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Path to Purchase: Navigating the Changing Consumer Landscape
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Path to Purchase: What does it all mean?
The journey a consumer takes to purchase a product, service or brand.
Old Path to Purchase: Research
Visit Store
Purchase
New Landscape to Purchase:
"Gone are the days of retailers only worrying about keeping up with their competitors. Today, the key to winning at retail is keeping up with your customers," said Rodney Mason, GVP of Marketing at Blackhawk Engagement Solutions, an international incentives and engagement company.
?
What is the Prevalent Internet
Smart Phones
Desktops
Laptops 71%
Tablets 50%
66% 41%
Shopping List Peak Time 4 pm – 9 pm
37% shop at work 58% shop at home while watching TV
Showrooming
Resource: Blackhawk Engagement Solutions Where Its At Report
Free Webinar – Tomorrow August 26 from 11 am – 12 pm
BLAH BLAH BLAH BLAH
B BLAH
BLAH
How Do You Break Through
The Noise?
Deliver the Right Message At the Right Point in the Consumer’s
Journey
Web TV
Radio F&F
Mobile
Resources Measure What Matters Most Report by Google
Where It’s At: A Connected Shopper’s Study by Blackhawk
Thank you!
I would love to sit down with you and help drive your business to the top!
CONTENTS
BES | WHERE IT’S AT | 1
TABLE OF CONTENTS Introduction 3 Methodology 4 State of Mind
6
Connected Shopping
7
Emerging Shopping
8
Mobile Price Match
10
BOPIS 12 Social Media
13
Loyalty Programs
14
Digital Promotion Delivery
15
Competitive Pricing
16
The Verticals
17
Appliances
18
Home Improvement & Hardware
22
Automotive Products
18
Office Supplies
22
Clothing
19
Pet Products
23
Electronics
19
Sporting Goods
23
Entertainment
20
Subscription Services
24
Furniture
21
Toys
24
Groceries & Consumer Products
21
2 | WHERE IT’S AT | BES
INTRODUCTION
INTRODUCTION
BES | WHERE IT’S AT | 3
CONNECTING AT THE CROSSROADS Your customers are always on the move. They are looking for quicker, easier and more targeted deals that respond to their shopping styles. They’re harnessing connected technologies to simplify and optimize their shopping paths. With all this activity, how can you make sure your path crosses theirs? By charting where your customers are now and where they’re going — the ways they pre-shop discover and filter, the devices they use and their influence along the multiple paths to purchase, and the many ways those paths can be disrupted — you’ll uncover dynamic messaging streams, product offerings and promotional offers. You’ll get closer to your customers by making their shopping easier, on their own terms. That’s why we commissioned this national study of 2,608 respondents to uncover their engagement and shopping behaviors across 13 leading retail categories. Through all of these variables, we have insights for mapping clear paths to effectively go to market. Gone are the days when your main worry was keeping up with your competitors. Today, as this study clearly shows, the key to winning at retail is keeping up with your customers. By anticipating where they’ll land as they explore new shopping territories, you can position your business directly in front of your underserved customers — and ahead of your competition.
Through this research and other insights generated by working with you, we’re able to build a grounded understanding of the market. From there, we can deliver the right strategies and incentives that grow topline and baseline sales, while improving your margins and long-term fiscal health. If you’re a retailer and want to be more effective in the market, partnering with us will bring you deeper, more specific insights from our studies. We also conduct custom research to help you identify your unique challenges and opportunities. By comparing them to the national benchmark data provided in this study, we can help you identify key strategies for growing your business. Please reach out with your questions and comments, and let us know if you’d like to receive more information about our services.
Now, let’s go find your customers. Good shopping,
Rodney Mason GVP, Marketing Blackhawk Engagement Solutions Rodney.Mason@bhengagement.com
4 | WHERE IT’S AT | BES
METHODOLOGY
METHODOLOGY
BES | WHERE IT’S AT | 5 Responses may not total 100% due to rounding.
Blackhawk Engagement Solutions conducted this national study in April 2015 to identify how and where consumers are using connected technologies to discover, filter and shop. The results reflect the responses of 2,608 adults, representing the general US population.
