Major Retailers Find Themselves Turned Into Showrooms
Last weekend, the main television in my house was on the fritz, so it was time to upgrade. Like many modern consumers, I turned to my laptop to research alternatives, and made a short list of television models to consider. I then pulled out my iPhone, did a search to locate the closest retailer and headed out to make my purchase.
After arriving at the store, I headed back to the TV department and, again using my smartphone, pulled up my list and checked out my choices. In the not too distant past I would have been the only one checking their phone while looking at product choices, but today, I was one of six different people in this area of the store doing so.
Then it hit me: we were all showrooming.
Showrooming is the new term to describe customers, like me, who go to brick and mortar stores as a part of their purchase process, check out products in person and then use mobile devices to find the best prices, many times leaving the store to complete their purchases.
I found myself paying close attention to what these other consumers were doing. Walking around, looking over shoulders (and getting some odd looks in response), I found that the majority of my fellow “showroomers” were doing some comparison shopping, although two of them were also checking reviews. More importantly, all of these would-be-purchasers were ignoring or waving off the staff who attempted to assist in closing the sale. For the most part, these young workers seemed at a loss for how to address these mobile-armed shoppers and drifted off to help other customers.
As I watched, two of the customers made purchases on their phones and left; apparently they found a better bargain than was to be had in the store.
New research from GroupM Next shows that showrooming is increasingly becoming a phenomenon, with almost 44% of consumers using mobile to shop in-store. Not only are consumers using mobile devices to check products, they are comparing prices and those comparisons are pulling them out of the store. According to the research, even a price saving of just 2.5% will pull 45% of customers out of the store, a 5% savings will pull out 60% of customers and a 20% discount will draw 87% of customers out of the doors.
After the first two customers in my “group” left the store, an enterprising young sales associate, fully armed with an iPad, approached my fellow showroomers in a different fashion. He engaged them with information on the models they were standing near, pulled up reviews and even (gasp!) pulled up comparison price sites along the store site. In each case this associate came down on the shelf price of the TV to within a few points of the lowest online price or offered some other value-add that the customer could not get from the online competitor.
I was amazed at this salesman’s initiative, as were the other “showroomers” who each stayed around long enough for this associate to speak with them. In each case, the customer made their purchase in-store instead of online.
This employee represented exactly how retailers need to approach the local showrooming trend. While shopping is still a predominantly local experience, it is no longer limited to local merchants. Local retailers have to be cognizant not only of what their fellow local merchants, but they must also raise their awareness level of online competition. For retailers to succeed in a showrooming world, they must have a strategy and offer in place to combat the potential of customers leaving the store strictly on the basis of price.
As for me…well, when the associate got around to speaking to me, I had already made my purchase. The store’s online site was running an “online only” special on the model that I wanted. While in the aisle, I completed the purchase, scheduled in-store pickup and was able to walk out with my new television within 15 minutes.
I wonder how that counts – as an in-store or online purchase?
Has Online Digital Streaming Hit Its Stride?
My family and I recently embarked on the annual summer vacation. This year, the kids chose Charleston, SC, which meant – ROAD TRIP! In my youth, long road trips meant many periods of static on the radio as we traveled between accessible radio signals. All options on the dial were “terrestrial” based, meaning traditional AM or FM radio stations. During this trip, we had in-dashboard options such as Pandora and Sirius XM and other streaming services as well as iPods, iPads and iPhones that could be plugged into the radio. Because of our plethora of options, I spent several hours of our journey exploring and switching between the myriad of stations available for our listening pleasure. Or, as my wife put it, I spent the whole time simply playing with the radio.
This experience got me thinking about radio, both traditional “terrestrial” radio and the growing ecosystem of options currently available to consumers. Traditional radio is truly the oldest medium for reaching a mass audience. According to Arbitron, it currently reaches more than 93 percent of the US population and accounts for more than 80 percent of all music listening. However, Arbitron also reveals that while traditional radio seems to have peaked, it has not seen true growth in listenership in several years.
On the other hand, online digital streaming is undergoing tremendous growth and the ecosystem is expanding at a rapid pace. Arbitron reports more than 18 percent year-over-year growth in consumers who listen to music (including streaming radio) exclusively online. Consumers spend the vast majority of their waking hours away from home; both terrestrial and online music and radio is with those consumers during the hours they are commuting, on the go or at work.
This growth is not only in online music or streaming services such as Pandora, Spotify or Slacker. Most “terrestrial” stations currently stream their broadcasts directly, or belong to a network or “co-op” of local stations streaming through a central point, such as Clear Channel’s iHeart Radio. These digital streams contain the same content as the “regular” broadcasts, but with varied advertising opportunities.
There is a true market shift beginning to take place in the “radio” space. Brands need to not only be aware of this shift, but recognize the unique opportunities available for reaching consumers. Brands need to consider and address such questions as:
- Who are the major players in the new digital audio universe and what are the advantages and disadvantages of each?
