THE FUTURE OF RETAIL LIES IN ACTIVATING CUSTOMERS, NOT BRANDS.

Retail disruption has become a key concern for brands, given the rapid and accelerating pace of change in the modern marketplace. In today’s sales environment, long successful local and global brands battle to maintain relevance in the face of an increasingly discerning and powerful consumer spoilt for choice, not only in terms of product availability but also how they purchase.

The greatest effects of the digital age have not been in the mechanics of shopping but rather in the enormous disruption to consumer-brand interaction.

As the gap between brands and consumers widens, largely as a result of the exponential growth in digital touchpoints and new channels, there is an urgent need for organisations to re-think how they optimise their resources to create value – for the brand and the consumer.

Too many organisations still think ‘brand activation’ is the solution to selling. There is a commonly held view that brand activation involves pouring large amounts of funds into the broadest possible range of touchpoints and channels in the hope of influencing the consumer to purchase.   This thinking has inherent and far-reaching shortcomings. For one, the term ‘brand activation’ has lost its meaning.  It has become an over-used buzzword, used to describe anything from entertainment to letterbox drops.

This is all grossly misleading, according to a new book titled Brand Activation: Implementing the Real Drivers of Sales and Profit.  Co-authored by Australians Alex McKay, Graham Brown and Neale Skalberg, they argue that activation is a process which should actually trigger a change in behaviour and produce clear and measurable outcomes, rather than simply affecting levels of awareness or creating general interest.

In his foreword to the book, the Managing Director of the Australian Consumer, Retail and Services Research Unit, Dr Sean Sands, echoes this view: “The goal of all brands is knowing how to inspire customers to act and to become active. This year’s successful marketing won’t be about making noise, instead it will be about providing a service.”

The consumer journey is constantly changing: More purchase decisions are being made closer to the point of sale than ever before. 

Drawing on research, insights and global experience, the authors explore the evolution of the consumer purchase journey and the factors that influence purchase in the modern environment. Although traditional ‘above the line’ advertising still has some relevance, many brands now recognise that rather than the traditional funnel-shaped path to purchase, today’s consumer path to a buying decision is subject to interruptions, diversions and delays. Brands need to move beyond purely push-style communication, embracing word-of-mouth, direct interaction and online information approaches.

Consumers are less and less influenced by above-the-line marketing and more and more influenced by personal forms of connections and ‘interruptions’ on their way to the checkout.  The research clearly shows that with the increase in more localised forms of communication, both face-to-face and digital, an increasing number of consumers are holding off on their buying decisions until the ‘last 3 feet’ of the sale.

“We wanted to better understand this phenomenon” says Alex McKay.  “One of our purposes in writing this book was to take a deeper look at the role of activation in the market, with specific reference to what influences consumers in their buying decisions; the extent to which  brand activation can be causally linked to actual purchases; and how this can be measured.

Misconceptions have a way of becoming entrenched reality unless one can see through the hype

With the upswing of online there had been talk of bricks-and-mortar retail being in jeopardy. The prediction that online shopping would make the physical store redundant was fashionable amongst the early internet ‘experts’ who envisaged the mass closure of store-fronts in favour of shopping from home.

Recent global trends have confirmed the contrary and that brick is the new black. With National Australia Bank* reporting in-store sales accounting for 93% of total retail sales in Australia, retailers have come full circle and recognise that the in-store experience is paramount. Online shopping may offer convenience, but the physical store offers a sensory experience. It’s no surprise that some of the poster children of online retail, Amazon and eBay, have established bricks-and-mortar formats. 

“When we look more closely at what is going on, it turns out that some of the ‘traditional’ approaches remain the most effective, provided they are adapted to the contemporary environment,” says Dr Sands. “In contrast, some of the ‘new wave’ tools may not be as effective as their popular reputations would suggest.”

Recent research by two professors at Monash University’s Department of Marketing on the relative effectiveness of various media channels in driving sales indicated that while social media drives traffic to websites, it is not strongly associated with final purchasing decisions. Online display, or banner, advertising was also shown to be largely ineffective at driving sales.

On the other hand there is evidence that having a physical presence combined with interpersonal connections, such as a knowledgeable and friendly sales staff, can lead customers to feel safer and subsequently spend more in-store.

It’s no longer about activating the brand. It’s about activating the customer.

Given the media options available to them consumers are choosing the ways in which they want to interact with brands and how engaged they want to be across a growing array of touch points.

“It’s no longer about activating the brand. It’s about activating the customer,” says McKay.  “The goal is to create an ‘active customer’, one who is primed for activation – for the decision to actually make the purchase. Shifting customers into the ‘active zone’ requires using the right kind of influencers. Smart marketers know this and will use the right channels and triggers to achieve that moment of sale.”

Today’s savvy consumer also knows that they are part of one of the most powerful marketing channels. As Harvard law professor Lawrence Lessig describes it, we have moved from a world of ‘read only’, in which consumers are simply receivers of messages, to a world of ‘read/write’, in which consumers have become part of the messaging. They remix what they have seen, heard and experienced via for instance, comments under a YouTube video, stories shared on Facebook and, of course, old fashioned word of mouth.

