QR Codes & Social Media Have Little Impact for Shoppers

Important New Research From Catapult Action-Based Marketing

As much as people embrace all things digital, they’re much fussier when they turn into actual shoppers. In fact, QR codes and social media have very little impact, according to new research from Catapult Action-Biased Marketing. The research found:

• "The role that social media is playing is not as large as we thought it would be. It’s a good consumer and advocacy tool, and it builds brand awareness. But once the mindset shifts to shopping, she is not going to Facebook, or to blogs. We keep saying to clients, “Don’t forget the boring,” because she is going to traditional sites, such as the brand’s site or Google. On larger-ticket purchases, she is increasingly going to ratings and reviews."

• "QR codes are a prime example of a technology developed by marketers first, and not with shoppers in mind. In the first place, there are still many people without smartphones, so you’re already saying, “You can’t play” to a big chunk of the population. And then among smartphone owners, there’s already a tremendous amount of fatigue, and usage of the codes is down 20% since we did the last study. We are always recommending an alternate entry whenever they are used, such as a Web site. And so often, what they are delivering isn’t really interesting or useful."

• "QR codes can be effective but marketers need to think more about mind states. For example, a subway ad with a code that leads to a photo of model Brooklyn Decker -- that means something to users. In the ketchup it sells to restaurants, Heinz has a QR code on the bottle. So people are sitting around eating and have time to pursue it. Basically, shoppers are usually in two mindsets: Will it save me time? Will it save me money? QR codes may save people money, but they don’t save time."

• "The most exciting piece of data is the understanding that digital tools in general are delivering against more need states than just “save time” or “save money,” even if marketers don’t realize it. For example, traditional store circulars rank higher for “gives me new ideas” than “saves me money.” So we are wrong about how we are using this tool. It shouldn’t just be coupons -- it should have a video or a recipe or something engaging. Paperless coupons deliver 17% higher on “rewards me” than “saves me money.”

• "Privacy is a tremendous concern, with 74% of the shoppers we surveyed expressing some level of concerns, and 23% saying they are extremely concerned. But what they claim to be worried about and how they act aren’t the same. It doesn’t seem to be slowing anybody down using digital tools."

Social media is the hottest issue on marketers' radar and increasing amounts of time and money are being thrown against this online trend. This research by Catapult throws some cold water on the social media craze. Are you seeing the same trends as Catapult and do you agree with their conclusions?

Retailers Fight Back (Mostly Unsuccessfully) Against "Showrooming"

Brick and mortar retailers are starting to get really annoyed at shoppers that use their stores to browse products and then buy online and the e-tailers that encourage this behavior. This year store sales overall edged up 4.1% during the holiday shopping season, while online sales jumped 15%. And while online sales represent only 8% of total sales, that is up from just 2% in 2000. Retailers such as Target, Best Buy, and Barnes and Noble are beginning to use the following tactics in an attempt to thwart showrooming:

• Asking suppliers to create special products that would set the retailer apart from competitors and shield it from the mobile based price comparisons that have become so easy for shoppers to perform on computers and smartphones.
• Asking suppliers to help it match rival's prices.
• Create subscription services that give shoppers a discount on regularly purchased merchandise.

Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target's executive vice president of merchandising sent a letter to vendors with the following message- "What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands." Target said sales were particularly disappointing in electronics, movies, books and music—products whose sales have migrated most significantly to the Internet. Those products accounted for 20% of Target's annual sales of $65 billion in 2010, down from 22% in the prior year. Vendors are likely to have little choice but to play ball with Target because of its clout as the second-largest discount chain. Major suppliers, including Kraft Inc., TV maker Vizio and Procter& Gamble.

Unfortunately for brick and mortar retailers they are waging an uphill battle because they have systemic problems that e-tailers do not including:

• Online-only retailers have significantly lower labor costs
• Etailers, for the time being, don't collect sales tax in most states
• Amazon is based on a different business model entirely: Amazon can sell products so cheaply because it uses its other profitable units—such as cloud data storage and fees it charges others to sell on its website — to subsidize the rest of its business. While Wal-Mart and Target are willing to sell a few things at a loss, Amazon's whole business is a loss leader.
• Consumer preferences are moving to online.

