Lessons from the Song Charts

“You’re hot then you’re cold; You’re yes then you’re no
You’re in then you’re out; You’re up and you’re down
You’re wrong when it’s right; It’s black and it’s white…”

Chances are if you’ve heard anything about Katy Perry’s 2008 hit Hot N Cold recently, it wasn’t good. Perry, an extremely popular singer-songwriter, filmed a version of the song for the children’s show Sesame Street and got roundly criticized for wearing an outfit that was deemed inappropriate. Sadly, it wasn’t the only negative publicity she’s received of late.

But who knew that Perry also was such a wiz at marketing. For one second, forget whatever you know about her and re-read the chorus to the song listed above. Now think about your shoppers and the whole thing makes sense. Sometimes they are hot then they’re cold; they’re yes and then no.

In other words, they are filled with contradictions and constantly changing opinions. It’s the job of every marketer to figure out the mess and find a way to provide answers.

It is increasingly apparent that shoppers become many different people in the course of making various purchases or even on a single shopping trip. In food stores that means choosing some items solely on price, while others are purchased for indulgence. In fashion it means mixing high-priced designer items in the same outfit with bargain-store apparel. It’s why we see BMWs at Dollar General and price-oriented advertising in Whole Foods. And it’s why one retailer reported shoppers drinking high-priced coffee while waiting in line to buy cheaper gasoline for their cars.

In short, it’s a world of contradictions.

The challenge for marketers it seems is cutting through this clutter and confusion. More than ever we need to ascertain the type of value different shoppers apply to different experiences. We need to be sensitive to their contradictory style of making choices and help show them we understand their need for value in all its form.

That means doing everything possible to cut costs in areas that provide no benefit to the shopper. Going lean and mean has never been more important because it allows you to spend your resources on those areas that do matter to the shopper. If you do that you can help build a relationship with the shopper that is sensitive to price even as you build other values.

But also remember that no one can get is all right. One of the lessons of The World According to Shoppers, the Coca-Cola Retailing Research Council report I profiled in Shopper Marketing is the importance of understanding these limitations. The report challenges marketers to examine your shoppers and competition to determine where you are and are not strongest. It’s impossible for any one company to dominate all areas and an honest assessment will help you understand where to focus. (You can download the study for free at http://www.ccrrc.org. Look under the tab for the North American council.)

Sure, you have to change to meet the changing needs of shoppers. But your ability to develop a consistent reputation of value will help shoppers know why to shop your stores or products. Even when they are up and then down, or in and then out.

About the Author

Michael Sansolo - Guest Blogger for Phenomena.com

Michael Sansolo works with some of the most innovative retailers and manufacturers in the US on a range of business issues including competition, marketing and management. His most recent book, The Big Picture: Essential Business Lessons from the Movies was released in January. The past senior vice president of the Food Marketing Institute, Sansolo is now research director of the Coca-Cola Retailing Research Council. He is a frequent speaker at a wide range of industry meetings.Contact him at www.michaelsansolo.com

Would You Be Loyal to You? – Loyalty, somewhat like charity, begins at home-the home office that is

The best marketers have mastered the art of getting people—specifically, customers—to change behavior. Profitably. Predictably. And consistently over time. This is a remarkable talent.

I myself find it hard to get people to change. For example, when I tell my teenagers to, shall we say, adjust their behaviors, they seem to get irritated and usually don’t follow through—for some reason. I then escalate the strategy and sell the benefits of the change I seek. I review the current deficient state (about them), develop attractive outcomes (for them), and enthusiastically present those benefits (to them). This strategy demonstrates slightly better response, but its high wear-out factor generates a lousy ROI. So as not to threaten my self-image as a marketing artist, I resort to the time-honored strategy of compelling them to change with an offer they can’t refuse. This has great short-term response, but I suspect my kids’ long-term loyalty to that brand of parenting may be declining.

Telling. Selling. Compelling. How well have these worked for you? Or the better question: How often have you changed your behavior based on someone telling, selling, or compelling you? Because we humans are biased in our perceptions and worldview, these strategies don’t work very well to promote lasting change. Either the results don’t measure up to the effort required or the relationship degrades over time—not exactly a loyalty marketer’s dream. Human beings commit to change their behavior only when they change their fixed thinking and attitudes. In other words, when they are darn good and ready.

Over the years I’ve picked up a fourth approach to profitable, lasting change management. I call it “Dwelling”—living into the situation of those you would change, and making the wise decision to change yourself from within that experience. As Gandhi said, “Be the change you wish to see in the world.”

When we dwell in the situation of the other, three important things happen: First, we come to understand. Not merely “learn” cognitively, but also “feel” deeply and emotionally the other’s situation. Second, we change. We resolve previously unrecognized blind spots in our understanding as we “adjust our mirrors” to see a suddenly clearer reality. Third, and most important, the intended objects of our original change-management quest recognize how we’ve changed and become more willing to change along with us.

As a loyalty-marketing discipline, “dwelling” can be accomplished through a few straightforward actions:

Eat your own dog food: When I was a food-industry brand manager, I participated in tasting sessions to judge product quality. Those were fun when I worked in Cereals and Snacks. Not so much in Pet Foods, where one R&D scientist actually taste-tested his creations. That type of deep commitment became known as “eating your own dog food.” Most marketers visit their stores and may shop their brands. True professionals live into their brands as customers. That means staying in your hotels, eating at your restaurants, flying your routes, listening to your call centers, and using your own credit and payment cards.

Learn loyalty: Participate in your loyalty program. Granted, this isn’t always possible or desirable. You may be employed by a health care facility and be perfectly fit, or by a child-oriented retailer and not have kids, or by a brand of adult diapers and…well, you may not need your company’s products (at least not yet). In such cases, organize and join loyalty customer user groups. Dwelling transcends merely sampling your customers’ interaction with you, and then heading home for a cold one.

Seek status: Become a “best customer” to experience the loyalty features and benefits—and the hassles and limitations—encountered by your actual best customers. Build your balance, earn your status, redeem your rewards. Similarly, every one of your company’s senior leaders should be active in your loyalty program. I know a loyalty practitioner whose entire executive committee publicly tallies their monthly program activity in a friendly yet serious competition for top status. They of course have no trouble understanding their program’s design, or recognizing improvement recommendations when they see them. In fact, they themselves have initiated many enhancements.

