A New Model for Customer Engagement
Gary Hawkins, CART
Retailers today understand the importance of digital marketing and digital customer engagement. What retailers grapple with though is creating content, including offers and promotions, that is available for personalization. Relevancy is all important in the digital world.
The challenge of funding personalized offers is universal and many retailers fall back on a time-tested solution: Get the brand manufacturers to pay for it. Every retailer I talk with about marketing personalization inevitably asks “Where do I go for incremental offers to power my personalization program?” These retailers are asking the wrong question.
In the near term, retailers should be asking how they can better use the existing promotional content they have. There are three key areas retailers should be focused on relative to marketing personalization:
- Personalized ad flyer: Rather than force your shoppers to search through hundreds of sale products to find the few that are of interest, retailers should be providing a personalized digital ad to each of their customers. This makes more effective use of existing promotions and helps drive sales by getting the most relevant sale items in front of each individual customer. Retailers doing this include Niemann Foods’ County Market stores, Coborn’s, and Foodtown.
- Look to TPRs: Every supermarket retailer has hundreds, if not thousands, of products on sale each week as part of a TPR (temporary price reduction) program and there are two opportunities here. The first is simply getting the most relevant TPR products in front of each individual customer as in the personalized ad flyer above. But there is a more powerful opportunity to implement a hybrid pricing strategy, providing a discount for all shoppers at the shelf but a deeper discount to shoppers as part of a strategy to grow shopper share of wallet.
- Look to local and regional vendors: In the Let’s Get Personal: Digital Customer Engagement in Supermarket Retail article (Part 4) I speak to retailers putting in place a digital marketing ecosystem. Looking to a mid-west supermarket operator we see the retailer opening up their digital marketing platform portal to local and regional vendors to create digital offers that are then directed to the most relevant shoppers. Everyone wins as the smaller vendors typically do not have access to sophisticated digital marketing, the customer benefits from additional savings on relevant products, and the retailer gains from additional content for marketing personalization and furthering local brands.
Longer term retailers should become private label savants, instead of investing private label margin in period mass promotions, use those funds instead to support targeted promotions providing savings on products relevant to the appropriate shoppers. In similar form, retailers should consider negotiating major brand products down to an everyday low cost and using the added margin to fund targeted promotions to relevant shoppers.
I am not suggesting this is easy but what I am saying very adamantly is that if retailers hope to survive going forward they must figure out how to provide savings on products each shopper wants to purchase. Kroger and Amazon are focused on this.
Retailers that have built their business on brand manufacturer marketing funds have built on quicksand. Big CPG brands are under increasing pressure as sales plateau or even decline as a growing number of shoppers avoid packaged foods and massive marketing budgets are directed to the best return on investment - increasingly that means digital marketing and shopper marketing initiatives that encompass shopper insights and targeting.
In today’s digital world, every interaction with the shopper must be made relevant to the individual customer. That means a dedicated focus on what the shopper wants, not necessarily what the brand manufacturer wants. This shift from the ephemeral riches of brand marketing funds to a sole focus on the individual customer is albeit challenging but necessary for traditional supermarket operators if they are to survive, let alone thrive, in the new world of retail.
About the Author
As Founder and CEO of CART, Gary Hawkins has an unparalleled view to current and future innovation in fast moving consumer goods retail.
CART is Advancing Retail by connecting the industry to innovation. Retailers, wholesalers and brands utilize CART to find, research and connect with solutions appropriate for their businesses. Solution providers use CART as a go-to-market tool that connects them directly to their target retail audience, all the way into the brick and mortar store itself. CART has unparalleled insight into what’s next in retail and shares this information regularly through multiple channels.
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