GENDER 51% Female
49% Male
HOUSEHOLD INCOME
ETHNICITY
19% <$19,999
1% American Indian or Alaskan Native
35% $20–$49,999
5% Asian or Pacific Islander
33% $50–$99,999
11% Black or African American
11% $100–$199,999
18% Hispanic or Latino
2% $200,000+
65% White or Caucasian
EMPLOYMENT STATUS 39% Employed full time
10% Homemaker
10% Employed part time
6% Student
6% Self-employed
REGION 16% Pacific
11% West South Central
21% South Atlantic
6% Mountain
15% East North Central
14% Middle Atlantic
6% West North Central
6% East South Central
5% New England
RELATIONSHIP STATUS
RENT VS. OWN
15% Retired
44% Married/Civil union
56% Own
9% Unemployed
6% Disabled
16% Widowed/Divorced/Separated
44% Rent
AGE
EDUCATION
8% Living with significant other 32% Never married
PEOPLE IN HOUSEHOLD
8% 18–22
4% Less than high school
13% 23–29
23% High school diploma
21% 30–39
26% Some college
20% At least one under 10
19% 3
18% 40–49
7% Vocational/Technical degree
22% At least one 10–18
15% 4
21% 50–59
29% College graduate
11% At least one over 18
7% 5
19% 60+
11% Graduate school
58% None of the above
4% 6+
CHILDREN IN HOUSEHOLD
23% 1 32% 2
6 | WHERE IT’S AT | BES
STATE OF MIND
CONNECTED SHOPPING
BES | WHERE IT’S AT | 7
PROCEEDING WITH CAUTION, NOT CONFIDENCE
SHOPPING ANYWHERE AND EVERYWHERE
Despite major reductions in fuel costs, often a prominent line item in household expenditures, there is still significant sensitivity to price and spending. It’s a safe assumption that if fuel prices were higher, the majority of customers would be hypersensitive to price and spending. Right now, they’re just cautious.
The smartphone is the most prevalent internet-connected device, with the laptop not far behind. That means you’re never further away from your customers than they are from their devices, at home or at work.
HOW DO YOU LEARN ABOUT PRODUCTS, SPECIAL SALES AND SHOPPING NEWS?
WHICH DEVICES DO YOU OWN AND USE DAILY?
47% TV
71% Smartphone
36% Friends and family/Retail websites/Social media (tie) 31% Amazon
66% Laptop
27% Google
50% Desktop computer
26% Ads on the web 13% Radio 6%
PRICE SENSITIVITY
47%
SHOPPING POWER
49%
More sensitive to price than last year
Same sensitivity to price as last year
57% Shopping power has not improved since last year
Evening hours are the peak online shopping period, but work hours still account for a sizeable portion.
Shopping power has decreased vs. last year
14%
10% 7–11 a.m.
$ 3 BRAND
4 STORE
5 AVAILABILITY
62%
regularly seek out and sign up for digitally delivered special promotions.
28%
11 a.m.–4 p.m.
DON’T TELL ANYONE, BUT A SUBSTANTIAL AMOUNT OF SHOPPING TAKES PLACE AT WORK. 2 QUALITY
48%
29%
WHAT HAS THE GREATEST EFFECT ON YOUR PURCHASING BEHAVIOR?
1 PRICE
43% Tablet
Other
37% admit to shopping at work. 18% often 19% sometimes
4–9 p.m.
9 p.m.–2 a.m.
TV WATCHING AND INTERNET SHOPPING ARE CLOSELY CONNECTED.
58%
Shop at home while watching TV.
(27% of ten, 31% sometimes)
8 | WHERE IT’S AT | BES
EMERGING SHOPPING
EMERGING SHOPPING
BES | WHERE IT’S AT | 9
SMARTPHONES: THE GPS FOR SHOPPING
WALLETS MAKE WAY FOR MOBILE
Mobile has changed how customers compare prices and shop online and in-store. For example, Google recently instituted a new ranking algorithm that demotes websites that aren’t mobile friendly. Already the most prominent connected device, the smartphone is on its way to becoming the primary tool for shopping.
A telling sign of the times: The traditional wallet is diminishing in use as customers rely more on plastic, recurring and mobile payments.
19%
WHAT’S YOUR FIRST CHOICE FOR COMPARING PRICES ON YOUR SMARTPHONE?
PURCHASE COMPETITOR PRODUCTS ON THEIR SMARTPHONES WHILE STANDING IN-STORE.
38% Amazon 32% Google 17% Retail websites 13% Other
54%
34%
20%
of shoppers would likely use a mobile wallet over a traditional wallet if it were accepted everywhere.
have mobile wallet apps.
would stop carrying a traditional wallet entirely if mobile payments and IDs were accepted everywhere.
WHICH PAYMENT APPS DO YOU USE? 85% PAYPAL // 24% AMAZON // 23% GOOGLE WALLET // 19% APPLE PAY
63%
59%
40%
would consider receiving offers on their smartphones based on where they are in-store.
would consider allowing retailers to know where they are in-store in exchange for exclusive values and savings.
use smartphone cameras to demo, share and compare products they find in-store.
RETAILERS NEED TO PROVIDE LINKS TO VIDEO AND PROFESSIONAL PHOTOGRAPHY AT THE POINT OF SALE FOR BETTER SMARTPHONE SHARING AND SHOPPING.
NEARLY 7 OUT OF 10 LOOK IN THEIR TRADITIONAL WALLET ONLY 1–2 TIMES PER DAY.
68%
1–2 times per day
24%
3–4 times per day
8%
2 OUT OF 5 CARRY LESS THAN $20 IN A TRADITIONAL WALLET. 39% <$20 35% $20–$50 17% $50–$100 6%
5+ times per day
$100–$200
3% $200+
10 | WHERE IT’S AT | BES
MOBILE PRICE MATCH
PEOPLE PREFER PLASTIC PREPAID As noted, shoppers are cautious, and price is the leading factor in purchase decisions. Customers are buying competitor products on their smartphones while standing in your store. With these as givens, it’s imperative that you have sound price-match strategies. Our extensive research has found that $5 in savings on a $50 product can tip the scales in favor of an online competitor. The majority of consumers will buy at a physical store that matches online prices with price-match rebates.