Compounding this problem is the numerous price comparison sites such as PriceGrabber, Pricewatch, Pricechecker, Finderscheaper, and Fatwallet which become more comprehensive, accurate and mobile every day. This writer is wondering if "showrooming" will be one of American Dialectical Association's 2012 words of the year.

What Motivations Drive Your Shoppers?

The Integer Group’s The Complex Shopper is an annual study, conducted in partnership with Decision Analyst, which studies motivations that drive shoppers during a purchase decision, such as shopping for major appliances and automobiles. Not only does it uncover the reasons why they buy, it also identifies how they think about – and interact with – the chosen company after the purchase.
The study identified four shopper types:



"Fretting Frugal (31%)
A Fretting Frugal finds big-ticket shopping about as enjoyable as a trip to the dentist. He’s nervous about making the wrong choice from the start, which only makes for a frustrating, unsatisfying shopping experience. The Frugal is price-conscious and easily overwhelmed, and these feelings lead to a delayed purchase or passing of the decision-making responsibility to someone else.
Experience Lover (29%) - Generally older and female
Shopping is a labor of love for the Experience Lover. She enjoys researching big-ticket items and makes things like reading reviews a prerequisite to the buy. Generally older and female, the Experience Lover is confident and takes great pride in her decisions. She values her relationship with particular brands and is more likely to make repeat purchases with the same company.
Social Adventurer (15%) Generally urban, ethnic, and socially mobile
The Social Adventurer believes what you buy is a reflection of your style and personality. So she spends extra time researching to make sure she gets it right. The Social Adventurer is urban, more likely to be a person of ethnicity and upwardly mobile. She loves shopping and isn’t afraid to spend big. She takes to social media to connect with the brand and lets others know about her experience.
Passive Purchaser (25%)   Generally older high income male Let’s get this over with is the best way to describe the Unconcerned shopper’s state of mind. This older, high-incoming-earning male wants his purchases quick and easy. He removes all emotion because the process is transactional and nothing more. He doesn’t waste time researching and he’s not loyal to a brand just because he spent a considerable amount of money with the company."

The research shows that for some shopping is a great adventure, a sport, a pastime while for others it is a trip to the dentist. Each of the shoppers identified above have to be approached in a different way to lead them down the path to purchase. For example, the Social adventurer wants to establish a relationship with the brand that enables her to shop where and when she wants while the Passive Shopper want the utmost in simplicity and the shortest distance between product and checkout. The Fretting Frugal want constant reassurance they are doing the right thing while the Experience Lover wants shopping to be rewarding and social.

The challenge for e-tailers is to identify each of these shoppers and provide them the experience that supports their shopping motivations and style. This may require a different navigation path that adds social interactions and product content or reduces information and the number of clicks to checkout.

What are you doing to identify and support your shoppers' motovational styles?

Ignore Customers at Your Own Peril

The future of communication between companies and their customers is via social media. According to a research study by Conversocial, "a majority (50.7%) of consumers currently use social media to communicate with corporations. Moreover, 78% of respondents believe that social media platforms would either soon entirely replace other means of customer service altogether or become the dominant way for consumers to communicate with corporations." In addition, Conversocial found:

High Rate Of No Response: Of those respondents who have communicated with companies on social media sites, nearly a third (32.5%) were either neglected or altogether ignored.
Price of Neglecting Customers: If ignored by companies on social media sites, 45% of respondents said they’d feel anger, and 27.1% said they’d stop doing business with the offending company altogether.
88% Less Likely To Buy: If confronted with unanswered customer complaints on a company’s social media site, 88.3% of respondents said they’d be either somewhat less likely or far less likely to buy from that brand.
Low Level of Current Consumer Satisfaction with Companies’ Social Media: Nearly a third of respondents, or 32.4%, characterized their overall satisfaction with the way companies use social media sites to communicate with customers as either poor or very poor, while 59.6% expressed guarded optimism for future positive developments in the field and only 8% were thoroughly satisfied. According to the study the primary complaints were slow response times, unanswered questions, and unmet expectations. In addition, most respondents stated adamantly that these complaints decreased their desire to do business with the company.

