What can we learn from the winning Retailers this Christmas?

It’s a year since HMV, Blockbuster and Jessops entered administration. This January started with a high level departure at Debenhams and the news that sales are down at the biggest UK‘s food and clothing retailers (Tesco and Marks & Spencer) are struggling to stay in touch with the modern British shopper (Daily Telegraph 6th January 2014). If you’re also thinking that Christmas didn’t go as well as you’d hoped, then we’d like to help you on the way to a successful 2014.

If there’s one big theme, it’s that the Customer Journey is more important than ever

Mobile internet and the 'always on' consumer mean the way shoppers think about and act on their purchasing decisions has changed dramatically. Shopping is anywhere and everywhere. The Customer Journey is no longer linear. It’s now more like a game of snakes and ladders. Now we can buy in a shop, via an app or even a games console. The dynamics of the customer journey are increasingly multifaceted and translating a brand into a compelling consumer experience requires an increasingly diverse skill set. Getting the balance right between on and offline is critical. So here are six ideas to inspire you this New Year.

1.     Deliver a harmonious Clicks and Bricks experience

Shoppers no longer see physical, technological and geographical boundaries. Good online experiences are carried forward as expectations of seamless service from High Street retailers. John Lewis has responded to the challenge of closing the on/offline loop, benefiting from significant sales growth driven by their Click & Collect service. Their new 2-year guarantee on all electrical & home technology products closes the circle and allows them to leverage their offline logistical infrastructure to benefit their online sales.

2.     It’s time to embrace Mobile

Mobile is increasingly finding its role at point of sale and, as a result, has blurred the lines between on and offline. Amazon are wise to this and also the fact that the vast majority of sales still take place in a physical store, so their app now includes a barcode scanner for quick price comparison. However, Mobile needn’t be a threat and can be used to bring customers into store and enhance their shopping experience. Pizza Express, for example, allow customers to pay for their meal via PayPal, rather than have to wait for a busy waiter. French retailer Carrefour recently introduced a mobile app designed to enhance the in-store experience for the Chinese market. The app uses location sensing technology, a social shopping list and an ad system that enables retailers to engage with their customers. Customers can even use the app to navigate to the product they want while in store.

3.     The same customer is worth more offline

We all know how important impulse buying is in-store. The reality is that 40% of consumers report making impulse buys while shopping in-store compared with 25% online. One of our clients has found that customers will happily spend more on a higher spec electrical appliance if they can see a physical demonstration and fully understand the difference in features. Price credibility online drives customers to store offline. In addition, John Lewis have found that customers who combine online and in-store shopping spend 4x more than those who use only one channel. So monitor competitor pricing and partner with comparison sites, if appropriate, but also use promotions to drive customers into store. To this end, B&Q’s Club app offers exclusive in-store discounts on various products, rather than rewarding purchases with loyalty points.

4.     Consider the daily conversation, as well as the big campaign

The reliance of many retailers on Christmas has lead to an obsession with share of voice at the most cluttered and expensive times of the year. But many brands overlook the opportunity to tap into topical events to achieve a more cost-effective and memorable outcome for your audience. For example, Marmite’s tactical press campaign after the death of Margaret Thatcher and Nando’s 5 minutes extra ‘Fergie time’ following the announcement of Sir Alex Ferguson’s retirement. Be topical, as well as seasonal. Consider messaging across Owned, Earned and Paid channels.

5.     Act in Real-time

“The internet requires every brand, business and individual to become a publisher” (Rachel Tipograph, Gap’s Director of Global Digital and Social Media). Today’s increasingly demanding consumer means that retailers need to be responsive in real-time and behave in a way that is relevant to customers at every point in their journey. This is easy in-store where you can see who requires assistance. Online it means serving the content customers need as they need it. Reacting to the weather enabled Bravissimo to increase swimwear sales by 600%. Create a sense of urgency in the face of limited stock with ‘only 3 left in your size’ type messaging and understand when and where ‘customer chat’ support might be needed.