MOBILE PRICE MATCH
BES | WHERE IT’S AT | 11 Responses may not total 100% due to rounding.
If offered a post-purchase incentive, which reward would you prefer?
Retailers can be competitive in the market while preserving margins through post-purchase incentives that offer the right rewards and drive more transactions.
67% $25 prepaid debit card accepted almost everywhere
Surprisingly, retailers that issue their own gift cards for price matching have lower take rates, because consumers don’t value those offers as much as cash. Using a validated post-purchase redemption process offers additional economic benefits. Despite the ready adoption of online purchases and growing payment app use, shoppers still strongly prefer plastic rewards over eCodes.
26% $25 Amazon gift card
6% Gift card for store where you made purchase
2 out of 3 people would choose a prepaid card, even if the gift card offered an additional $5.
2%
66% $25 prepaid debit card accepted almost everywhere 34% $30 gift card for store where you made purchase
$25 Google Play or iTunes gift card
ALTHOUGH PLASTIC REWARDS STILL DOMINATE, VIRTUAL REWARDS SHOW GREATER ACCEPTANCE AT LOWER DENOMINATIONS.
For the following rewards, would you prefer a plastic prepaid card or a digital prepaid eCode?
PERCENTAGE THAT WOULD ACCEPT AN ECODE IF IT WERE THE ONLY OPTION:
REWARD
PLASTIC
DIGITAL
80% $25 eCode for $100 purchase
$25
67%
33%
71% $50 for $200 purchase
$50
69%
31%
$100
74%
26%
$300
74%
26%
65% $100 for $400 purchase 62% $300 for $1,200 purchase
12 | WHERE IT’S AT | BES BOPIS
FASTER THAN FAST Buy Online, Pickup In Store (BOPIS) has perks for both retailers and shoppers. It reduces shipping costs and gets customers in-store where they can purchase more. Plus, it provides faster access to merchandise for greater customer convenience.
SOCIAL MEDIA
CONSUMERS ARE FOLLOWING THE SOCIAL MEDIA PATH With social media saturating the world, it’s surprising how underutilized it is for real-time price promotions, especially because it’s the main reason consumers follow brands online.
WHY DO YOU FOLLOW BRANDS ON SOCIAL MEDIA? 53% Values and savings
10
$
3 DAYS EARLIER
28% News and trends 17% Promotions and sweepstakes 2% Other
86%
would consider buying online and picking up in store to save $10 on a $50 item.
78%
would consider buying online and picking up in store to receive an item 3 days earlier.
BES | WHERE IT’S AT | 13
68%
of those who follow brands regularly use social media special promotions.
15%
33%
Daily
Monthly
20%
32%
Weekly
A few times a year
45%
have purchased online and picked up in store in the last 6 months.
AMAZON DASH IS A NEW SERVICE THAT LETS SHOPPERS PURCHASE GROCERY AND CLEANING PRODUCTS WITH THE PUSH OF A BUTTON LOCATED WHERE THE PRODUCTS ARE STORED AT HOME.
42%
have used special promotions they find on social media.
40% 32%
66%
would pay $8 to have an item delivered to their home the same day they purchased it.
would consider using Amazon Dash.
24
Amazon is also testing same-day and one-hour delivery in select markets for its Prime customers.
follow brands on social media.
89%
of those who follow brands on social media want special offers from those brands.
14 | WHERE IT’S AT | BES
LOYALTY PROGRAMS
MAPPING THE LIMITS OF LOYALTY Despite industry investment and broad shopper use, loyalty programs are simply not perceived as providing much value or savings. Grocery stores are the only retail vertical where loyalty rewards are equally dispersed. Outside of grocery, only the very best customers typically receive significant value. For this reason, only a small percentage of consumers value loyalty programs as a differentiator.
DIGITAL PROMOTION DELIVERY
BES | WHERE IT’S AT | 15
SOCIAL GAINING ON EMAIL EMAIL STILL DOMINATES IN DIGITAL PROMOTION DELIVERY, BUT SOCIAL IS GAINING TRACTION.
WHICH TYPES OF PROMOTIONAL OFFERS DO YOU USE? 73% Email 42% Social media
Only 15% believe loyalty programs provide the most savings.
80%
37% Text
OF CUSTOMERS RECEIVE LOYALTY OFFERS VIA EMAIL.
36% Shopping apps
88% of shoppers who receive email promotions use the offers.
73% belong to loyalty programs.
62% of those who belong are happy with their loyalty program.
44% 44%
80% Email 8% Other
often sometimes
WHILE IN-STORE, HAVE YOU EVER EXPERIENCED A PROBLEM TRYING TO REDEEM AN OFFER RECEIVED ON YOUR SMARTPHONE? IF SO, HOW WAS THE OFFER DELIVERED?
