In workshops or at speaking engagements I often quote a figure of 70% of in-store work doesn’t make money. It’s based on a detailed analysis of hundreds of activities and whilst I know that it will be different for every business, we never get challenged. The truth is that the majority of people in the audience have no idea what their situation is because they – be they consumer marketers, shopper marketers or sales managers – do not measure the impact of their activity. But the majority of managers in consumer goods organizations also know that all the evidence they do have would support my point: that the vast majority of programs lose money.
So if your account team or shopper team is losing money on your in-store activities, what should you do?
Assuming that the activity planned is a good one, there are a number of factors which have an enormous impact on whether the activity you are planning makes money. These factors add up to one simple question that must be answered in both the planning and evaluation phase.
How many of my target shoppers actually get to interact with my activity?
If all of your target see and interact with your activity, then we’d be well on our way to success, so why doesn’t this happen?
Compliance – According to a previous comment on this blog left by Mike Spindler of Shelfsnap and other surveys conducted, compliance can be as low as 50%. So potentially half of your shoppers have no chance to see your activity. If that doesn’t impact ROI I don’t know what will!
Out of Stocks – In our surveys, the vast majority (up to 83%) of out of stocks are promoted items. Out of stocks in some stores range up to 12% of total range. Applying even 10% out of stocks to the 50% of stores that installed the activity correctly, now leaves only 45% of shoppers actually able to buy.
Interaction levels – This is where it gets really scary. According to POPAI, the global association for marketing at retail, most shoppers don’t notice displays. They quote that in studies less than half of shoppers notice even one piece of POP (out of upwards of 150 in a store). In research studies by engage, we have found that less than 10% of shoppers have noticed a specific floor display (and these were pretty big displays).
Who interacts – Clearly the design of the activity will impact its interaction levels, but we could be looking at a number of 10% or less of shoppers actually get a chance to interact with a display. Now comes the killer question. Who actually interacts with our activity? For this I’ll focus on the two most common in-store activities, displays and discount promotions.
I’m not a big fan of standard segmentation models – segmentation should be driven by the brand’s strategy, not a generic model invented by an agency – but sometimes they are useful.
POPAI created a segmentation which divided shoppers into four groups: Planners, Bargain Hunters, Time stressed shoppers and Explorers
So which of these segments shop at displays? I’d guess explorers. And promotions? That would be the bargain hunters. So far so good. But how do these segments intersect with your brand’s target shoppers? How many marketers out there are actively targeting Bargain Hunters? I’d guess not many, and yet there is a good chance that much of your sales uplift during any activity is sucked up by them. How many of your target shoppers actually are within that small set of shoppers who see, and interact with your activity?
Return on investment is a function of the investment costs, compliance and interaction. As you can see it is easy to envisage a situation where only a few percent of your target market actually are impacted by your activity. No wonder so many of them lose money!
So how does a shopper marketer improve the ROI of their in-store activity?
1. Focus on compliance If it isn’t executed in the store, then we’re struggling already.
2. Be really clear about who your target shopper is. Value is created when the right shopper (your target) interacts with your activity. See the Venn diagram below: the Value Zone is the intersection between the two, but it’s impossible to work this out until there is a really clear view on who the target shopper is.
3. Understand which activities are most likely to create the behavioral change desired in the target Utilize research or evaluations of past activity to understand which stimulus or activity is most likely to be noticed by shoppers and most likely to lead to engagement.
The retail store is a tough, unforgiving environment, but as all trends suggest that more and more money is pouring into this arena, making small improvements in ROI will make a bigger and bigger difference as time goes by. And given that most activities deliver really poor returns, it doesn’t take much to outstrip the competition in this area
What in your opinion, should manufacturers and retailers do to make in-store activity more profitable for all? Is the answer to do less, or simply to do things differently? Do let me know