When your best customers perceive that you care about your loyalty program not just as a marketer, but as one of them, you’ll have a better program. And you can look in the mirror and answer “yes” to the question “Would you be loyal to you?”

About the Author

Jim Sullivan - Partner, COLLOQUY - Guest author Phenomena.com

Jim directs the advancement of enterprise loyalty at COLLOQUY, an endeavor guided by his almost 30 years of managing in marketing, strategic planning, business development, innovation, and communications. Jim also assists with COLLOQUY’s loyalty workshops, seminars and conferences, and serves as an academic liaison for colleges, universities and thinking institutions performing research on Enterprise Loyalty.

Prior to joining COLLOQUY in 2010, Jim founded his own company and was a principal at BUILT TO LEAD, a leadership development practice based in Central Ohio. From 1997 to 2008 he worked at Alliance Data Inc., most recently as Chief Marketing and Planning Officer and as a member of the Executive Committee for the Retail Services division. Earlier, he served as Senior Vice President at Information Resources Inc., consulting with such clients as Procter & Gamble, Kraft USA and ConAgra frozen Foods.

A resident of Columbus, Ohio, Jim serves on the Advisory Board of The Initiative for Managing Services at The Fisher College of Business, The Ohio State University, and is an MBA-level instructor in Services Marketing at OSU. He and his wife Lauri have three children.

The Shopping List

The shopping list is the Holy Grail for marketers. The more specific (brand name, flavour/scent, packaging, size, etc.) the consumer is, the better. However, “making the list” is only a means to an end. Marketers need to do everything in their power to make sure the consumer executes on their shopping list.

Shopper research usually focuses on understanding how the consumers shop, when they shop, and why they shop. A knowledge gap exists in also the identification of why a consumer “stops” – specifically, why a consumer fails to execute on a particular item in his/her shopping list. Smart marketers ask the following questions:

1) Why didn’t a consumer purchase something on his/her “list?”
2) What did the consumer purchase instead of the listed item?
3) What was the consumer’s work-around/intention for not purchasing the listed item? This knowledge will help marketers proactively plan for some of the shopping “road bumps.”

Typically, in-store media and the lack of appealing choices (package size and price) are common road bumps and deterrents to shoppers’ objectives. A hang-tag on a competitive product might persuade the shopper to purchase Dove vs. Olay soap this shopping trip vs. most trips. An out-of-stock 24-pack (vs. the on-shelf 12-pack) of Evian might persuade the shopper to postpone this specific purchase until she visits the warehouse club next weekend. And, a side comment from a Whole Foods employee about the merits and authenticity of a packaged rice pilaf mix might actually persuade the shopper to create the side dish herself.

Obviously, as marketers, we can’t control the settings in which shoppers shop (with the exception of web presence and branded store environments). However, marketers should do everything to understand how the environment ultimately impacts the shopping behaviour. Regular review of in-store media activity, branded and store label competitive pressures, and pricing fluctuations should be routinely analyzed along with scanner data. In-store consumer behaviour (whether via a complicated, neurological device or via the professional eye of a trained market researcher) should be observed to see what happens at-home, in-store, at-shelf, and ultimately, at the cash register. The path to purchase is lined with many road bumps; marketers need to understand how to help navigate shoppers to success.

About the Author

AnnaMariaTurano - Guest Blogger for Phenomena

AnnaMaria Turano is a partner and Executive Director with MCAworks, LLC – a strategic consultancy based in Westport, CT. AnnaMaria leads client engagements across a diverse set of industries including financial services, food/beverage, pharmaceuticals, telecommunications, and software. She has helped companies develop and roll-out strong customer value propositions and strategic plans as well as identify new opportunities for growth via new products, new targets, and new geographies.

AnnaMaria is co-author of Stopwatch Marketing (Portfolio: 2008) and is also a featured contributing author to Shopper Marketing (Kogan: 2009).

AnnaMaria holds both an M.B.A. and a B.A. from the University of Chicago. She has taught marketing at NYU’s Stern School of Business and Fordham University; she is currently an Adjunct Professor of Marketing at the University of Tampa.

Values with value

For many European food and grocery companies the post-recession market has been dominated by the theme of providing value to shoppers – communication of prices, promotions and product performance shouts from retailers’ aisles and manufacturers’ advertising campaigns.
While ‘value’ has been the constant undercurrent of recent years, IGD research has shown that a collection of ethical and environmental sustainability themes also resonate with shoppers. Therefore ’values’ offer a second strategic lever for food and groceries companies – a potential beacon creating opportunities for companies to differentiate their offer and create value for their businesses.
In our recent conversations with shoppers across Europe, however, the desire to find value in their values has become stronger than ever. For example, in our latest consumer report Shopper-led Product and Range Innovation, we discovered that three in ten shoppers are looking for improved product values as the key factor that attracts them to try a new product. Of these shoppers, three quarters are also motivated by strong value perceptions.

Shoppers sharpen their ethical focus

Interest in ethical and environmentally sustainable products and issues continues to grow among European grocery shoppers. Our latest European shopper report Ethical and Sustainable Shopping found that 86% of shoppers in France, Germany, Great Britain and Spain are now interested in at least one aspect of ethical shopping – an increase from 81% in 2008. Although headline interest is growing, shoppers however are limiting their ethical focus. In our latest findings we have again segmented shoppers into five ethical segments and found that in 2010 the proportion Ethical Evangelists, the most ethically engaged shoppers, has declined in all European countries in our research.

We have, though, seen the proportion of Aspiring Activists and Blinkered Believers grow. These are shoppers who actively engage with one ethical issue only, or are interested in more ethical issues than they actively buy groceries to support. Rather than dropping their ethical standards following the recession, many shoppers have therefore focussed their ethical consumption on the single ethical issue that concerns them most.
This shift, from broad engagement to narrower focus, reflects the difficult trade-offs many shoppers are currently making when seeking value while shopping for groceries. It does, though, represent an opportunity for producers and retailers of ethical products. There is still strong interest in ethical issues that may again translate into purchase action with a return to a more stable economic situation.