6.     Future proof your loyalty programmes

We’ve become a nation of deal hunters. We expect them and know where to seek them out. So we’ll happily switch brand and stock up to take full advantage. As such, loyalty schemes are evolving away from a transactional focus through developments such as ‘social couponing’ and ‘co-creation’. However, some innovative retailers have realised people are loyal to communities around common interests and centred on common products. For example, target amateur photographers or baking enthusiasts and become part of their conversation.

Do you really want your bank to be your friend?

Since launching their Customer Charter campaign in June 2010 promoting 14 customer ‘commitments’, NatWest have suffered from well-publicised computer problems, had complaints upheld by the ASA and seen a key competitor, Nationwide, promote seven ‘Savings Promises’ promises that (according to Marketing magazine) strikes an “all-too familiar tone”.

Yes, Nationwide are promoting “promises” rather than “commitments”, but do customers really care or even really want a conversation with a bank, building society or even a utility company? NatWest are a good example since they are the largest spending TV advertising amongst banks and have the largest branch footprint. However, brand tracking data demonstrates that (two years into their service campaign) they’re still firmly ‘with the pack’ for the full suite brand perceptions. Indeed, GfK research suggests that NatWest have actually lost market share since launching the campaign and customer satisfaction has remained broadly static throughout¹.

Interestingly, whilst Mintel research shows massive cynicism about the banking sector as a whole, it also shows that 51% of customers had chosen their new bank due to their proximity to the local branch². Indeed, a recent JCDecaux study³ demonstrated that only 12% of consumers felt improved customer service would improve satisfaction whilst 43% wanted cash back rewards’.

Yes, consumers might find meerkats, Stephen Merchant or another comedic voice over artiste a tad more personable than ‘helpful banking’, but most people just want their bank to work, behave ethically (i.e. not launder cash or fixing inter-bank lending rates) and be able to water their lawn in summertime.

Ironically, Nationwide have suffered bank-esque IT frailties in recent months and brands really do need to recognise that no amount of glossy marketing or innovative media planning will make a blind bit of difference if they can’t get the basics right.

While brilliant concepts and creative ideas might shift perceptions and favourability in the short-term, the old cliché still holds true that you’re more likely to change your spouse than your bank account. Indeed, 56% of those dissatisfied with their main current account have held their account for over 10 years and only 3% of consumers had switched their account in the last 6 months to September 2011⁴.

Ultimately, in spite of banks increasing desperate efforts to win our hearts and minds, there’s no evidence to suggest that consumers want banks to be their friends and a huge opportunity exists for a brand to capitalise on the public cynicism and demonstrate genuine customer understanding as a point of difference.

¹GfK

²GMI/Mintel

Connected Commuter

⁴GfK

Sponsorship’s move to the centre of the comms mix

Introduction

Digital has profoundly changed the landscape. Empowered customers are disrupting every sector. How we communicate, shop, bank is profoundly different to as little as 5 or 10 years ago. There are more media channels, more customer touchpoints, more paths to purchase. In short, there is more choice and this means more consumer power.

In today’s world, traditional strengths (like the scale of your media budgets or distribution) are no longer enough to guarantee survival and this creates a need to refresh your brand identity, fully integrate your marketing campaigns and provide a customer experience that is consistent across all channels.

But it’s not all doom and gloom. We now have the opportunity to involve customers in the design our marketing campaigns, products and customer experience - as well as the opportunity to assess Brand sentiment and gain feedback in real-time on how their last interaction made them feel - delivering genuine customer intelligence.

Background

The number of digital users is still growing.

People are spending more time online.

Social Media usage is still growing

We have entered a new era that Forrester calls the ‘age of the customer’

So what’s different in the age of the customer?

The media landscape and consumption are very different. 9 out of 10 adults go online every day. The job of planning media and deploying campaign budget is much more complicated with ‘digital’ now accounting for 27% of all advertising spend.

There is increasingly a move away from 'push' campaigning to a more dialogue-based approach. This also creates the challenge of richer content development and increasingly brands are buying into sponsorship properties to engage their target audiences.

