More Measurement Tools Needed to Drive In-Store Marketing
By Tom Ryan
According to a survey by RSR Research, the biggest barrier to improved
collaboration between brands and retailers around in-store marketing is a “lack
of visibility” into in-store execution. Rather than improved execution tools,
however, the respondents saw technology, particularly improved measurement
methods, as the best way to bypass this issue.
According to the report, “The logic goes, ‘If I don’t have to rely on in-store
employees, I have a greater chance of getting consistent in-store execution.’”
The report, Enabling the Shopping Process: In-Store Marketing for the
Empowered Consumer, was based on a survey of 88 retailers and manufacturers
in spring 2009.
Survey respondents reported best way to create a “compelling, consistent
shopper experience” involves tapping into customer-facing technology. The
technology not only provides personalization for the consumer but also increases
the chance of in-store compliance. But because technology is expensive, especially
at the store level, collaboratively funded efforts are required both to bring
in the money as well as “the best insights from both parties.”
While the economy has slowed technology investments, the wish list for
new technologies around in-store marketing focuses on those measuring program
effectiveness, rather than new innovations to reach consumers in stores.
RSR said this reflects “a shift in perception around in-store marketing programs:
few seem to question the value, and are willing to make investments if it
helps them identify exactly where the value lies. This is a warning to solution
providers: for the retailers that ultimately own the real estate, ‘results’
need to be measured not in eyeballs or dwell time, but in hard dollar sales
increases.”
In its conclusion, RSR said that some basic capabilities must be in place
to successfully measure the value of in-store marketing programs.
“First, the right capabilities need to be built in the right order – recognizing
that this is an iterative process,” the report states. “It’s useless to pursue
personalized communications if you don’t have the content or the delivery
channels first.”
Second, RSR thinks its best to bring as many parties to the table as possible
when it comes to funding and planning in-store marketing campaigns. “This
applies both internally and externally – the more coordination you have,
the higher quality the campaign, and the more likelihood of getting all of
the funding you need to make it happen.”
Finally, RSR said even in cases where brands drove the funding, survey
respondents reported that retailers retained responsibility for execution.
That’s why it’s even more paramount to let in-store technologies resolve
execution issues.
“It’s easy to blame in-store execution when an in-store campaign does not
yield expected results,” the report states. “But it’s a lot more honest,
and better for everyone in the long term, if that can be eliminated as an
issue. The solutions that enable in-store compliance tracking – from
store execution management to video analytics – are more powerful than ever,
and retailers are missing out on a big opportunity by choosing to live with
the problem.”
Discussion Questions: What do you think of the potential of in-store compliance
tracking technologies to resolve execution issues and drive collaboration
between brands and retailers around in-store marketing programs? What challenges
may be faced in measuring the value of in-store marketing programs?
I guess I’m a bit cynical here because of what we’ve already seen with RFID. P&G had wonderful programs going that showed the effect of out-of-stocks, the loss in sales to both sides when a display sits in the back room instead of getting implemented and the percentage of stores where displays actually happened. Yet, Walmart was unwilling to embrace the program.
As long as retailers see it as the manufacturer’s problem and believe they can make up category sales even if a particular brand is sold out, there won’t be consensus on this issue. Compliance seems to cost the brand more than it costs the retailer so while everyone talks a good game, the incentives and desire to solve the problem are quite different on differing sides of the fence.
With so much money and attention moving in-store, the ultimate measure will be whether any of these efforts jumps up sales in the long term or whether every effort provides limited pop. If retailers want more above-the-line marketing spend in their store they will need to commit to making in-store execution a top priority.
In-store execution failure has been the default bailout excuse for too long. Now that technologies like “Shelf Snap” are maturing and gaining traction, compliance can hopefully be taken off the table and marketing program effectiveness can be exposed.
In addition to better tracking and visible information on execution, it should be incumbent upon the retailers to provide both manufacturers and agency partners with real sales data behind all true shopper marketing efforts.