Five ethical shopper segments

• Ethical Evangelists are interested in, and actively look to buy, a range of ethical issues
• Focussed Followers have made several steps into ethical shopping, but pick and choose their areas of interest
• Aspiring Activists have aspirations and interests which outstrip their current ethical shopping behaviour
• Blinkered Believers buy into only one ethical dimension
• Conscience Casuals do not actively shop ethically, and show little or no interest in doing so

In all four markets surveyed, the proportion of Conscience Casuals, our least ethically engaged segment, has dropped. These shoppers, though, do still provide an opportunity for manufacturers and retailers of ethical products. In our discussions with them, it was clear they do have some interest in ethical issues and were often reasonably well informed, it was just something they did not consider when grocery shopping.

An ethical carrot rather than a sustainability stick

We asked British shoppers how they felt grocery retailers and manufactures could help them to make choices that would be most effective in protecting the environment The feedback was clear, shoppers would much rather be encouraged with an ethical carrot than forced into specific behaviours with a sustainability stick.

The most popular tactic that shoppers requested to help them make environmental choices was the provision of incentives. Overall, just under half of shoppers mentioned this, with one in four identifying it as the most appealing tactic. This compares to just one in ten shoppers who suggested penalties for people buying the most environmentally damaging products.

Hence, through seeking promotions, long-term price savings or loyalty mechanic benefits, shoppers are again asking for value for their values. This appetite creates the opportunity for manufacturers and retailers to positively encourage or incentivise shoppers to change behaviour in favour of ethical products. Some such activity is already underway – for example, in Britain Procter & Gamble has recently worked with Ocado to promote environmentally friendly lines, offering a 30% discount through its Future Friendly initiative.

Balancing the twin levers of ‘value’ and ‘values’ continues to create opportunities for the food and grocery industry – and the current feedback is clear, shoppers expect values with value.

About the Author

Ben Miller, Head of Shopper Insight, IGD

Ben leads IGD’s Shopper Insight team. The team undertakes primary shopper and consumer research on the key trends in our industry, and specialises in pulling out the insights and implications for grocery businesses.

IGD’s shopper and consumer research provides a landscape perspective on shopper behaviour, to help you get above your category and understand the macro-drivers – from store, channel and product motivators to ethical attitudes. In bespoke projects, we also get under the skin to help you understand what this means for your category. Ben leads all this research, and can work with you to develop sustainable business strategies based on the full breadth of our robust shopper insight.

Ben started his career in the market research team at UK retailer Safeway, before undertaking roles in competitor analysis, promotions management and finally Investor Relations, working on the Morrisons/Safeway activity.

Ben joined IGD in early 2004, firstly as international retail analyst, before managing the research on IGD’s subscription website Retail Analysis. He has finally gone full circle back to market research to undertake his current role.

Ben is a very experienced presenter, regularly delivering our shopper and retail insight across Europe, from bespoke boardroom briefings to large conferences. You can use his breadth of skills and first-hand experience to help you with a bespoke project, a training brief or to add value to an internal event or conference.

Now With More Coverage! New and Improved Ways to Win the CPG Consumer

Warren Storey of Epsilon - Guest Blogger for Phenomena

Here is another reason why marketers should think twice about their media basket: Turns out the new-and-improved channel for receiving household product information may not be so new after all. In fact, it is the same formula as last year.

Except for that added hint of the web.

An extensive survey of consumers in the U.S. and Canada reveals that people still prefer to hold the information they get about laundry detergents, air fresheners and other household products in the palm of their hands. U.S. respondents rank newspapers, brochures and family and friends as the top methods of receiving weekly information, according to a survey from ICOM, a division of Epsilon Targeting.

Canadians followed a similar pattern, though they are more likely to get their information from brochures – 66 percent, compared with 36 percent of US respondents.

In short, consumers still prefer those tried-and-true communications that have dominated for years, for reasons of convenience, privacy and the simple pleasure of receiving personal mail about a new product. In categories such as personal care, food and cleaning products, consumers are almost three times as likely to prefer to get their information offline.

Except, of course, when they are getting it online. That is to say that consumers are a fickle group, and while many still like to receive product promotions and updates by mail, an increasing percentage are using email and company web sites for information about household goods. Twenty-two percent of U.S. respondents and 27 percent of Canadian respondents said they use email more today than last year.

Social media, meanwhile, is attracting consumers in the single digits.

These are fertile findings for marketers. The standard methods of reaching consumers are still largely effective, and therefore can be used as leveraging tools. Underused forms of communication, including mobile, present significant upside potential for the properly targeted message. Marketers can use this information to revamp their strategies, incorporating those channels that will drive greatest returns – and surprisingly, offline can provide some of the greatest.

Faster, Private, More Trustworthy!

To better understand why consumers prefer newspapers to Twitter, and television to Facebook, it helps to know what qualities appeal to them.

Factors that drive consumers to postal mail over email include convenience, privacy and trustworthiness. Marketers should consider these factors when targeting specific market segments – for example, women are more likely than men to prefer addressed mail.

So let’s look again at the preferred methods of receiving household product information. While U.S. and Canadian respondents identified newspaper inserts, mail and family and friends as their top means of gathering product knowledge, roughly two-thirds said they “never” use Facebook (71 percent of U.S. respondents, and 67 percent of Canadians).

Social media is an emerging medium whose preference among consumers is still too small to effectively gauge, but it should not be ignored.

Perhaps the discrepancy in how marketers and consumers view social media lies in how it is primarily used. Based on all of our information, as well as other studies, individuals engage in social networking for personal reasons – just as the name implies it is to hook up with friends, family and long-lost schoolmates. It is an “opt-in” place to brag about what happened on the weekend, check out trends or news, and basically have their voices heard. It really is not yet established as a territory for marketing, though there are opportunities to change that. The trick is being accepted, or invited into, the social circle.

Another channel to watch for is mobile. This fast-emerging outlet for couponing and other product offers was “never” used by 73 percent of U.S. and 76 percent of Canadian respondents. But as major retailers including Target and Starbucks increase mobile couponing, and as smart phone apps like shopkick emerge, we suspect this “never” figure to decline. Stay tuned.