Here is an interesting question- "How fast is fast in responding to questions and complaints?" The fastest response time goes to Xbox with an average time of 2 minutes and 42 seconds. In contrast, none of the largest US retailers including Sears, Kmart, Kroger, Wal-Mart, Macy's, Costco, Bloomingdales, Safeway had a response time of under one hour and most, if they responded at all, averaged four hours. In addition, Costco, Kroger and Kmart ignored 100% of inquiries on their Facebook page. Conversocial notes that inquiries and complaints ignored on social media push consumers to more expensive phone interactions that costs an average of $15.00 per call.

The distinct and critical difference between social media interactions including complaints, inquiries and even compliments is the public nature of the content. Phone calls and emails are not viewed by a wider audience that may join the conversation enlarging the impact of the message- for better or for worse. The sooner a complaint or inquiry is handled the quicker the message disappears and the quicker the problem is contained.

PR challenges faced by large corporations are only intensified in social media. A negative public image can escalate when consumers have a more transparent and wide-reaching voice. Retailers must deal sensitively and promptly with their online communities if they hope to maintain a positive customer experiences. This requires:

1. Fast and consistent responses to all complaints across all social media 

2. Co-ordination between Marketing and Customer service to avoid negative feedback being spread across fans’ news feeds.
3. Targeted messages to deliver tailored responses to each sub-section of a diverse fan base.

Are Negative Reviews Hurting Your Sales?

Customer product reviews are fixtures on retail and consumer brand websites, with over 80% of retailers featuring some level of reviews.  A study conduced by Market analysis firm Cone Inc. in 2011 found that 80% of online customers (up from 67% in 2010), after reading negative online reviews, change their purchasing decisions. Conversely, and not surprisingly, 87% of consumers said a favorable review has confirmed their decision to click the buy button

Inevitably -- no matter how good your product or services are -- you'll get negative reviews that sting.  It's how you deal with negative comments that will mitigate or inflame the negative impact to your business.  How should you respond and how? What should you say or do?  According to Dan Kehrer of Bizbest, here are the six rules for responding to negative online reviews:

Be on top of the news about you:  If a customer writes a negative review about your business, that's bad. If you don't know about it, that's even worse. Businesses should implement comprehensive but simple-to-use "reputation management" or reputation-monitoring programs. These services search the Web for any mentions of  a business, service or product and provides access to the information via an easily interpreted dashboard. Many services will aggregate large volumes of reviews and measure the dominating "sentiment" expressed in the reviews.

Have a response plan: Know the major review sites that pertain to your business and your options for responding to negative reviews on these sites. Understand the tools they offer to respond to customer reviews (good or bad) and any options you may have for requesting removal of offensive comments. Armed with this knowledge, you can have a plan in place for what to do if something negative shows up. This will help you remain calm and approach your response professionally.

Remain calm and measured: Negative reviews are aggravating, scary and very unwelcome however,  don't overreact. Knee-jerk reactions to negative reviews have gotten many businesses  in hot water and may only make things worse. One of the best responses is asking more about the basis of the review including the expertise of the reviewer, how the product or service was used, and prior  experiences with the service or product. Gathering more information gives greater insight into the nature of the complaint as well as comes of as non-defensive and open to feedback.

In all cases, avoid elevating the controversy the review generates and keep your focus on being positive and rectifying the situation if possible.

Your response will ripple out to a wide audience: Your respond to a bad review will be read by the writer as well as other current and prospective customers. Other current and prospective customers are you primary audience.  Responding in a calm, measured and forthright manner will let you take control of the situation and communicate that you are serious about your customer service and you commitment to resolving this, and any subsequent, situation. Good communication and a resolution plan will go a long way to calming any fears other current customers and prospects may experience as a result of the review.

Offer a viable solution: Saying  "We're sorry" is not enough, it is what you do about it that communicates your commitment to your customers. Whenever possible offer something tangible, perhaps a discount, freebie or extra of some kind. You are making this gesture in public, so others will judge you on it.