!
88% of shoppers who receive text promotions use the offers.
7% Text 5% Phone app
44% 44%
CONNECTING IN-STORE AND ONLINE PROMOTIONS IS IMPERFECT. SMARTER POINT OF SALE TECHNOLOGIES ARE ENTERING THE MARKET, BUT UNTIL THEY PROVE THEMSELVES, DIFFICULTIES WITH MOBILE OFFERS WILL BE COMMON.
often sometimes
87% of shoppers who receive app promotions use the offers.
42% 45%
often sometimes
37%
Problem with text
!
35%
Problem with email
WHICH DEVICE DO YOU USE MOST OFTEN TO RECEIVE AND REDEEM EMAIL AND SOCIAL PROMOTIONS? 70% of shoppers who receive social media promotions use the offers.
62% COMPUTER
27% PHONE
10% TABLET
1% OTHER
28% often 42% sometimes
!
27%
Problem with app
16 | WHERE IT’S AT | BES
COMPETITIVE PRICING
VERTICALS
BES | WHERE IT’S AT | 17
ALL ROADS LEAD TO SALES Rebates and validated rewards offer shoppers greater value for redeeming post-purchase, give dealseekers best in-market prices and preserve margins. Shoppers are using technology to seek out rebates, and to quickly redeem them through digital experiences.
68%
said rebates are an attractive offer in-store.
65%
57%
said rebates are an attractive offer when shopping online.
said they want to redeem rebates via smartphone.
WHERE DO SHOPPERS FIND THE GREATEST VALUE? It may be a high-tech digital world, but nothing beats a good old-fashioned sale.
51%
Sales
26%
Coupons
15% 8%
Loyalty
Other
Now, let’s look at 13 retail verticals and the incentives-to-purchase price elasticity by category. Rebates and other post-purchase validated rewards offer lower in-market prices than instant discounts, thanks to reduced redemption rates.
18 | WHERE IT’S AT | BES VERTICALS
VERTICALS
BES | WHERE IT’S AT | 19
CLOTHING
APPLIANCES Top 3 sources for comparing prices
You’re buying a washer and dryer for $800. Which reward would you prefer?
You’re buying $200 worth of clothes. Which reward would you prefer?
64% Retail websites
62% Retail websites 52% In-store displays 39% Google 37% Amazon 33% Print ads
Top 3 sources for comparing prices
58% $150 REBATE 42% $100 instant discount 48% USE THEIR SMARTPHONES TO COMPARE PRICES.
58% $50 REBATE 42% $35 instant discount
53% In-store displays 41% Amazon
50% USE THEIR SMARTPHONES TO COMPARE PRICES.
36% Google 30% Print ads
27% TV/Radio (tie)
25% Value shopper sites
27% Value shopper sites (tie)
22% TV/Radio
10% Social media
14% Social media
9% Mobile apps
11% Mobile apps
6%
4%
Billboards
AUTOMOTIVE PRODUCTS Top 3 sources for comparing prices
You’re buying 4 tires for $500. Which reward would you prefer?
ELECTRONICS You’re buying a $600 smart TV. Which reward would you prefer?
59% Retail websites 47% In-store displays 43% Google 41% Amazon 29% Print ads
Billboards
Top 3 sources for comparing prices 61% Retail websites
60% $125 REBATE 40% $85 instant discount 47% USE THEIR SMARTPHONES TO COMPARE PRICES.
66% $100 REBATE 34% $65 instant discount 53% USE THEIR SMARTPHONES TO COMPARE PRICES.
49% In-store displays 46% Amazon 40% Google 29% Print ads
28% TV/Radio
27% Value shopper sites
25% Value shopper sites
25% TV/Radio
14% Social media
11% Social media
10% Mobile apps
8% Mobile apps
5% Billboards
5% Billboards
20 | WHERE IT’S AT | BES VERTICALS
VERTICALS
ENTERTAINMENT Top 3 sources for comparing prices
You’re buying a $30 DVD/Blu-ray/download. Which reward would you prefer?
BES | WHERE IT’S AT | 21
FURNITURE You’re buying a $500 set of table and chairs. Which reward would you prefer?
53% Amazon
Top 3 sources for comparing prices 61% Retail websites
61% $12 REBATE 39% $5 instant discount
51% Retail websites 43% Google (tie) 43% In-store displays (tie) 28% TV/Radio
50% USE THEIR SMARTPHONES TO COMPARE PRICES.
64% $110 REBATE 36% $75 instant discount 43% USE THEIR SMARTPHONES TO COMPARE PRICES.
58% In-store displays 37% Google 36% Print ads 31% Amazon
26% Print ads
28% Value shopper sites
22% Value shopper sites
25% TV/Radio
15% Social media
9% Social media
13% Mobile apps
8% Mobile apps
7% Billboards
6%
Billboards
You’re buying a $100 iTunes or Google Play gift card. Which reward would you prefer?