In the middle is email. Those shoppers who prefer it to postal mail say they do because it is faster, can be read at their convenience and can be printed out when needed. Indeed, while 22 percent of US respondents said they use email more this year than last year, 14 percent use it less. As for postal mail, 6 percent increased their usage and 22 percent reduced it. The reason for the shift: Consumers say they are receiving less postal mail and more email.

A similar trend exists among Canadians, while 27 percent said they increased email use, 11 percent cut back. Likewise, 9 percent of Canadians use postal mail more, and 19 percent use it less.

So while there has been a bigger decrease in the use of mail, it is not being driven by consumers. Instead the decline is the result of marketers who are sending less traditional mail but more email.

Forty-four percent of U.S. respondents, and 33 percent of Canadian respondents, said they were receiving far more email than a year ago, but not opening them.

More for Your Money!

Again, our survey results present a rich opportunity for marketers to examine their target audience and then customize a strategy that incorporates the channels that are most preferred, trusted and used by existing and prospective customers.

It is critical to remember that all of these channels work best in conjunction. A special offer arriving in the mail can direct consumers to a website, which can lead to a newsletter registration that translates to email offers. Social media also has a place in this mix, though the form it takes and the way in which it is executed is dramatically different. Remember, consumers engage in social media for primarily social reasons. Marketers that do not approach them in an appropriate way with the right message risk being seen as an intrusion, an unwelcome visitor. Be genuine, transparent and approachable.

By knowing where the targeted customer is, marketers can design and build a multi-channel campaign that can touch the consumer at various points in direct proportion to their channel preferences.

The result is not only a new and improved use of mediums, it could mean more market share for the same price.

For Full Report: http://www.epsilon.com/channelpreference

About The Author

Warren Storey is responsible for developing new products and improving ICOM’s current offerings in the sector and over-the-counter markets in the United States and Canada.

Shopper Marketing – Interview with Markus Ståhlberg & Ville Maila

Recently Markus Ståhlberg & Ville Maila were interviewed by Wes Isley, editor U.S. custom content publisher Pace Communications (http://pacecommunications.com/). The interview was about the Shopper Marketing Book and Shopper Marketing Sector. The main objective of the interview is discussing how the supermarket industry can benefit from the shopper marketing strategy.

We thought of Sharing the interview exclusively with all the Phenomena blog readers even before the interview was published online. Here goes:

1. The book features more than 30 articles from retailing and marketing experts worldwide. How did you and co-author Ville Maila select the experts and articles that appear in the book?

To answer to this question we need to go back to the origins of the book. Phenomena has practiced shopper marketing since 2003 and by 2007 we recognized a clear need for defining what shopper marketing really consisted of. We saw that there were specialist companies emerging everywhere that represented actually quite extensive spectrum of marketing and sales related services, from packaging design to shelf-space optimization. We started getting touch with people we knew around the world and also approached previously unknown companies about their possible interest towards contributing to the “milestone in shopper marketing” as we called the project back then. Since many of the author-candidates we approached had never heard about the company, it was initially rather difficult to build credibility for the project. To be honest the author selection followed quite simple pattern of contacting large number of interesting companies and cherry picking the best quality material from the resulting articles.

2.  The articles stress that shopper marketing is different from traditional grocery store advertising and marketing. Rather than attempting to change shopper behavior, it aims to understand behavior and respond accordingly. Are more supermarket retailers and manufacturers adopting this new approach or is there resistance? If there is resistance, what are the reasons?

On general level, I don’t think there is any reason for retailers to object with shopper marketing as such. After all, it means that manufacturers are investing to their shoppers in the store instead of the brand’s target group outside the store and to increasing purchase decisions instead of building the brand. Only reason to object for retailers is of course one of the main drivers of shopper marketing in the manufacturer end; gaining more space and attention in the store for their products.

I would actually disagree with the point of not trying to change shopper behaviour. Key insight about shopper marketing is that shoppers are somewhat unconscious in the store and if the brands did not try to change their behaviour, they would always buy the same products. In other words, the way I see it is that from shopper behaviour point of view, shopper marketing’s key benefit is to make it easier to make purchase decisions, i.e. to change shopper’s behaviour for their own benefit.

3.  Perhaps the main takeaway point is that there is a difference between “shoppers” and “consumers.” Are retailers readily embracing this distinction? Why or why not?

Categorically speaking, retailers are much more interested in shoppers, not in consumers. Shopper marketing is actually a built-in ideology to retailing – retailers have always practiced shopper marketing. I think a better question would be, should the retailers pay more attention to consumers as well?

The question applies much better for manufacturers, who generally haven’t seen a difference between the shopper and consumer. When the manufacturers were in power until the 90s, the consumer ruled the scene and once retailers took over, suddenly also shopper became an important topic of discussion.

4.  As a shopper, I like the emphasis on improving the supermarket environment because it seems the basic design never changes. Why are grocery retailers and manufacturers slow to make these kinds of changes?

Logistics rules in fast moving consumer goods (read, Every Day Low Price is the most efficient method of gaining shopper loyalty). You can ask yourself – if there was a supermarket chain with 30 % higher prices, because of fancy logistically inefficient store-design – would you shop there? It’s all about getting the stuff in and out as efficiently as possible. I would not foresee drastic changes to supermarket layouts in near future.

5.  I like the idea of breaking out of the traditional category approach to grocery store design because I currently must travel the entire supermarket to get ingredients just for one meal. Will we ever have a “breakfast solutions” section, for example, that includes milk, cereal, bacon and eggs, all together in one spot?

This is a nice idea, but what if somebody wants eggs for baking? Where should she go – would there be eggs in multiple locations within the store? Or would it just be stacked only based on the common usage occasion? In the previous case, it would be a logistic problem and probably the square inches of shelf used would not be very efficient. In the latter case, I doubt whether a person wanting do her baking would really see why she has to visit the breakfast section to find eggs. There could be some niche store concept that support this kind of ideology, but I don’t think it is in sync with logistics driven mass retailing.

6.  I confess that when I shop, I’m on a mission to get in and get out, so I’m unlikely to watch TV screens or otherwise linger at the point of purchase. How can shopper marketing successfully address that kind of behavior?

