how he ran his business, knowing if the customer is returning, sales, profit and even EBITDA will likely follow. They did. The resulting customer-driven culture was contagious. His associates were consistently rated the best and his stores as well.

The learning here is not necessarily we should all run our stores as Mr. Feargal did, rather we should be aware that prioritizing certain success metrics often have unintended consequences. For example, those that dwell on a metric like “gross margin rate” often elevate “hitting a specific number” to such a level of importance they often forget that if it is the “wrong” gross margin number and it negatively impacts sales and customer count, then the selection and prioritization of metrics is flawed.

Unfortunately, the finance department determines the metrics and goals for many retailers. In my career, I have met two, maybe three finance people who actually understood the importance of the customer and the intangibles that drive shopper loyalty and sales. Most do not. They assume that their set of financial metrics live in a purely linear relationship with each other.  There is a better way and it starts with an acknowledgment of shoppers and the competitive environment. From there, building a financial plan in the context of the specific investments in margin, capital and labor needed to delight shoppers and effectively compete to take market share provides more thoughtful and useful goals.

It’s not a coincidence that companies that think about the customer first are generally growing and healthy while those who begin the planning process with EBITDA and gross margin rate mandates are steadily find themselves measuring declining sales and margins in the ensuing year.

MERCHANTS … Have Real Margin Growth Challenges?

Sustainably Grown Produce

Seeking to:

  • Grow margins, without sacrificing revenues?
  • Optimize assortment range, prices and/or promotions?
  • Maximize leverage with Customer Marketing?
  • Unlock real ROI from consumer-centric category management?

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Engaging the Shopper In-store is a Literally a Moving Target!!

grocery_shelves
By Mark Heckman, ACT4Value Contributor

 

Contemporary retailers have learned over the years that the buying and selling merchandise is not a singular option when it comes to revenue generation. Retailers duly recognize their stores serve as collection points for buyers and have become quite proficient leveraging their shopper audiences, charging fees for merchandising events, coupon dispensers, and in-store advertising of every sort. This is particularly true in the Food, Drug, and Mass, (FDM) channels, which is the focus of this writing. Specifically, (FDM) retailers have become reasonably successful in “selling” space in their stores, primary valued on the basis of the tens of thousands of shoppers that traverse each one of their stores each week. Selling In-store “Real Estate” While theses in-store customer “traffic” counts serve as an intuitive beginning for the basic evaluation of retail “in-store real estate”, more progressive retailers, with the help of research and new technologies, have recognized the upside in a more sophisticated approach in communicating to shoppers while they shop.

To accelerate this learning, in-store shopper marketing research has created an extended bank of knowledge depicting how and why shoppers do what they do once inside the store. Knowing where shoppers go, how long they long they linger in any given spot, as well as how fast they move throughout the store, are all vital input variables that lead to leveraging and measuring the in-store environment with effective media communications. Without understanding shopper movements and behavior at a somewhat micro level, in-store media cannot reach a consistent level of effectiveness for either the shopper or the messenger. In fact, numerous attempts to harness the complex environment of the in-store communications environment most failed to gain traction due to their over reliance on general traffic counts and lack of connection to both the shopper and the dollars they spend. Short of understanding the dynamic behavior of in-store shopping, past in-store media efforts have been based upon the notion that in-store media lends its self to be measured similarly to other mass media such has billboards, television, and others. Nothing could be further from reality.

Empirical reasons abound as to why in-store media mandates its own set of rules. To codify the components of effective in-store media practices, understanding the key behavioral drivers of the in-store shopper are essential. Five behavioral and measurement elements play an important role in effectively understanding and measure in-store shopper behavior. These elements begin with understanding the mindset of the shopper, but the also include the empirically measured influences of time constraints, locational influence, impact of the message or offer, and cogent metrics that are linked to sales. The ensuing chart and descriptions will hopefully serve to codify these elements.

1. Mindset (of the Mission-Driven Shopper) First and foremost we must agree that despite propaganda to the contrary, the vast majority of shoppers in Food, Drug, and Mass are single-minded in their quest while in-store to find what they need and get out. Generally speaking, they are not in the mode to browse, read lines and lines of content or gaze at product demonstrations or cooking videos. To be fair, shoppers at times budget more time during an occasional stock-up shop. While most studies indicate stock up trips are in decline in the traditional grocery channel, during these shopping occasions, shoppers are more observant of both in-store media and messaging than those on mid-level of quick trips. With that said, while shoppers are in the mode to buy, in order to do so they do welcome help along the way. We will discuss in more detail, what shoppers consider help and what they view as noise. They chiefly rely on their past experience in the store for product placement and when retailers move these items, for whatever reason, chaos reigns until the shopper can re-orient to the new arrangement.

2. Time (So Many Shoppers, so Little Time) Retailers should relish the fact that these mission-driven shoppers buy many of the same items trip after trip. When it comes to shopping lists the top several hundred sku’s command nearly 80% of the items sold. Identifying these items and knowing how to strategically place them within the store yields much opportunity to build baskets while not prolonging the shopper’s trip. The mission-driven shopper has become quite proficient in navigating through their favorite supermarket. The average supermarket-shopping trip lasts only 13 minutes1 according to a recent study by the in-store research firm, Videomining, Inc. Clearly, shoppers are not in the store, engaged in actual shopping nearly as long as most retailers believe they are. Despite the brevity of the shopper’s visit, much of the marketing, media and content in place for the shopper to consumer is geared for a much more deliberative and casual-paced shopping trip that rarely occurs.