- Is advertising on streaming music services such as Pandora and Spotify more valuable than direct advertising with choice local streaming services?
- Should advertising dollars be shifted from “terrestrial” radio to streaming radio and music?
- Where is the industry headed in the next year, two years and five years?
Brands that can successfully answer these questions will be well positioned when the digital audio shift hits the point of critical mass, placing them in prime position for optimal consumer engagement.
Are Brands Overwhelming Consumers with Choice and Communication?
Last weekend, I was given the duty of visiting our local Wal-Mart to purchase household necessities. A list was provided, and out the door I went, believing this would not be a problem. One of the first things on my list was “toothpaste,” so I visited that aisle, which is where my problems started. There appeared to be hundreds of choices – from mint, gel, blue, green, whitening, extra-whitening, tartar control and on and on.
That said, my list simply read “toothpaste.”
Needless to say, I was dumbfounded not only by the amount of the choices, but by which one I was supposed to purchase. After several minutes of consideration and indecisiveness I almost gave up, but finally grabbed one that looked right and went on my way. Naturally, this process (sans toothpaste) was repeated several times over during my trip.
Later in the day, I came across several articles in the Harvard Business Review (HBR) discussing this same type of situation and the number of brands that are inundating consumers with a vast amount of choices. In many cases, this is considered “choice overload.” The HBR conducted a survey of 7,000 consumers and found that a large majority of them had abandoned the traditional “purchase funnel” altogether, embarking on new types of purchase paths. One of the main reasons for this is a “cognitive overload” due, in large part, to marketer’s overwhelming efforts to engage with them.
Most consumers today are shying away from the over-abundance of choices and instead are looking for simplicity and ease of decision-making. With the hectic life most consumers lead, the last thing they want to do is spend multiple minutes on each product choice (in my case, spending fifteen minutes in a toothpaste aisle to make a choice was ridiculous).
This same type of over-engagement is happening on a local level and in the social sphere. According to the Harvard study, most marketers still believe that the best way to keep customers is by engaging them, interacting as much as possible in order to create relationships. However, this is rarely the case, especially with social media. The study found that contrary to popular belief, the majority of consumers (77%) do not want to have a “relationship” with a brand. Relationships are reserved for family and friends, not businesses. Of those who did say they had a brand relationship, the main reason was because of shared values (64%), infrequent engagement or interaction. For example, consumers may share the value with Pedigree that all dogs deserve a loving home and identify with Pedigree for that reason, not because Pedigree sends multiple emails or has several lines of “touch points” with the consumer. What consumers really want from brands, especially when engaging them on a social site, is to get coupons and discounts, not posts and messages.
The over-engagement by brands and the increasing level of choices and options may very well be doing more damage than help to a brand. Does this mean brands should immediately cut the quantity of communications with consumers? Not necessarily, but following are nuggets all brands should consider:
- What percent of consumers are “relationship-oriented” and which are not? Each group should be marketed to differently based on these parameters.
- What shared value might consumers have? Many brands (like Pedigree and Southwest) market heavily upon these shared values, helping make their consumers more loyal.
- Is current social engagement beneficial? Posting on social sites should be more than just talking.
Both types of consumers should be engaged by posting shared values and giving monetary rewards to fans and friends.
In the end, it is not the brand with the most communication that will win with consumers, but the brand that communicates smartly and effectively by knowing who they are talking to and what that person wants to hear.
Harnessing the Power of Facebook for Local
A few days ago, my family and I were discussing the need to open our pool soon and the subsequent need, due to my general lack of mechanical skills, to find a company to perform this task for us. My wife was on Facebook at the time, so she decided to utilize the platform to search for a local pool company. This surprised me because everyone uses Google to perform a search, right?
Apparently not. In fact, according to the latest stats, Facebook has passed Ask.com and AOL.com in search market share, currently garnering 1.44% of the market. According to comScore, in the recent “Local Search Usage Study,” the use of social networking sites for local business searches has increased 67% since 2010.
Facebook has been a driving force in news over the past several weeks. From various discussions regarding the impending IPO to the latest news of the purchase of Instagram, Facebook is everywhere. And in the realm of local search, Facebook continues to be a very large factor.
How much does Facebook influence local online and local search? The short answer – a lot. Depending on the study and source, statistics say that 70-90% of local small businesses use Facebook for local marketing. eMarketer estimates that the largest category of Facebook fan pages are for local businesses, which is almost triple the amount of large “brand” pages for national companies. Additionally, other research has shown that local business Facebook pages garner five times more reach percentage and eight times more engagement than brand or corporate pages.