We have been thought to follow the ideology of efficient logistics. This varies between different markets, however. For instance in China and Asia in general shopping is considered to be entertainment, which of course has a drastic effect on which concepts succeed. Regarding the question about shopper media, I do think it has huge potential in helping shoppers to make their purchase decisions. When considering shopper marketing, it is all about volumes (actually it’s very similar to other media). The idea is not that 50 % of shoppers will buy the product because of the ad – it could be considered very efficient if only 1 % responded (e.g. from 30.000 shoppers, 300 would buy).

As a remark, it is important to understand that there are very few SKU’s that are purchased by more than 15 % of all shoppers. I recently witnessed an analysis of one major retailers customer data, which showed that out of their 15.000 bar codes there were only 50 products that were bought by more than 15 % of people and of these many were unbranded products, such as cucumber or tomatoes.

The key elements of success, in my opinion, for shopper media is that it is considered a sales building tool instead of a brand building one and that it is optimized for the purchase decision process that takes 5 seconds.

7.  You stress gathering accurate research data and using it effectively to be successful at shopper marketing. What would you say to the argument that “times are tough, and we can’t afford it right now?”

I would ask, what can you afford? Shopper marketing aims for increasing purchase decisions and as such is a sales building tool producing immediate results. So I would ask where do you put your money to?

8.  In the case of some other grocery marketing strategies, sharing personal shopping habits with retailers and manufacturers has not translated into tangible benefits for the shopper. How will a shopper marketing approach differ?

Shopper Marketing aims to understand shopper behaviour and to make it easier to make purchase decisions. This will be beneficial for shoppers only if the shopper’s purchase decisions result in consumer satisfaction. So it is all about giving you the correct reason to buy a product that you will potentially like. In the end, successful shopper marketing should result in repeated purchases, or loyalty towards the product and brand.

9.  Another key to shopper marketing success is getting support between all stakeholders: retail, manufacturing, marketing, sales. What advice would you give to someone who sees the potential of shopper marketing but who needs to persuade skeptical team members?

I don’t think you need much to convince retailers or sales to shopper marketing. For the marketing department, it definitely requires the biggest change in mindset. Briefly, marketers should understand that they must start focusing on two completely different worlds, that of consumers’ (which they already master) and that of shoppers’. Succeeding in both requires mastering two arts, instead of one. The biggest and most common mistake is to apply the rules of consumer marketing to shopper marketing. For manufacturing shopper marketing means bigger volumes, which is hardly a problem. However, the most efficient medium for shoppers is the package – that reaches 100 % of the target group. Using packaging as a medium involves manufacturing as well through tricky and costly design changes. For manufacturing the best guideline is to compare the investment (through labor and direct costs) to buying media. Media is expensive and you pay a high premium to an external media owner. Your packages are owned and controlled by you and you only pay the direct costs associated with the work and materials, with no premium at all. Therefore efficient use of packaging as a medium should usually be a better investment than traditional media.

About Shopper Marketing Book

Shopper Marketing - Published by Kogan Page

World’s first book on Shopper Marketing combines the perspectives of 35 internationally recognized shopper marketing experts, among them Phenomena’s top specialists.

Shopper Marketing is compiled of articles written by 35 individual contributors from around the world. The book is edited by Markus Ståhlberg and Ville Maila. Markus is the CEO of Phenomena Group Ltd, and Ville is the Planning Director.

Contributors include among others:

Simon Uwins / Tesco plc, Paco Underhill / Envirosell, Herb Sorensen / TNS Sorensen, Matt Nitzberg/ dunnhumby Ltd, Lubov Kelbakh / Nestlé Rossiya, Gordon Pincott / Millward Brown, Jim Lucas / Draftfcb, Brian Harris / The Partnering Group, Al Wittemen / TracyLocke, Gerardine Padbury / IGD, David Sommer / MEC Retail, Gwen Morrison / The Store (WPP), Clemens Steckner / G/D/P Marktanalysen, Toon Van Galen / Ratera & van Galen, Scott Young / Perception Research Services and 20 more!

Customer service has been knocked off its perch by low prices as the leading factor driving Canadian shopper loyalty, according to a study released by COLLOQUY

The COLLOQUY Canadian Retail Loyalty Index, a study of 3,500 Canadian shoppers, shows that the importance of customer service has plummeted by almost 20 percent since 2008 as discount retailers make major gains in Canada. However, the
study also reveals that deep discounts are not the only way to customers’ hearts and wallets.

The Loyalty Shift

When asked for the factors that most influence their loyalty to a retailer, Canadian consumers revealed a major shift in their views since 2008. The importance of customer service dropped 18 percent among the general population, falling to second place behind competitive price. By contrast, in 2008, virtually all demographic groups ranked customer service the most important factor in gaining and keeping their loyalty, with competitive price finishing a distant second.

Even among most demographic groups that still rank customer service as the top driver in shopper loyalty, its lead is
narrowing. In Quebec, its importance plunged by 25 percent in 2010. Similarly, for both seniors and women it dropped by 20 percent in importance. The only exception is young adults, whose views of customer service as the top factor in
loyalty are virtually unchanged since 2008.

Despite the large drop in the importance customer service plays as a loyalty driver in Canada, the Canadian experience
pales in complexion to the US, where a similar study by COLLOQUY reveals that low prices have become even further entrenched since 2008, leaving little room for retailers to win on anything but price.

“While the recession played a major role in driving consumers to low-price stores, even as the economy recovers the need to deliver a good customer experience and value is the new normal for all retailers,” said Kelly Hlavinka, author of

COLLOQUY Canadian Retail Loyalty Index and COLLOQUY Partner. “But value doesn’t just mean low prices. Stores that can identify the shoppers that contribute most to their bottom line, and how to satisfy them, stand the best chance of survival and success,” she added.

The Winners

The COLLOQUY Canadian Retail Loyalty Index asked respondents a series of questions to measure how often they shop at leading retailers, as well as how loyal they feel to those retailers. The results illustrate a growing shift to discount retailers and low-price warehouse stores, though well-established retailers with strong brands and loyalty strategies continue to be well-represented.