The saying goes "The only bad review is an obituary": Customer service snafus and bad product reviews are opportunities to shine by correcting the situation in an aggressive and forthright manner. A bad review, while discouraging, provides important feedback that may be exposing hidden weaknesses in your product, service, staff or approach that are important for you to know. Take advantage of your opportunity to respond in a way that turns the situation around and makes you look caring and responsive in the eyes of other customers. Also, ironically, a few negative reviews can lend greater credibility to your positive ones since customers will be more convinced they are genuine. According to Reevo, 95% of consumers become suspicious when no bad reviews are evident, believing the site to be censored or faked.

Responding well to bad reviews is as much a matter of containing your emotional response as is having a good strategic response. It is important to remember the reviewer who is slamming your product or service does not have the deep emotional attachment to the product or service that you do and, although they may be motivated by anger, it s not a major part of their life. After reading the review count to 100, or 1000, before you respond and then when you do respond carefully, honestly and openly.

Etailers Improving the "Last Mile" of Customer Service

Consumers shop online for savings and convenience. Most of the convenience comes from having items delivered directly to the home but being clueless about when a delivery will arrive or finding a missed delivery label pasted to the front door isn't convenient- it is annoying. Etailers are beginning to provide more delivery "transparency" and give consumers more control over when orders arrive at their doors.

Data from post-purchase surveys conducted by e-retailer QVC.com show that 97% of consumers who give high marks to their delivery experience say they will buy from QVC.com again, says John Hunter, executive vice president of customer fulfillment services at QVC, part of Liberty Interactive Corp. "We get repeat buyers when we offer a great experience around delivery," Hunter says.

Etailers and delivery companies are rolling out or refining the following innovative programs:

UPS Returns Exchange
A combined pickup and delivery service designed to take the headaches out of processing returns of online orders, the company says. UPS developed the service to provide a way to pick up returned products that would increase customer service, speed up the returns of products, ensure that the right products are returned undamaged, and reduce the likelihood of fraudulent schemes that seek credit for or replacement of products that don’t actually get returned. UPS delivery drivers inspect returned items according to retailers’ instructions—such as that they match the original order and are not visibly damaged—before accepting them for return delivery to the retailer.  Drivers provide retailers with real-time updates of returns and deliveries via handheld devices connected to the UPS corporate network. This service targets returns of products considered to be of high value, such as those retailing for $250 or more.

UPS' My Choice
A program, that sends an e-mail, text or recorded phone alert the day before the package is scheduled to arrive with an approximate delivery time. The first alert arrives about 24 hours before a package is scheduled for delivery, giving a consumer enough time to make changes before a package is placed on the delivery truck. If a recipient knows no one will be home to accept delivery, he can electronically authorize drivers to leave packages that normally require a signature. Rather than find a missed delivery tag on their door, consumers who know they won't be home to accept delivery can also pay UPS a $5 fee per delivery to have that package rerouted to another address or to a UPS Store location where they can pick it up. Consumers also can schedule to have UPS deliver the package within a two-hour window they select, also for $5.

Walmart Shipping
Walmart.com, in addition to its Site to Store program that offers free shipping to customers who pick up online orders at a local Wal-Mart store, also recently expanded a test program that lets consumers have Walmart.com orders shipped to one of 650 FedEx Office retail locations in approximately 15 metro areas, including New York, San Francisco-San Jose, Chicago, Boston, New York, Portland, Seattle and Minneapolis. A Wal-Mart spokesman says many of the urban markets the FedEx test is running in already have Wal-Mart retail stores, but consumers say in post-purchase surveys that the No. 1 reason they select the FedEx Office location as their pickup point is convenience.

Amazon Locker
Amazon.com is testing a retail store delivery option for urban consumers in Seattle, New York and London. The delivery program lets consumers in these areas select at checkout a local pick-up location for their online orders. Packages are then delivered to secured lockers installed at local retail shops, including drug stores, convenience stores, grocery stores and colleges. Amazon e-mails codes to consumers they can enter to unlock the locker containing their delivery.