Once again we see that local, even with Facebook, is the great leveler between national brands and local businesses. In fact, with Facebook, local businesses have a distinct advantage as it is much easier to create and maintain a Facebook page for one location vs. several thousand. Those local businesses that are utilizing Facebook as a part of their local strategies are wielding that powerful advantage over their national brand counterparts.
There are, however, some national brands that are uncovering ways to leverage the power of Facebook on a local level. Starbucks, for instance, has utilized the Facebook parent-child option to tie together all of the pages of their local stores under the main Starbucks brand page. When a person visits that main page, they are able to click on the “Locations” icon which takes them to a page listing all of the Starbucks close to the location specified on their profile page.
While this is an advantage in one aspect, if those local pages lack content, fans and interaction, these pages may do more harm than good.
Like politics, all marketing is truly local and national brands have to think and act locally in order to catch up with the local businesses. So what are major national brands to do to utilize the huge consumer power that Facebook has over the local arena?
- Tie together all of the existing locations on Facebook to the main Facebook brand page using the parent-child feature.
- If they do not exist, create Facebook pages for all retail locations. This enables the brand to speak to consumers at their level and achieve a much higher reach and level of engagement.
- Engage a system to actively manage all locations from a corporate level, allowing for brand image maintenance and consistency.
- Engage with local consumers in the way that they want, with active replies to posts, offers and communication.
These tactics may seem daunting at first as they sometimes require more resources than a brand wants to commit. However, there are several systems available to all brands that can create concise and seamless streams of information and automation which make this mountain not only manageable, but achievable at economies of scale. Brands that choose this route and engage local customers on their social doorstep will benefit by increasing their local brand advocates, fans and sales.
Four Developments in Local to Watch for in 2012
Four Developments in Local to Watch for in 2012
Last Friday night, I spent a few hours devising a plan to win the Powerball. Using the winning numbers from the past two years, I created a database and concocted a formula to predict the next winning numbers. I naturally included various factors—outlier numbers, recent trends, total history—that would influence the drawing. Upon completion of this plan, I was wholly confident that my analysis would deliver a positive outcome – to my bank account. As you’d expect, when the numbers were drawn Saturday night, I was ready to collect my winnings. Fast forward …
Since I’m now writing this post, I bet you can guess the outcome. Out of the six numbers drawn, I got one. Yep, you read that right. One.
As I crumpled the ticket in angst, I thought about the many brands that have set their 2012 local online agendas in the same way. They’ve looked at what has happened in the past and have made the assumption that future success will come from employing those same local online strategies and tactics. However, if the past few years have taught us anything, it is that consumer behavior is anything but predictable, and that being the leader in a new space is much more valuable than captaining a ship with a dwindling passenger count.
Fortunately, brands are not alone in their efforts to navigate the local online landscape of 2012. Following is my list of the top four local online considerations that warrant paying close attention to as we look ahead to Q2.
1. The Rise of Google+ As Social for Businesses
In 2012, Google+ will become the dominant social destination for businesses. Google+ has topped the 100 million member mark, but it is nowhere near the size of Facebook and there remains debate over the size of its active member pool. The launch of Search plus Your World renders those stats unimportant. Google is now incorporating social results directly into the organic listings and seems to be heavily favoring Google+ results over other social signals, which will turn a brand’s involvement on Google+ from a luxury to a necessity.
What does this mean for brands? Google+ Pages is the portal for brands to create, define and build their social presence on Google. These brand pages have a similar look and feel to Facebook, but Google+ has one vital component Facebook can’t match. On Facebook, social commentary dies after a few days. With Google+ Search plus Your World, commentary can live on and influence organic search results. Most importantly, this influence can and does extend beyond searches by those in a brand’s circle; there are already examples of social influence on organic results, whether or not the searcher is logged in to Google+.
What should brands do? Brands should create a main Google+ Page for the brand and for each brick-and-mortar location, and take steps to gain friends and create circles for each page. The larger the pool of friends, the greater the chance of the searches by those friends being influenced by the location pages at their points of consideration.
2. Social Content Will Continue to Flummox Marketers
Social network success will no longer be defined by number of follows, friends, fans or likes. Brands will discover that these metrics define social success no more than Nielsen ratings define success for a television spot. A brand may have 10 million fans on Facebook, but how many of those fans really care? A recent study by the Ehrenberg-Bass Institute shows the answer to that question is not what many brands want to hear; engagement by “fans” with a brand is actually only around 1.3 percent.
What does this mean for brands? No one brand has truly harnessed the power of social media. Many have garnered fans and likes, but turning those likes into dependable revenue remains elusive. Those brands that can construct a winning social formula will pull ahead of the pack.
What should brands do? Digital social media is the 21st century version of the picket fence or water cooler, and brands need to approach it as such. Turn the current approach of a digital billboard to one of an engagement platform. Stop thinking of friends as consumers and instead treat them as, well, friends.