66% $20 REBATE 34% $10 instant discount
GROCERIES & CONSUMER PRODUCTS You’re buying 10 grocery items. Which reward would you prefer? 59% $15 REBATE 41% $7.50 instant discount
67% In-store displays 54% Print ads 47% Retail websites
You’re buying a $55 video game. Which reward would you prefer? 48% USE THEIR SMARTPHONES TO COMPARE PRICES. 65% $15 REBATE 35% $7.50 instant discount
Top 3 sources for comparing prices
32% Value shopper sites 26% TV/Radio 25% Google 19% Amazon 15% Mobile apps 10% Social media 6%
Billboards
22 | WHERE IT’S AT | BES VERTICALS
VERTICALS
BES | WHERE IT’S AT | 23
HOME IMPROVEMENT & HARDWARE Top 3 sources for comparing prices
You’re buying $100 worth of home improvement items. Which reward would you prefer?
PET PRODUCTS You’re buying $40 worth of pet products. Which reward would you prefer?
58% Retail websites
Top 3 sources for comparing prices 60% In-store displays
62% $20 REBATE 38% $14 instant discount
54% In-store displays 40% Amazon
60% $10 REBATE 40% $5 instant discount
37% Google
53% Retail websites 38% Print ads 36% Amazon
36% Print ads 26% Value shopper sites 25% TV/Radio
45% USE THEIR SMARTPHONES TO COMPARE PRICES.
41% USE THEIR SMARTPHONES TO COMPARE PRICES.
9% Social media
11% Mobile apps 10% Social media
64% $15 rebate 36% $8 instant discount
7% Billboards
OFFICE SUPPLIES Top 3 sources for comparing prices
You’re buying $50 worth of office supplies. Which reward would you prefer?
7% Billboards
SPORTING GOODS You’re buying $90 worth of sporting goods. Which reward would you prefer?
57% Retail websites 55% In-store displays 44% Amazon
25% Value shopper sites
Top 3 sources for comparing prices 55% In-store displays (tie)
62% $20 REBATE 38% $12 instant discount
64% $25 REBATE 36% $15 instant discount
37% Print ads 33% Google
27% TV/Radio 25% Value shopper sites
You’re buying $60 worth of tools. Which reward would you prefer?
10% Mobile apps
33% Google
55% Retail websites (tie) 44% Amazon 35% Google
43% USE THEIR SMARTPHONES TO COMPARE PRICES.
41% USE THEIR SMARTPHONES TO COMPARE PRICES.
34% Print ads 25% TV/Radio
23% TV/Radio
24% Value shopper sites
10% Mobile apps (tie)
12% Social media
10% Social media (tie)
9% Mobile apps
7% Billboards
7% Billboards
24 | WHERE IT’S AT | BES VERTICALS
SUBSCRIPTION SERVICES Top 3 sources for comparing prices 52% Retail websites
You’re buying a one-year home subscription service (e.g., security alarm, lawn care, pest control, etc.). Which reward would you prefer?
45% Google
62% $110 REBATE 38% $80 bill credit
39% Print ads 34% Amazon 31% TV/Radio 30% Value shopper sites
41% USE THEIR SMARTPHONES TO COMPARE PRICES.
29% In-store displays 19% Social media 13% Mobile apps 8% Billboards
TOYS Top 3 sources for comparing prices
You’re buying $40 worth of toys. Which reward would you prefer?
53% Retail websites 51% Amazon (tie) 51% In-store displays (tie)
61% $15 REBATE 39% $8 instant discount
37% Google 32% Print ads 25% TV/Radio 23% Value shopper sites 11% Social media (tie) 11% Mobile apps (tie) 7% Billboards
46% USE THEIR SMARTPHONES TO COMPARE PRICES.
Blackhawk Engagement Solutions is a leading global provider of customized incentive and engagement solutions for consumer promotions, employee rewards and recognition, and indirect sales channel management programs. Blackhawk Engagement Solutions is a strategic partner with many of the worldâ&#x20AC;&#x2122;s leading brands and a thought leader that provides game-changing engagement solutions. Through innovative products, services and technology, Blackhawk Engagement Solutions inspires actions that impact results. Blackhawk Engagement Solutions, headquartered in Lewisville, Texas, is a division of Blackhawk Network. bhengagement.com Rodney Mason GVP, Marketing Rodney.Mason@bhengagement.com 972.538.7336 Š2015 Blackhawk Engagement Solutions, Inc. All rights reserved.
MEASURE WHAT MATTERS MOST
A marketerâ&#x20AC;&#x2122;s guide to improving outcomes by focusing on your best customers and the critical moments in their journey
Introduction It’s no secret that it takes many marketing touchpoints to connect with a customer, find a quality lead or make a sale. But how do you know the right message to deliver at each point in that journey? How do you ensure that your investments are working and that you’re not wasting money and resources—or worse, alienating your customers? Today’s customer journey includes many touchpoints— each one is an opportunity
Better measurement is the answer. It’s the key to understanding and making the most of these interconnected touchpoints, but it’s not always top of mind when building marketing campaigns. Lay your measurement foundation first—before you dive into the creative work—and you can achieve more with marketing. In this brief guide we’ll look at four crucial tenets of measurement-focused marketing: choosing the right metrics, focusing on your best customers, valuing the whole journey and proving impact. Collectively, these points show how better measurement can improve campaign effectiveness, help you get the credit you deserve for your programs and, most importantly, ensure a better return on investment for all of your marketing.