Eliminating delivery anxiety will encourage more consumers to shop online. That's why retailers and delivery services are increasingly offering such options as in-store pick-up, scheduled home deliveries, advanced delivery alerts and, in the case of the leading online retailer by sales, Amazon.com Inc., package retrieval from a locker at a convenience store. In addition, QVC customer service representatives receive more calls from customers requesting information on where their package is than any other type, and the "check order status" service on QVC.com is the most frequently used service on the web site. United Parcel Service of America Inc. says it gets 26.2 million tracking requests a day. Reducing this volume of shipping tracking requests will reduce shipping costs.

Convenience for customers and cost savings for etailers sounds like the classic win-win situation that will continue to drive delivery service innovation and expanded services. After all, it is that "last mile" of the shopping experience that makes or breaks the customer experience.

 

 

The Emerging, and Shocking, Truth About Brick and Mortar Stores

Brick and Mortar Stores are Becoming Showrooms for Online Retailers

One does not need to look any further than Sears' decision to close over 100 stores to get a glimpse at the transformation of brick and mortar stores to showrooms. The emerging "showroom" buying pattern  takes a consumers first to e-commerce sites like Amazon to find and research a product, then to a bricks and mortar store to touch the product, then back online to make the purchase. And it is not just Sears that is being "showroomed". Best Buy, for example, is getting a reputation as being a showroom for Amazon, suggests the New York Times blog Bits.

There are interesting relationships between consumers and their stores. They are sentimental about bookstores which may save the bookstore regardless of Border's demise. They are loyal to their grocery store if the store is a cut above such as Wegman's, Trader Joes, or Whole Foods. And they have little attachment to electronic stores such as Best Buy, who is marginal in customer service anyway.  However, regardless of the bond consumers have to bricks and mortar they are driven more by cost and convenience. Increasingly, and ever more rapidly, the cost and convenience balance is tilting in the favor of the etailer.

Many consumer experts have branded 2012 as the year of the explosion of mobile technology. Fueled by the increasing sales of smart devices and the exponential growth of apps, 2012 is anticipated to be  the "tipping point" of mobile ecommerce. Mobile apps, such as those offered by Google, Amazon and PriceGrabber, allow shoppers to take a photo or scan a barcode of an item, then go online to view prices offered by other retailers. “A May survey of 3,000 shopper found that about 40% had searched for a lower price using an in-store shopping app or search engine, then purchased the item for a lower price online,” said a Wall Street Journal article.

Oracle, in its May 2011 research report, states mobile commerce is growing dramatically. Up to 48 percent of all U.S. consumers are using their mobile devices to research and browse products and services, and those numbers have grown steadily – up from 37 percent in a consumer benchmark survey commissioned by ATG in July 2010, and 27 percent in a consumer cross-channel survey taken in November 2009, according to the report. According to an aricle in the financial times, on Cyber Monday, mobile purchases jumped from 2.3 per cent of all internet spending in 2010 to 6.6 per cent. Moreover, according to estimates by Forrester Research, for every $1 spent online, the internet influences $3 spent in stores.With all those new iPhone 4s' in consumer's hands can exponential mobile growth be far behind?

Interestingly, "showrooming" also applies to the CPG category. Etailers such as Amazon, Drugstore.com, and Alice, are internet based and have been focused on selling CPG products directly to consumers for the past few years. However, Walmart- the mother of all brick and mortar stores is not only starting to sell large volumes of CPG products online they are also snapping up technology companies, for both talent and technology, to rapidly expand their online sales capabilities. In addition, in its store in Chicago suburb Mount Prospect Walmart has introduced a drive-through window where customers can pick up items ordered online through its site-to-store program. It has moved its site-to-store counter from the back to the front, has prominent signs urging customers to go online for anything they can't find in the aisles, and has terminals near the entrance that customers can use to buy online.Thus, it is the purchase of large ticket items and small ticket items that are moving from bricks and mortar stores to etailers.

As online shopping become more prevalent and retailers learn they can downsize or repurpose their brick and mortar stores, the showrooming of retail is bound to accelerate. The ongoing challenge will be for retail organizations to manage this transformation rethinking how to manage their brick-and-mortar locations as the Internet changes how people shop.