3. Place (In-store Locations Matter!) Further, recent observational studies tell us that most of the grocery shopper traffic remains on the perimeter of the store. The neighboring chart depicts (with larger blue arrows), that the majority of the shopper traffic in a traditional supermarket stays on the perimeter of the store and much fewer shoppers venture down the center-store aisles (smaller arrows). Yet other research not only corroborates the dominance of the store’s perimeter, but also reveals that only 18% of the time a shopper spends in the store is within the sku-intensive aisles of center store. In fact, nearly half (44%) of the time spent in the store is not spent shopping at all, but rather allocated to simply navigating through the store and checking out. Herb Sorensen, author of “Inside the Mind of the Shopper”, and other in-store research experts have reported that reaching shoppers “early” in their shopping trip is important, given the shopper’s tendencies to buy more voluminously in the early stages of their trip and tapering off as they make their way through the store on the way to the checkout. This measured behavior creates a challenging environment for both brands and retailers as both strive to effectively reach shoppers while they are in the center store area. In most stores, center store occupies more in-store real estate and houses more sku’s than any other area of the store. We also know from a variety of in-store research that shoppers spend a disportionately short amount of time in center store, where most of the inventory and variety of items exists. The resulting challenges for brand and retail marketers are obvious.

4. Impact (Clarity, Relevance, and Brevity of Message) An essential component of effective in-store media is a clear function of the first three behavioral conditions of the shopper. Shoppers are focused, time pressed, and not always where the retailer and the CPG want them to be. Accordingly, when signage or messaging occurs, they must be designed to catch the shopper’s attention, convey a relevant message, and prompt them to buy (or not to buy). For the mission-driven shopper, they are looking for information that directly assists them in making a quick purchase. To do so they are looking for simple but vital information about the product, namely the product name and function, how much does it costs and if it is discounted, how much do they save.

5. Metrics (New Media, New Metrics) The larger point of traffic flow research lies in the necessary acknowledgement that in-store media in the retail environment cannot be accurately measured on the basis of aggregate shopper counts or presumed exposure to advertising stimuli. Past efforts to do so have fallen short as those that fund the media (largely consumer package goods brands), understand that if the in-store media” cannot be linked directly back to a purchase, it must be assumed it was either unnoticed or poorly placed in the context of prompting a consumer purchase. Said another way, brands will invest in-store media if they can attribute its presence to incremental sales. Programs built on the premise of “exposure” or “eyeballs” alone, are too nebulous in their approach to appeal to brands that are now funneling significant dollars to better understand in-store shopper behavior. These “shopper marketing” initiatives thrive from the enhanced understanding of how shoppers shop, what shoppers are thinking about as they shop and how this learning can enhance future in-store engagements between shopper, retailer and brand. Commonly used metrics such as sales, response rates, exposure, and lift over baseline sales, remain important for those that invest in in-store media, but brands also want to also know “who” bought, and “where” (aisle or end cap), they bought the item. With locational technologies and other less sophistication methods these data are less rare.

But in the process of introducing new and more insightful metrics, these measurements must have some cogent connection back to sales. Dollar sales, unit sales, category impact, and product affinity, and “lift” over a baseline performance are remain elusive for many in-store media events. Practical Application Ideally, every brand and retailer would engage in a comprehensive in-store shopper study, setting the benchmarks for their stores and products relative to shopper traffic, exposure, and interaction.

As the venerable Yankee catcher, Yogi Berra once put it; “You can observe a lot just by watching!” So it is with many of the basic tenets of in-store shopping behavior. There are several quick exercises a retailer and brand partner can do, short of commissioning a comprehensive in-store tracking study;

• Conduct manual observational research, watching, counting and tracing the paths of a sampling of the store’s shoppers, at different times of the day and different days of the week. Several hundred trips should make for a nice mini-study. This audit should culminate in several store maps for each day part and day of week. (If multiple store layouts that differ dramatically exist, consider tracking in each of the major layout types.)

• Count traffic specifically by each end cap and make a note of purchases as a percent of shoppers that ventured by each display. (Understanding which end caps receives the best traffic exposure and convert shoppers to buyers are important elements of effective in-store merchandising.) • Notice the predominant direction shoppers flow down each center store aisle. Are they traveling mostly from the front of the store to the back or the opposite? (Shoppers given the direction of their movement may not easily see Signs.)

• Take notice and attempt to unblock any obvious areas where shoppers become congested or have trouble navigating. (Shoppers will spend more dollars and time in the store if they are free to roam and not delayed by congested or difficult to access areas of the store.) Concluding Remarks The complex environment of in-store food retailing offers tremendous opportunity to reach shoppers at or near their moment of purchase decision. The average shopper today has no desire to linger and browse. They covet efficiency, brevity, organization, and familiarity. Signs, messages and even digital content can be welcomed shopping aids provided they convey relevance, assist the shopper in making purchase decisions and are reasonably intrusive.

Ironically, much of the in-store media today is designed for a shopper that generally no longer exists. Brands and retailers love to fill their stores and aisles with content and messaging in the hopes of stimulating a longer in-store engagement, while shoppers want just the opposite relationship. The next installment of “Making In-store Media Work” will focus specifically on the mindset of the shopper and the elements of in-store media that provide the best opportunity to reach the “mission driven” shopper.

MARKETERS … Have Aggressive Price Competitors?

Digitally Enabled Consumers

Are you ready to:

  • Use Loyalty Program to more effectively differentiate on Pricing?
  • Capture more Shopper Marketing dollars?
  • Deliver card-less Consumer Insights?
  • Effectively leverage Multi-channel Consumer Choice?
  • Generate real ROI from CRM/Loyalty investments?

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