1
Focus on the Right Metrics Align metrics with real business objectives
2
Value Your Best Customers Put customers before transactions
3
Attribute Value Across the Journey Improve performance by giving credit where it’s due
4
Prove Marketing Impact Show the incremental effect of your investments
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1 Focus on the right metrics The best marketers set themselves up for success by identifying clear metrics they want to effect before launching a campaign. Yet how do you define the right metrics? Many marketers focus first on high-level campaign objectives such as creating brand awareness, generating leads or driving in-store sales. But when it comes to evaluating the success of their campaigns, they resort to measuring lower-tier, proxy key performance indicators (KPIs). Let’s look at the KPIs for a hypothetical auto manufacturer:
Some Typical KPIs and How They’re Measured Marketing Objective
Create brand awareness
Generate online leads
Drive customers to store
Marketing Channels
TV Video Social Display/Rich media
Paid and organic search Display Online referrals Website content
Mobile web and apps Email Print Radio
KPIs (Key Performance Indicators)
GRPs Brand lift Video/Rich media engagement
Number of leads CPA ROAS
In-store visits Number of purchases Purchase value
Measurement Tools
TV viewership Consumer panels Web analytics Brand surveys
Conversion tracking Web analytics CRM
Mobile app analytics CRM Transaction data
For each of these marketing objectives, familiar metrics exist. Yet many of these familiar metrics were designed at a time when it was hard, if not impossible, to measure all touchpoints. Today, with advances in analytics, it’s possible to better align your metrics with your core business goals. If your company’s biggest goal is to increase profits, then your marketing metrics should show how your campaign contributed to profits. For example, if your marketing goal is to generate online leads, it may seem natural to focus on lowering the previous quarter’s cost per acquisition (CPA). But what if by lowering your CPA, you also lower the quality or volume of leads and thereby
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reduce revenues and add other costs? Perhaps in this case you should create a new metric: “Cost per high-quality acquisition.” Another common pitfall is using metrics without context. Suppose your colleague has just launched a new video, and she sends around a proud email touting 20,000 views. How do you know whether 20,000 is a “good” number of views? One way to answer this question is by looking at benchmarks for similar videos launched by your company or other comparable companies. You can also look back at the creative brief. If you launched the video to create awareness among new potential customers, but the majority of these views came from your existing customers, then the video missed the mark. Your colleague’s metrics should reveal information about how many new customers view (and engage with) the video rather than the number of views alone. Well-designed metrics often cross departments within an organization. Over time, one customer may see and be influenced by many different marketing programs from the same company. So if your #1 overall objective is profit, then your return on investment should be measured based on the sum of all marketing inputs, not just the direct-response campaign a customer saw right before making a purchase. Break down team silos to reflect the true customer journey
Brand Awareness
Online Leads
In-Store Sales
Increase in Profits
Entire Customer Journey
Breaking down organizational silos can be a painful and highly political process, but it’s worth the trouble for organizations that stick with it. People’s salaries and bonuses may be tied to legacy metrics, so if you want to switch to new (more strategic!) KPIs, you may need to also consider new incentive structures for your sales and marketing teams. It’s vital to find a champion, ideally a senior-level manager, who can help make teams
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jointly accountable. Simple strategies include making sure that different marketing groups sit near each other at work, or creating monthly cross-team meetings to share goals and metrics. Some companies also create internal “good for the business” reporting tools that don’t impact the official financials but allow separate teams to view shared marketing impact. Even better, restructure the organization so that your brand team, your digital team and your store team all report to the same person—often the CMO. That person should be responsible for providing a unified view of marketing achievements, tying these back to the broader business goals. And keep in mind that excellent KPIs are useful only if you have reliable data to keep track of your results. Make sure you have the right analytics and measurement tools for both online and offline channels, to collect clean and accurate data that will let your entire team glean insights about your performance. Strive to bring your data and reporting together to deliver one “single source of truth” for your entire organization—the more you’re able to share data and metrics, the better you’ll be able to respond to the needs of today’s customer.
ESSENTIAL QUESTIONS
FOCUS ON THE RIGHT METRICS
Have I selected relevant metrics and benchmarks to measure marketing success? Do my marketing metrics align with business goals such as revenues and profits? How can we break down silos and make teams jointly accountable? Do I have the right measurement tools on hand?
“Key performance indicators (KPIs) that measure the success of a single touchpoint fail to inform eBusiness executives of the impact of consumer engagement across multiple touchpoints. Additionally, department, team and individual goals aligned to a single touchpoint ultimately fail to drive cross-touchpoint thinking and behavior in employees. This siloed approach hinders the shift to a digital business.” Martin Gill, VP, principal analyst in Forrester report1
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Forrester Research, Inc., Define New Metrics For Digital Business Success, March 26, 2014.
