I posted recently about the apparent indifference of consumers and shoppers to many brands: a post that created a large number of responses. And perhaps not surprisingly, either. The idea that consumer and shoppers suggest that they would be quite happy without the vast majority of brands should strike a chill into the hearts of many marketers. Can so much of our efforts and marketing activities really be so unappreciated?
Well – yes and no
The rise of discounters in many markets suggests that too much of what many brands are offering to consumers and shoppers is simply not adding enough value. True, the decision to shop at an Aldi or a Lidl store is in part about the chain and the shopping experience. But it is also (certainly for the repeat shopper) a decision to shop in an environment where many household brands are simply not available. Why is it that, despite all of our marketing efforts, shoppers are turning to no frills offerings?
Consumers and shoppers pay for marketing activities
Consumers pay for marketing activities. I mentioned this in passing during my presentation at a recent conference. There was a deep intake of breath from many in the audience. I didn’t, until that point, realize that I’d said anything controversial. I’ll say it again.
Consumers and shoppers pay for marketing activities
Of course they do. Everything we do as marketers is ultimately factored into the total cost of putting a brand in the hands of a consumer. The natural conclusion, when consumers and shoppers opt for the no frills alternative is that the cost to the consumer of that activity is more than the consumer is prepared to pay.
Marketing activities cost the consumer a lot!
And we’re not talking about small amounts of money, either. Large consumer goods companies could be spending 20% – 30% or more of total sales value on marketing activities, and that doesn’t include the salaries and other costs of the marketing team. All those new product launches that don’t actually work? Who pays for the R&D? You guessed it!
Many marketing activities don’t add enough value to consumers and shoppers
And that is one of the problems with too much marketing now. There is no calculation of the Consumer Return on Investment. CRoI would be a measure that ascertains specifically what value a consumer gets from said marketing activity, and compares it to the cost that consumer will ultimately pay for it.
Put simply, is the value that the consumer accrues from this activity greater than the cost of conducting it?
When we ask a consumer ‘would you like to see brand X on Facebook?’, and they reply ‘Yes’ – it is meaningless, or disingenuous at best. When consumers say “I prefer my brands to have an omnichannel presence’ what they are actually saying is “I’m totally happy for brands to go omnichannel as long as I don’t have to pay for it”.
But they do.
If you ask me would I like a cup of coffee, I’ll say yes. If you ask me if I’d like that coffee to come in a fancy cup, then sure. But if you tell me the fancy cup will cost me ten percent more? Well – perhaps the standard cup works just fine for me.
All that social management and content creation costs a fortune – all in the name of building better relationships with a whole load of consumers: many of whom either don’t want that relationship or certainly aren’t prepared to pay for it.
So how might we know if marketing activities deliver a Consumer Return on Investment?
Would a consumer pay more for a brand as a result of that activity? It’s as simple as that. Before your next dollar is spent on marketing, ask yourself a simple question. Do you have evidence to suggest that consumers see value, and are prepared to pay a premium for, the activity you are about to commit to. And if you don’t, perhaps we should be asking more of our market research activities too?
Note that I’m not suggesting that the customer will actually pay more for it (in that we’ll put the price up) – but to ascertain real value to a consumer then surely we have to ask (even if it is hypothetical) would they pay for it. If the answer is no – how much is it really worth?
Clearly actually testing this in research is complex: consumers are so used to believing that all this stuff is free that a direct question would lead to equally misleading data. This isn’t the place to discuss methodologies, but there is surely a way to better test the real value of marketing activities to consumers, and therefore to be able to estimate the CRoI.
Of course not all activity fits into this pattern. There are activities we choose to invest in (e.g. sampling) because it will add value to us. That’s OK. That’s us investing in consumers to get a return later. But if year after year our marketing costs the consumer 30% of the total cost of the product, surely, from time to time, we should ask ‘Is the consumer getting a return on this?’ If we can honestly say that the consumer is getting more value than the cost we are putting in, then that’s fantastic – marketing is working fine. But if we are spending on something that doesn’t move the needle in terms of consumer value. What then?
I’d love to know what you think of the concept of CRoI – please join the conversation in the comments section below.
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