Based on their brand experiences the consumer has the potential to significantly affect a brand’s reputation. The most powerful consumers, those with very large online and social media followings, can become brand ‘activists’ who literally make or break a brand if their bouquets and brickbats ‘go viral’ and are amplified over time.

“In this sense the active customer really stands at the centre of the purchasing journey, both being influenced and having influence at the same time”, says McKay.  “Their journey is not isolated but connected. It is one link in a chain, every other link being another consumer’s journey.“

The principles of activation haven’t changed.  They just need to be continually adapted to an evolving environment

In the continual search for return on investment and improved efficiencies, one of the recurring themes in all the research, brand experiences and industry insights is a return to some of the basic principles of sales and marketing.  The principles of activating customers to purchase have remained constant. All that has changed are the execution, tools, technology and scale.

There are three basic principles behind creating an active customer:

Local - The concept of ‘local’ has a much broader meaning than in the past. It’s all about ‘getting closer to the customer’ not only geographically, but by providing a personalised experience, exceptional customer service, physical contact and creating unique selling propositions that stand out in the marketplace. 

The store is still the centre of the sales universe. Customer service and sales personnel are as important as ever, with effective face-to-face interaction remaining central to retail success.  As Dr Sands points out the drive for short-term profit and over-reliance on digital communication has resulted in the sales force in particular becoming an undervalued asset.  In this area the trend is ‘back to basics’, with larger retailers having to rethink the role of their sales staff and learn how to behave like smaller retailers, as consumers demand the personal touch and high levels of responsiveness.

Triggers - The imperative for marketing and sales professionals is to understand how to recognise, design and deploy triggers or activation strategies that take promoting or defensive action in the moments of disruption.  This is the opposite of the traditional approach in which the aim is to exert influence as early as possible in the customer’s journey by using above-the-line techniques.

Today the triggers to purchase extend beyond events and geographic proximity.  They include anything from places, things, samples or trials, moments, activities, emotions, needs, times and date.

Value - Only the customer determines value.  And for the organisation value is created from the moment of sale.  But how do consumers define value? Price and quality are still considered by shoppers as the factors with the highest importance, according to the latest Omnibus Tracker research by the ACRS (March 2016).  However there has been an increase in shoppers who rated price, quality, convenience and variety as having more of a moderate importance.

“The aim” says McKay “is to use these activation principles closer to the point of purchase rather than rely on some of the more expensive and ‘remote’ above-the-line channels which would have been subject to disruption prior to reaching this point.”  Effective salespeople are a particularly valuable asset in these situations, he says. “One should think of them as experienced waiters who activate customers by helping them make choices and pointing out the specials of the day”.

Being comfortable with being uncomfortable is a prerequisite for change

So what does this all mean for organisations?  One thing is clear: as the world of the consumer changes so too must brands adjust and evolve their thinking. Change is never easy. And the bigger the organisation the more difficult it is to shift out of the proverbial ‘comfort zone’ .Taking a different path, one that is unfamiliar and unknown, requires a certain psychological flexibility on the part of organisations. By learning to embrace the new challenges and perceived threats constantly presented by the market, one can overcome the major barriers to progress.  These include a reluctance to face or pursue change, underutilisation of resources and poor and insufficient measurement of sales and marketing initiatives.

 “Becoming comfortable with discomfort is a core mechanism of change” says Daniel Dymond, a practicing clinical and high performing psychologist. “The desire for comfort and distress avoidance is deep rooted. It’s based in an area of the brain that is ‘subcortical’, which essentially means that it’s an automatic reaction – something out of control.”

Dymond says that being more tolerant of uncomfortable emotions allows us to direct our attention to mindful behaviours that are value driven rather than emotionally governed.

A final word from Dr Sands: “We’re in a fascinating period of change as the balance shifts increasingly towards the consumer. In this environment it is important that anyone with responsibilities in sales and marketing develops a clear understanding of the factors that ‘activate’ purchases in the real world.  Above all, brands and retailers need to optimise their investments, seeking out those activities that create real value and can be proven to do so.”

Sources:* NAB Online Retail Sales Index - January 2016

Highlights from the ACRS World Congress

Highlights from the ACRS World Congress

Fortunately for these big brands they have the luxury of both big data and big budgets. Their hearty customer data pool supports the development of highly personalized transparent messages and services. Sadly, not every brand has the robust data or deep pockets to deliver such mass customization.

But Dr. Lazarevic did deliver some good news. All brands – big and small – still have the opportunity to evolve brand relationships into two-way conversations. Retailers and brands, for the most part, still have the luxury of having two-way dialogue via their bricks and mortar store.

My take-away from the seminar is clear. While online technologies offer consumers convenience, speed, ease of use, brick and mortar stores still have a distinct advantage – face to face personal interaction between the consumer and the sales associate in-store. These personal exchanges offers opportunities to expand and enhance customer relationships by building loyalty and encouraging purchases.

Again this was music to my ears. As a retail sales and marketing agency, we know first-hand that customer experience trumps price and product almost every time. There is no doubt that service is one of retail’s main differentiators for success and competitive advantage.

For further information on the World Retail Congress.

By Nabih (Nabs) Awad, Group Account Director, Retail Safari