With so much money being poured into stores (be they of the virtual or bricks variety) there is always a danger that some of that money is going to be wasted. But our data suggests up to seventy percent of money spent on promotions is wasted. Message to John Wannamaker – If you thought fifty percent waste was bad – don’t try shopper marketing!
And why does this happen? Yes there are lots of reasons: we could blame greedy retailers, difficult analytics, and just having too much to do; but today let’s focus on one thing at the heart of all of this. Too many shopper marketers don’t actually do marketing very well.
Sorry, but it’s true. Marketing is (according to one of my marketing heroes, Dr. Philip Kotler) “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit”. Now the reason I’ve chosen Dr. Kotler’s definition for this piece, apart from the fact that I am a big fan, is that he uses two words often forgotten in shopper marketing: target and profit.
There isn’t a self-respecting consumer marketer who would create activity targeting all consumers, yet in the land of the shopper marketer it seems to be OK to talk about “the shopper”. Too many shopper marketers still seem to dwell in that “Mad Men” era where the shopper was a generic housewife and all they all wanted was their whites to be whiter, their kids to be wholesome, and their husbands to appreciate the meal they put on the table.
Now I’m pretty sure that even back in those days shoppers weren’t always the same, but perhaps it was an approximation that was (just about) OK. Today that simply isn’t true: shoppers vary massively, and this, if nothing else, marks the advent of the age of shopper marketing. Shopper Marketing needs to market to shoppers, and that means targeting, and targeting means being selective about who we’re after.
So which shoppers should you gun for? There are loads of very clever, sexy, (and occasionally clever and sexy) segmentation models, but how do we boil this down to something everyone can work with and apply? It’s brutally simple. Which shoppers represent the majority of your current profit, and which represent the biggest opportunity to create future profits? That’s it. Simple isn’t it?
Or not. Because if it was that simple we’d all be at it.
The problem is that marketers too often get confused. We confuse sales and profit. We track loyalty without considering what it actually means. For example, a shopper who always buys your brand is great, but if they only buy it on promotion then they are less profitable.
We track customer satisfaction, when satisfaction hardly guarantees future behavior. I’m satisfied with lots of products, but it’s only when I’m delighted that you have won me over. Satisfied customers are at risk. Satisfied customers are the ones that increasingly need promotions to bind them to brands.
We measure repeat rates often without considering the conditions necessary for that repeat purchase to take place. Repeat is where we make money but the real measure is repeat at full price. If this measure is deteriorating then a brand is really going to struggle. There is a big difference in the value of a shopper who is loyal at full price and a shopper who is loyal only at a discount (but that discount is frequent enough to ensure I never have to leave the brand).
What this comes to is that the model of success actually requires a marketer to understand both the behavior they are trying to create, and the circumstances within which this behavior is most valuable (ie the marketing mix). The goal would be loyalty without discount for most companies, so why do they continue to create a marketing mix which makes this impossible?
Marketing investment therefore needs to consider the following steps to be able to fully comprehend the profit value of a group of shoppers, and therefore the value of that segment:
The value of the consumption change that is unlocked. The sales value of a shopper segment depends on the consumption value it creates. Shoppers who buy to fill the larder are lower value than those that enable long term changes in consumption behavior.
The specific size of the shopper segment. How much of a particular consumption opportunity can be unlocked by a certain group of shoppers. Not all consumers are shoppers, and just because a population is homogenous as consumers doesn’t mean they are as shoppers.
The stores where the shopper can be influenced. Understanding this helps understand how to reach those shoppers (indeed can they be reached), but also goes to indicate the cost of the marketing mix required to to influence them.
This enables investment decisions to be made based on a true understanding of the value of a segment, as well as the cost of achieving that value: and that drives profitable shopper marketing
And if this seems difficult, or beyond the capability of your business right now, take heart. Tiny steps in this direction will make you stand out from the crowd – winners aren’t perfect, they are merely better than the others. Who knows, a couple of shifts in the right direction and you might get to match Mr. Wannamaker’s fifty percent yet, and that would be some achievement!
Featured image via Flickr