Interestingly, social networks and blogs now account for around half of all time spent online in the UK. Consumer habits have changed and the digital age has empowered them.

The balance of power has shifted

It’s no exaggeration to say that empowered consumers have eroded previous sources of dominance. A focus on the customer must now be the key strategic imperative for any brand manager. Why? Because, according to Forrester Research, 76% of world's population are connected to each other on Social media and a wealth of information is at their fingertips through the mobile devices in their pockets (2011). They “want things faster, better, cheaper and with a higher degree of service; technology makes it possible for them to get what they want”.

In fact, technology is now so thoroughly integrated into our lives that 42% find it “hard to be without my phone/mobile device” (Euro RSCG 2012). Consumers can find what they want anywhere in the world. Let’s not forget that 100 years of brand equity and significant High Street presence weren’t enough to save Woolworths. Large scale brand campaigns are also no longer guaranteed to provide competitive advantage.

Traditional sources of strength no longer apply. Only 15% of consumers trust ads to inform purchase decisions, whilst 76% trust consumer recommendations for purchase decisions. Consumer purchase behaviour is changing with a greater reliance on networks, blogs and wider information gathering before providers are actively evaluated and ‘considered’.

So what needs to be done?

It has been said many times before, but the Marketing agenda now needs to be focused on ‘customer insight’ and ‘engagement’ at the expense of the traditional focus on ‘awareness’ and ‘consideration’. In addition, we all need to build richer content and interactivity into our campaigns.

Many brands that have traditionally spent big on TV have shifted to making significant investments in sponsorship properties. For example, Sharp's sponsorship of UEFA Euro 2012, while McDonalds, Coke and Lloyds TSB have all invested heavily in London 2012. Indeed, the sponsorship revenue associated with the 2016 Rio Games is already expected to exceed the London 2012 total. Some brands, such as Coors with their relationship with the Mexico national football team, are targeting their future customer based on the insight that the Hispanic community amongst the US population is rapidly growing.

Procter & Gamble, the FMCG giant, is pursuing a more "balanced" growth strategy, reflecting the increasingly challenging trading conditions and implementing a change in approach that would enable it to "win" with shoppers and investors. P&G believe that their affiliation with the Winter Olympics in Vancouver “generated up to $100 million in incremental sales [in the US]” and they “feel comfortable on building that on an international basis”. At the same time, they are taking a "brand agnostic" approach to digital marketing and cutting $1bn from their marketing expenditure by 2016 across the Tide and Pampers brands by leveraging the cost advantages of new media.

This is serving to bring about a shift in the position ‘sponsorship’ has traditionally held at the periphery of the comms mix – bringing it into centre stage. Digital technologies and social media are the key enablers here. Johnnie Walker is a good example of a brand which has harnessed the power of both sponsorship and social media with great success. Needing to tackle the trend of waning interest in scotch in the U.S and introduce younger drinkers to its brand, Johnnie Walker created buzz around a trendy event where young people could come to learn more about scotch. An integrated social media platform allowed participants to share their experiences with Johnnie Walker and each other. The ‘Striding Man Society’ exceeded its membership targets by 23% and demand was up 34% among new members.

A new, aligned set of KPIs is now required to ensure a robust framework is in place to measure success. Internal structures also need to be aligned to ensure an integrated approach to Social Media / digital touchpoints across Marketing, eCommerce, PR and Customer Service teams.

Concluding thoughts

The change brought about by digital technologies is inevitable and needs to be properly planned for. The proliferation of choice means that the USP remains a critical marketing principle. However, communicating it via traditional media means a real likelihood that the message won’t be believed and your customers expect more from you than a 30 second spot on ITV. Thought needs to be given to evaluating the shifts in your audiences’ perceptions, attitudes and behaviour, rather than simply in shifts in their awareness and the resultant uplift in sales. And finally the growth in ‘earned’ channels must be leveraged to compliment efforts in the ‘paid’ and ‘owned’.