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2 Value your best customers While you consider what to measure, you’ll also want to think about who you should be measuring. It’s understandable to want to increase store and website visits with coupons or promotions, but what if those customers end up costing you more money than they bring in … and then never return? When the incentives are geared solely around shortterm sales and CPA, it’s tempting to buy cheap placements and keywords for ads and promotions. However, doing so can lead to short-lived customers and success.
“The shift from conversion to customer-centric marketing means a change in thinking. And it begins with getting to know the customer.” Neil Hoyne, “When It Comes to Attribution, Customers Count” Read the article >> Instead of measuring transactions alone, model the lifetime value (LTV) you derive from your customers. For example, you may discover that 20% of your customers are driving 80% of your profits. By focusing on getting to know those best customers (the “whales”)—as well as how you acquired them and how you can find and retain more like them—you can cut costs and increase revenues. Quick Tips for Customer-Centric Measurement Really know your customers Deepen your understanding of your customer base: •
Who are they?
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Where did they come from?
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How long do they stay with you?
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How much have they spent over time?
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How much have they cost?
Centralize your analytics to attain this holistic view of customers.
Distinguish the “whales” from the “wasted energy” Use your CRM system and website analytics to segment your customer base. •
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Look for segments of customers who completed high-value purchase. Identify segments of customers who purchased repeatedly (look for multiple and high-value sales).
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Find segments that perform desired behaviors on your website.
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Determine which segments are not performing well.
Find and retain more “whales” Identify which (combination of) marketing channels and keywords helped you acquire your best customers; then double down on those. Use marketing tools to find more potential customers who closely resemble your best existing customers. Use technologies like personalization and remarketing to strengthen relationships and drive long-term value. Reduce waste by decreasing marketing spend on customer segments that are not performing well.
Read more tips on developing strong customer relationships through tailored experiences in the Secrets of the Math Minds >>
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“AccuWeather is using better customer data so we can start to market on an individual basis rather than focusing on a traditional market segment like we do now. It’s really exciting to build experiences— really personalized weather solutions—for our users rather than for general segments of users.” Steve Mummey, director browser products, AccuWeather.com As you get to know your customers better, remember that the customer journey is continually evolving. People are spending more time online, especially on mobile, but advertising spend hasn’t kept up. Now consider that the 25-year-old consumers of tomorrow are the 15-year-olds of today, and more than 75% of today’s teens already shop online.2 (And you know how much those teens use mobile.) Channel use is changing fast, and measurement is the best way to see where your customers are headed.
ESSENTIAL QUESTIONS
VALUE YOUR BEST CUSTOMERS
How much do I really know about my customers? Have I defined “customer” clearly? How do I acquire more customers who resemble my best existing customers? Do my advertising investments align with my strategy to reach and win the “whales”?
2 June 2014 BI Intelligence e-commerce demographics report / Piper Jaffray Spring 2014 “Taking Stock With Teens.”
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3 Attribute value across the journey How do you know what’s working in your marketing and what’s not? Start by identifying the role of each touchpoint along the customer’s journey. (If you’re not sure how different channels influence the purchase decision, our Customer Journey to Online Purchase tool can show you industry benchmarks.) Once you have a handle on what the customer journey looks like, marketing attribution can help you to optimize your digital campaigns. Marketing attribution, broadly speaking, means dividing up the value of an online sale (or conversion) and distributing fractions of that value across the different touchpoints that led to the sale, from a display ad seen last month to a search ad clicked this morning. To get the most out of attribution, be sure to pair it with flexible marketing tools (and incorporate offline channels via marketing mix modeling). That way, you can adjust your investments and messaging to better connect with your customers.
Distribute credit to multiple touchpoints along the path to purchase
Display
Social
Organic Search
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$100
Don’t forget that you also need to appropriately value each touchpoint within a single channel. For example, if you’re using online display ads, interest-based targeting is more of an “upper-funnel” activity than remarketing; and for paid search ads, generic keywords help you engage with more new customers than do brand keywords (which tend to convert more existing customers).
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Attribution can be done with spreadsheets, rules-based modeling software or even sophisticated data-driven algorithms. Whatever attribution method you choose for your business, make sure you continue to adapt and measure results so you can see what really works for your business. That’s the way to get the most out of your measurements and your marketing.
Six Tips for Better Attribution Get to know the conversion path for your business. Ask yourself the following questions: • What’s the time frame for a typical conversion? Hours? Days? Weeks? • Which channels influence your customers? Are you measuring them all? • Do you understand the role that each channel plays in moving your customers to make purchase decisions? Qualify the seriousness of your attribution problem: Start by contrasting your standard model (often a last-click model) with other models (such as data-driven attribution). Note the deviation. If there is little deviation, the problem is probably not serious. If there’s a lot of deviation, you may have a larger attribution challenge (and opportunity). Don’t let organizational silos stand in your way: Make sure your attribution work spans all of the marketing channels your customers are likely to encounter. Consider offline channels and pathways and their interactions with your online media. Don’t think of attribution as digital only. Take advantage of cross-channel efficiencies. For example, use display creatives to drive customers to low-cost keywords. Cross-device attribution can be a technological challenge, but don’t let that stop you. Use a “mobile multiplier” or other estimation techniques to account for the role that mobile plays. (You can use our Full Value of Mobile Calculator for this.)