Grocery:

Among grocery chains, in Ontario the discounters lead the pack, with Zehrs ranking highest for customer loyalty and No Frills topping the charts in frequency. Similarly, in the West, Costco is the COLLOQUY Retail Loyalty Index leader, with Safeway winning the frequency race. On the other hand, in Quebec, IGA tops both scores as does Sobeys in Atlantic Canada. In Quebec, Loblaws (loyalty) and Metro (frequency) emerge as strong second place finishers.

Pharmacy:

In the pharmacy category, discounter Zellers narrowly beats Walmart Supercenter, Shoppers Drug Mart/Pharmaprix and Rexall in the loyalty race in Ontario. Shoppers Drug Mart is cited as the most frequented drugstore. In Quebec, home grown favorite Jean Coutu topped both frequency and loyalty scores, as did Shoppers Drug Mart/Pharmaprix in Atlantic Canada. In the West, discounters reign supreme, with Costco again topping the loyalty category and Walmart attracting shoppers most frequently.

The report also examines the factors that drive loyalty among the subset of consumers most likely to recommend a retailer (a standard way of gauging loyalty). Here, the report illustrates that in the grocery category, “value for money” and “product quality” topped all other loyalty drivers, with “pleasant store environment” and “knowledgeable staff” lagging behind. On the other hand, in the Pharmacy category, “pleasant store environment” topped the list, suggesting that it’s not all about price – it’s about what you deliver, and how you deliver it.

“In the United States, brands built on low prices have rocketed to the top in nearly every category. In Canada, the news is much better for retailers that have built loyalty to their brands with a more diversified approach than simply promising the lowest price,” said Hlavinka.

Winning strategies for the new retail normal

Since there can only be one low-price “leader” and given the risks to retailers associated with continuous price
cuts, the COLLOQUY Canadian Retail Loyalty Index suggests the following strategies for retailers:

* Be wise about where you can win. While retailers may not be able to beat Walmart on price, there are other places to
win, from selection to in-store service. Better yet, retailers can win by knowing and understanding their most profitable customers and what they want.

* Deliver more value. While the recession hangs on, promotions aimed at a retailer’s best customers and partnerships can augment the value customers receive in return for their loyalty.

* Collect the customer data you need to succeed. By casting the net wide and collecting customer data, retailers can ensure their communications, pricing and product selection hit the bull’s-eye with their most profitable customers.

* Look local. Examine additional marketing opportunities within a
tighter range of store locations to court nearby customers, and to attract new
and previously infrequent shoppers.

About the COLLOQUY Canadian Retail Loyalty Index:

The COLLOQUY Canadian Retail Loyalty Index asks consumers to name the brands to which they feel the strongest loyalty, and seeks to learn more about the drivers of that loyalty, regardless of the presence or structure of a formal customer loyalty program. The 2010 Index surveyed 3,500 Canadian consumers.

About COLLOQUY:

COLLOQUY® comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. Owned by LoyaltyOne.

COLLOQUY has served the loyalty-marketing industry since 1990 with over 30,000 global subscribers to its magazine and www.colloquy.com the most comprehensive loyalty web site in the world. COLLOQUY’s research division develops research studies and white papers including industry-specific reports, sizing studies and insights into the drivers of consumer behavior. COLLOQUY also provides educational services through workshops, webinars and speeches at events throughout the world and is the official loyalty-marketing partner of both the Direct Marketing Association and the Canadian Marketing Association and a content provider to the American Marketing Association. COLLOQUY also operates the COLLOQUY Network, a global consortium of practitioners certified in COLLOQUY’s proprietary methodology.

COLLOQUY magazine subscriptions are available at no cost to qualified persons at www.colloquy.com or by calling 513.248.9184.

Thanks a Million: How to Recognize the Ultra-Luxury Shopper

When it comes to luxury store retailing, properly rewarding a customer who spends $200,000 a year could be as easy as a walk in the park, or Park Avenue. But recognizing those dedicated shoppers who spend upwards of $1 million a year takes more than diamond points – this kind of shopper requires sincere eloquence.

It’s a high-class, and at times bewitching, problem.

After all, identifying these shoppers is not difficult. Luxury comes with an implied level of unparalleled customer service, so the top-tier shopper often develops an intimate relationship with her sales associate. That associate in turn becomes a de-facto ambassador, loyalty mechanism and extension of the retail brand.

The trick then is combining that on-the-ground intelligence with shopper data to identify a loyalty reward the luxury consumer finds of real value. These are shoppers who can literally afford anything they want, remember – there is no question of need. Rather, it comes down to delivering a one-of-a-kind service or experience that falls squarely within their values.

This is not exactly a revelation – wealthy shoppers have long equated luxury with their life experience. But in the past couple of years, the top-tier consumer has been changing how she shops, opting for private services rather than buying on the sales floor, and having items shipped home instead of advertising her splurge on the street. This indicates that even the exceptionally affluent are sensitive to flaunting their wealth when so many others are suffering economic hardships.

Understanding these philosophical shifts is critical. While average spending by luxury consumers rose by almost 30 percent in 2009, it was driven by the much smaller, super-affluent segment with a household income of at least $250,000, according to Unity Marketing’s 2010 Luxury Report.

The Ultra-Luxury Sweet Spot

The challenge is that for most loyalty programs, hard and soft benefits need to escalate in value and importance as membership levels climb. These perks are packaged to entice the customer to spend her way into that next level of recognition. But the ultra-luxury shopper is defining that next level herself – she values the importance of being unique.

Translated into fashion, this means she wants to ensure that no one else is going to turn up at an event wearing the same creation.

Understandably, there is fierce competition to impress, woo and retain her. Those merchants winning the race are delivering the kinds of recognition that make these shoppers feel truly remarkable, even in their privileged surroundings.

For instance, I know of one retailer that partnered with a top celebrity chef who was opening a new restaurant in a major metro market. The retailer invited 100 of its best customers to attend a pre-opening dinner, giving them the exceptional opportunity – and bragging rights – to try something before thousands of others.

The same imagination can be applied to charity events or fundraisers. A shopper’s level of spending could benefit the symphony, or cancer research. It is simply a matter of identifying what she connects with.