3. IYP Sites Will Continue To Stumble
IYP sites will no longer be a prime destination for local information. Although local online search generally started with websites that were the digital counterparts of local yellow pages, today this is no longer the case. The local ecosystem has expanded and evolved, print directories have become antiquated and local search traffic has migrated to search engines or specific sites, leaving the IYPs grasping.
What does this mean for brands? Most IYP sites engage in paid models where basic location information (name, address, phone number, etc.) is free to list on the site, but further details require “upgrading” to a paid service. With Google and Bing both offering robust listings for free—and covering approximately 55 to 60 percent of local search traffic—paying for a listing that delivers only a fraction of available traffic has been seen as a poor investment by many brands.
What should brands do? If a brand is currently paying for IYP listings, it should closely examine the benefits of that spend and determine if better results can be achieved through that investment, but in another place of the local space.
4. Mobile Has Truly Arrived As A Search Device
According to Google, this past Valentine’s Day, 62 percent of all US-based national chain restaurant queries came from mobile devices. JiWire reports that 21 percent of consumers search for a coupon on their mobile device while in a store. Morgan Stanley estimates that by 2015 there will be more mobile web users than PC web users. 90 percent of local mobile searches result in an action, typically within 24 hours. Mobile has truly arrived…and in a big way.
What does this mean for brands? Having information that is accessible via mobile devices is critical for local businesses. As more and more consumers engage with their mobile devices, having a mobile-optimized site (not only one or two mobile pages) will be essential to capture those consumers who prefer to shop via their devices.
What should brands do? The first step should be to optimize all local business listings to ensure they have top positioning on mobile searches, as results past the first page are typically ignored. Serious consideration should also be given to incorporating elements of HTML5 into brand site designs, as this can help the site render correctly on mobile devices.
This year will be one of advances and growth in local and will foster the continued bonding of local, social and mobile. Those three elements of the digital world are now irrevocably intertwined and can no longer be viewed as separate enterprises and projects. Implementation of the tactics discussed here will enable brands to ride the wave of so/lo/mo, while ill-prepared competitors get left behind.
Is Google Setting Up A New Paid Platform?
For years, the daily deals model has been relatively stable and focused on smaller, local businesses with the flexibility to create market and niche
the quantity of deals sites, but the formula remained the same: city-specific deals offered by city-specific businesses. In the fall of 2010, national retailer The GAP broke the mold by offering consumers a national daily deal and breaking the original “local” daily deals mold. They were soon followed shortly by other retailers, including sister brand Old Navy. Following the lead of the above mentioned retailers, last year, Whole Foods became the first national perishable goods chain to offer a nationwide daily deal.
Google, which often serves as an innovator in the online space, announced a change to its daily deals offering last October that could very well signal the next broad evolution of the space. The announcement unveiled a partnership with 14 separate daily deals providers that changed Google Offers from being a single offering to an umbrella destination for deal-
seekers. Along with this change, the search giant has adjusted the space making the “one size fits all” approach a more tailored experience by introducing a personalization quiz meant to hone in on a user’s interests; thereby providing them with more relevant deals.
The only thing greater than the quantity of daily deal sites is the quantity of deal sites that have failed. Google’s decision to launch Offers, with targeting as an embedded part of the system, could be the necessary element making the difference between success and failure. Given the history of the space, it seems likely that consumers will be much more willing to sign up and engage with Google Offers, considering that from the beginning of their membership, they will be assured a much more targeted, therefore useful, experience.
However, the targeting mechanism could serve a deeper purpose for Google. Let us not forget that Google’s core service is providing targeted information to searchers, with a percentage of that information appearing in the form of paid search advertising. It is not too far of a stretch for that to be applied to the deals space as well.
What does this mean for national brands?
Imagine a scenario where a pay-per-click model is applied to the deals space within Google Offers. One where the deals shown are decided not only by their relevance to a particular user’s interests and the discount the merchant is willing to make, but also on a pay-
Large national brands, especially those with a significant local footprint, should keep a close eye on this evolving situation and look for the opportunities that will surface. Daily deals have historically focused on smaller local businesses, but in today’s ultra-competitive marketplace, even larger retailers need to think, move and act like their smaller counterparts. As such, we recommend the following:
- Know your space – Implement a program to monitor the major deal sites such as Groupon, Living Social and Google Offers to gauge competitors’ level of involvement. You want your brand to appear as a leader in the space, not a follower.
- Think engagement, not profit – Old Navy and Whole Foods proved a national offer can have a local appeal and drive traffic into stores. Do not look at deals as profit drivers, but as traffic and consumer engagement vehicles.
- Utilize social media – Chances are your consumers are engaging with your brand through social media, so use those resources as a free “idea box” for designing offers around what your consumers want.
- Innovate – Be a leader in the marketplace by supplanting a current sale/promotion with a national coupon offer, especially on items or services that are planned loss-leaders.