Find more tips in the Definitive Guide to Data-Driven Attribution >>
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Keep in mind that attribution by its very nature is backward-looking. If you haven’t historically used a certain channel (say, a new social network), then attribution can’t tell you how well that channel is going to work in your new campaign. It can, however, provide directional guidance (by examining the past performance of other social networks you’ve used, for example). And it can help you optimize as you go. At its best, attribution helps you to understand how different marketing channels are influencing your customers so that you can adapt not just your investments but also your messaging strategy.
“Attribution modeling changes everything. We’re spending our money more efficiently than we were before. We know what we’re getting for it.” Joe Meier, vice president business development, Baby Supermall
ESSENTIAL QUESTIONS
ATTRIBUTE VALUE ACROSS CHANNELS
Am I measuring and valuing all of my customer touchpoints, both within channels and across channels? What does the full customer journey to conversion look like for my business? Am I applying attribution results to improve my investment decisions as well as my customer messaging?
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4 Prove marketing impact The right metrics, the best customers, the full purchase journey—each of these is crucial to smart measurement. Yet perhaps more important than any of these is proving marketing impact. What you really want to understand is what happened only because of a given marketing spend change (and would not have happened without it). Beyond helping you invest more wisely, proof of incremental effectiveness can also help change perceptions among senior executives, taking marketing from a “cost center” to a “revenue driver.” To show incremental impact, you’ll need to switch from correlative measurement to causal measurement. Correlation can be useful, but it won’t convince your CFO that the marketing department is fattening the bottom line. Take Joe, a hypothetical SEM manager. After applying attribution tools, Joe sees that his remarketing campaign is a key driver of conversions. But is it really remarketing at work, or is Joe simply showing ads to a subset of customers who would have converted anyway? To show causation, you have to experiment. Well-designed experiments are controlled and statistically robust, with a clear test group that sees the content you’re investigating and a control group that doesn’t. One way of achieving this is through randomized geographic testing: for instance, turning display ads on in some regions and off in others. (See Measuring Ad Effectiveness Using Geo Experiments for more details.) A big advantage of this type of experimentation is that it can evaluate marketing impact across all devices. It also can solve one of the attribution challenges we described above: estimating the potential performance of a new and untried marketing channel.
CarPhone Warehouse uses geo-experimentation to prove how mobile influences in-store sales. See how >>
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Geographic testing, of course, isnâ&#x20AC;&#x2122;t the only available experimentation tool. Experimentation can also be used to optimize ad campaigns or website content. Whatever type of testing youâ&#x20AC;&#x2122;re doing, it should be ongoing and iterative. Test one thing at a time, based on a very specific question and hypothesis, and add the findings into your strategy. Then move on to the next test.
Positive Testing Cycle
Observe current behavior and metrics
repe at !
Test different programs
Implement change
To get a feel for the types of hypotheses you should be testing, keep up to date on industry trends and consumer studies, such as new holiday shopping behavior, the impact of digital on in-store sales or how brand marketing is changing thanks to mobile video and search ads. Use what you learn to validate your own investment plans.
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“Using controlled incrementality measurement provides a competitive edge for HomeAway. Not only do we know what works and what doesn’t, but we can also apply the measurement knowledge over and over, comfortably extending our business footprint using more and more channels.” Will Lin, vice president global online marketing, HomeAway
ESSENTIAL QUESTIONS
PROVE MARKETING IMPACT
Am I relying on correlations, or can I base my decisions on measured causal impact? Do I know the incremental value of each of my media investments? How can I incorporate experimentation to prove the value of my marketing, including new channels?
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Checklist: Measure what matters most Don’t wait until after you’ve run your campaign to think about measurement. Establish your measurement-focused marketing strategy before you spend that first dollar. Here’s a recap of how to do it:
Focus on your true business objectives Make sure your KPIs are in line with the real problems that you’re trying to solve. Don’t let organizational silos stop you from measuring what matters most.
Measure customers, not just transactions Measure long-term customer value instead of pure revenue, and look at which channels bring you your best customers. You’ll develop stronger, more profitable relationships and avoid wasting money and effort on customers who cost more than they’re worth.
Attribute value across the whole customer journey Understand what your customer journey looks like, and think holistically about your marketing. Attribute credit to various marketing touchpoints to uncover insights and opportunities that will help you invest more wisely.
Prove the incremental impact of your marketing spend Identify vital channels and new opportunities—then experiment to prove the value of your efforts (and stop what’s not working). Make experimentation a regular part of marketing cycles: keep testing and keep improving.
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