Fashion Secrets, Top Designers

The point is that retailers cannot rely on standard incentives to engage this special group of shoppers; their loyalty transcends traditional rewards.

Rather, they must pair their customer purchase data with the personal expertise of their sales associates, or brand ambassadors. While the data will hint at future shopper desires – a diamond bracelet to match a necklace; shoes to match a purse – it is the sales associate who can gauge the shopper’s values, her social calendar and the circles with which she socializes.

This requires a thorough understanding of the merchant’s loyalty program throughout the store, from the stock room to the register. If a retailer schools its best associates on just how their good actions benefit the entire company (as well as their weekly compensation check), these employees will strive for the next-highest tier of service.

At Saks Fifth Avenue in Houston, for example, one sales associate offered to catalogue the closets of his very best clients, recommending what should be kept and what should be donated. A great service, but then he took it a mile higher by sharing his knowledge of the Houston social calendar to ensure his clients have an unrivaled, stylish look for an event. His in-depth knowledge of his customers, the local marketplace and fashion keeps his clients coming back.

Luxury in Knowing

With such rewards, luxury retailers not only will effectively recognize the top 10 percent of their clients, they could expand that shopping segment to represent 15 percent or 20 percent of the total.

I believe the key here is to provide a service or an experience that causes the luxury shopper to shift her spending from one retailer to another. Straightforward reward points won’t necessarily do that – they may simply be used toward buying an item she would have gotten anyway. But an invitation-only evening with a top designer, how do you put a price on that?

Saying “thank you” to a shopper who just spent $1 million at your stores requires creative currency of an equal amount. Not only should you do all you can to ensure her loyal business, but the offering should be one-of-a-kind, and not something that can duplicated and repackaged by a competitor a few blocks – or key strokes – away.

About the Author

Phenomena Guest Blogger - Guy Dilger

As a LoyaltyOne consultant, Guy advises on best practices in all areas of loyalty marketing, including program development and implementation, relationship marketing strategy and tactical planning and execution. He draws on a wealth of experience in creating loyalty solutions for high-profile brands, with a particular expertise in supporting strategic marketing goals with innovative tactics designed to drive revenue and market share. He is part of a team of senior consultants who work with many well-known consumer-focused companies, including Walgreens, Target, Canadian Tire and Ulta Cosmetics.

Prior to joining LoyaltyOne, Guy held a senior position with Sears Holdings, where he managed national customer-centric loyalty initiatives for Sears and Kmart. Previously he was part of the management team at Limited Brands, where his loyalty marketing work in support of the Express brand included CRM, email/web-based programs and the redesign and relaunch of a private-label credit card. He began his career in information systems with AT&T and subsequently progressed through a series of product management and brand/customer marketing roles with Sabre Holdings.

Based in Chicago, Guy has an MBA and a B.S. in Economics from Southern Methodist University. He also completed a graduate exchange program in international marketing at the Instituto de Empresa in Madrid, Spain. Guy can be reached at gdilger@loyalty.com.

A Thirst for Learnings – Lessons in the development of CPG loyalty initiatives

When Coca-Cola launched its landmark My Coke Rewards program in February 2006, the fizzy, thirst-quenching leader was at the front edge of an emerging, bubbling trend: the rise of CPG efforts in the loyalty space. Consumer packaged goods companies had long harbored “data envy” toward their retail counterparts, who could easily gather consumer transactional data. And with some retailers beginning to use increased analytics capabilities to gain new insights into shoppers through loyalty and other data, CPGs realized they needed to build their own consumer databases and leverage them to foster customer relationships.

Just a few months later, COLLOQUY reported on the mounting evidence of CPGs using loyalty-marketing principles and practices in the July 2006 white paper, CPGTalk: The Total Package. The white paper delved into two huge challenges CPGs faced in developing loyalty initiatives: The lack of a direct-to-consumer loyalty mechanism, and an inability to track transactional data on individual customers buying product at various retail outlets (creating a world of “invisible” customers). CPGs were just beginning to recognize two central possible models if they wanted to join the loyalty party: A relationship model, in which the CPG engages with consumers directly, and a retail-centric model, in which they leveraged retailers’ purchase measurement ability.

Since the publication of The Total Package, there have been significant shifts in the world of CPG loyalty, particularly regarding the relationship model—thanks in large part to the success of My Coke Rewards, as well as the challenges the program has faced and the learnings it has acquired over the past four years. My Coke Rewards has led the way as an incubator of learning, while other CPGs have observed what the program has gone through and apply its lessons to their own efforts.

Another wave of CPG-based programs are now in the market, at the gate, or in the pipeline. I believe many of them will enjoy a permanent place in consumers’ hearts, minds and wallets thanks to what they’ve learned from the CPG pioneers before them.

Two steps forward, one step back

At the time of its launch, My Coke Rewards was the largest program ever debuted at Coca-Cola—and its code-based program issuing points redeemable against an extensive rewards pool was ground-breaking. By 2007, however, weaknesses in the program’s design began to become public, including consumer confusion; code-entering fraud; a constantly-changing value proposition; and significant liability on the company’s books.

Coca-Cola stuck with the program, however, and revamped it considerably: Today, it continues to succeed thanks to clearer and more relevant communications, more easily accessible redemption options, and online practices that reduce potential for fraud.

I’ve seen other CPGs clearly take the experiences of My Coke Rewards to heart and develop programs that work more smoothly right from the start. For example, I admire Tropicana Juicy Rewards, which launched early this year, for their careful work on the process of on-pack consumer code entry. And programs such as Huggies Enjoy the Ride Rewards have built long-term, equity-based relationships between the CPG and the consumer. These programs and others are building a permanent presence and becoming best-in-class examples that can guide the rest of the industry in the way that My Coke Rewards has.

New opportunities—and current challenges

One of the most drastic changes since 2006 has been the meteoric rise of digital, mobile and social media initiatives. Offering promotions on Facebook fan pages, posting videos on YouTube, offering quick connections on Twitter, and participating in Foursquare have opened up vast opportunities for CPGs to engage consumers directly and, at least in some cases, to gather data on those interactions and measure those relationships.

Those exciting options in social media, however, come with possible pitfalls that must be carefully considered. Consumers are savvier than ever and will talk about the problems or the disappearance of loyalty programs—so while no CPG wants to be left out of the relationship-building game through loyalty, it’s more important than ever that the game is played well.

Playing it well means building teams that can handle the challenges of this new CPG loyalty territory. For example, most CPGs may not have data and loyalty-focused experts already on their staff, since a merchandising, product-driven model has been in place for most of these companies’ histories. Today, CPGs are creating new teams and acquiring experts from the loyalty space to guide them in pursuing these long-term, relationship-building, data-gathering opportunities—as well as to make sure sustainable financial models are put in place.

No matter what strategies CPGs employ, however, loyalty success boils down to mastering the basics—what I call the 3Cs of CPG loyalty:

Craft – It all goes back to planning. Management buy-in is essential, the right value proposition must be fully developed, and program/system set-up must be developed carefully.

Commit – CPGs shouldn’t be afraid to establish the direct relationship with their consumers. Years ago, many CPGs feared disrupting relationships with retailers. However, there is a much stronger acceptance of the CPG direct relationship now. CPGs should make sure they’re in loyalty for the long haul so their campaigns aren’t perceived as promotional flashes in the pan.

Communicate – CPG loyalty marketers—as those in other industries such as travel, financial services and retail have learned over the past two decades—must make their program rules and value proposition perfectly clear. This includes developing a well-designed, well-communicated exit strategy.

The CPG loyalty crystal ball

In my mind, there’s no question that CPG loyalty programs will continue to emerge forcefully at a fast pace—the space has grown since the 2006 publication of CPG Talk: The Total Package, and as mentioned previously, CPGs have taken learnings of early programs to heart regarding issues such as liability and availability. I believe membership numbers will continue to grow as we head toward the conclusion of 2010.

The question we asked in CPG Talk: The Total Package, was, “Do you really want a relationship with your beverage brand?” The answer is a resounding yes—if it’s the appropriate product with a program developed with the above 3Cs in mind.

About the Author

Guest Blogger - Sol Zia, Consultant, LoyaltyOne Consulting

Sol Zia is a LoyaltyOne Consultant and COLLOQUY Contributing Editor. Sol boasts more than 15 years experience in consulting, analytics and customer relationship management. Most notably, he worked with Microsoft leading the measurement and learning campaign for the launch of Windows Vista and worked with Cathay Pacific focusing on their North American segmentation. Sol also held significant roles working with other corporate clients including Discover Card, Washington Mutual, Wells Fargo, Sears, Unilever, Toyota and Nortel. Sol’s vast consulting experience is complemented by an extensive speaking and writing resume that includes appearances at some of North America’s largest marketing conferences. His areas of expertise include marketing optimization, predictive modeling and ROI measurement. He is also quite involved in the CRM/Analytics business community and continues to be a regular contributor to industry forums and activities. He can be reached at szia@loyalty.com.

True Path to Loyalty: Winning the C-Suite by Marrying Marketing and Finance

Maybe it’s true that money can’t buy love. But when it comes to developing a loyalty plan that distinguishes one retailer from the rest, dollars are as important as passion.

Indeed, for a loyalty program to reach its fullest potential, a retailer requires buy-in from the entire C-suite. And achieving that takes a meeting of minds that think very differently: marketing and finance.

Imagine them as two explorers traveling vastly different paths toward the same goal. When it comes to developing and evaluating retail loyalty programs, financial people tend to focus on the costs and the bottom line. Marketing experts, meanwhile, inform their decisions through shopper data and qualitative ingredients that can’t be measured with a financial yardstick. Both approaches are necessary, yet they can trip each other up.

Precima - Taking customer insight to a whole new level

It is possible, though, to build a bridge of understanding between the two paths. With the right plan, tools and a dose of open-mindedness, finance and marketing can together map a course that encourages support of a successful loyalty program across the entire retail organization.

Need more evidence? Then consider this: On average, 30 percent of retail customers generate 75 percent of sales. On a per-customer basis, this can translate to very high incremental value with each positive behavioral change.

Seeing Through a New Lens

But for marketers, capturing such milestones can only be realized with backing of the financial team. This means exposing finance to a “new” way of thinking, and changing the lens it typically uses to quantify the impact of loyalty programs and marketing efforts.

Instead, provide finance with the refined lens of data, best supplied through a well-designed loyalty program. After all, developing a peerless marketing approach takes trial and error, and each attempt does cost money. The more controlled the process, the sooner finance and marketing will see how they benefit each other. Once they can focus together on identifying and then attaining desired behaviors, they can shape the dialogue around managing the risk.

But it is a two-way path. The financial team has much to bring to the table, often raising critical questions that marketers may never consider. It is important not to take these cross-examinations personally – both teams want the best results. Likewise, always be forthright about projections, because overselling forecasted benefits can lead to a world of woe.

Such collaboration is crucial to a successful program, because true loyalty does begin at “home,” with the merchant. For instance, while working with one retailer, the finance team began poking holes in my program assumptions, saying they did not make sense and that the behavior shifts I assumed could not be accountable. This candid discussion forced us to open our minds and build a model we both felt comfortable with.

The trick is using the tools of data – knowing who your customers are and the products they want to buy – to illustrate the benefits of loyalty. This will help the finance team to see how deeper customer relationships equate to long-term engagement, lifts in spending and a broader breadth of products in the basket.

To Know Them is to Win Them

In short, knowledge is power. Through loyalty-supplied data, merchants can improve their percentage of marketable customers, create real-time communications that are relevant, and redirect mass-marketing dollars for optimal results. They can actually anticipate future demand by gauging their customers’ life stages and values, all revealed through data.

Achieving these goals as an organization takes patience. Marketing must continually seek company-wide support – most importantly from finance. The two teams may think in different ways, but that doesn’t mean they can’t see eye-to-eye.

Neither department may be able to put a price on that, but the results – while immeasurable – are certainly something to love.

About the Author

Nicolle Scavuzzo is Director of Client Services at Precima, a shopper-driven insight and strategy firm operated by LoyaltyOne. She can be reached at nicolle.scavuzzo@precima.com