At the end of the day, it’s about having enough case studies that prove the Shopper Marketing theory with real business results. Agencies use them to get different industries to join the Shopper Marketing movement, and to sell the discipline through marketing and up the line within a client organization. Manufacturers use them to defend and appropriate more funding to programs that can deliver a better ROI than a lot of other marketing spends.
Without real collaboration on execution and business results, we remain handcuffed by elements that are easily fixed. So what are we waiting for?
I too am a bit of a cynic, however, I see the responsibility for tracking compliance as a must for manufacturers. Manufacturers have done a better job in recent years of turning in-store funding into performance related activities but there is still much room for improvement.
There is technology available for compliance that can be better utilized by merchandising reps, such as in store handhelds, or firms that have a compliance tracking program for hire. Obviously RFID held promise but costs and widespread implementation are barriers to current usage.
The Retailer is still the gatekeeper to the consumer and if tracking compliance can result in fact-based presentations about better results and IF there is a ROI for the manufacturer, then more efficient and effective in-store programs are possible.
More measurement tools might be needed to drive in-store marketing, however, what is truly needed are more hands-on hours devoted to using these tools and creating more of a passion for communicating and sharing the information internally and with vendor partners. I don’t mean to suggest that more time is even available to do this properly, however, if that’s not the case then more tools are not the answer.
In-store marketing and promotion should follow a simple and repeating cycle: Planning –> Execution –> Measurement. Each iteration should feed into the next, so that lessons from one campaign can be used to improve the effectiveness of the next.
All too often that cycle is broken. The Measurement step is a labor-intensive afterthought that lags by weeks or months, or it isn’t even part of the program. And without that insight and feedback, salespeople, marketers and category managers are doomed to repeat the failures of past campaigns. So when people talk about improving “visibility,” they often simply mean that they want Measurement of some kind.
But I would argue that the ideal marketing/promotion cycle should go beyond that. Measurement shouldn’t just be a single step, but it should be an automated, integrated part of the entire cycle. Planning should be done with access to simple, relevant analytics and shopper data, so that the campaign is targeted to the right shoppers. Execution should be monitored while in progress and corrected when it goes awry, not just handed off to the individual store managers. And measurement of the effectiveness of a campaign can’t be a one-off report, it must follow the purchases of shoppers long after the campaign ends to see if their long-term behaviors has actually been impacted.
The challenge with this level of measurement is that it requires a fundamental shift in approach. Retailers’ IT, Database Marketing, and Analytics teams are stretched too thin to add this type of continuous reporting to their plates. Instead, it requires a dedicated system that is plugged into the relevant sources of data (such as loyalty-identified T-Log data and a feed of shopper interaction with in-store shopper touch-points). And the system must be accessible to (and understandable by) the non-technical marketers and salespeople, both inside and outside the chain, without requiring help from IT. This type of access is rare today; hopefully, we will see it become the norm over time.
Responsibility for in-store execution often falls through the cracks as retailers settle for “good enough” and margin-strapped brands look the other way. I’ve seen this get worse as licensing and pure brand marketing firms (you know, the ones that are doing direct brand deals with retailers) divorce themselves from tactical or technological in-store marketing even though they have a lot to lose (royalties) if sales don’t happen.
This presents a huge opportunity for brands and third party solutions providers to coordinate (there’s that word again) co-funded continuity programs and for marketing firms to bake in-store execution into their licensing deals.
This issue has been on the table longer than peace talks in the Middle East. We all know what the problem is ultimately–stubborn retailers and brand-centric manufacturers both unwilling to give in to each other. More forms of measurement will not solve the problem. I had hoped by this time in the 21st century the two sides would be a little closer, but that doesn’t seem to be the case.
As far as technology-driven in-store communications go, they are so expensive (not just to install but to maintain) that they’re a tough nut for most retailers to swallow given current economic conditions. Plus, kids always play with them and they break down.
All worthy comments. One thing I would like to add is that technology is great but cannot capture everything. There still needs to be some component of eyes and ears on-site to gain quantitative and qualitative data. But with all of this let’s remember that most companies are “information rich and execution poor.” At the end of the day, everyone needs to be accountable. I find many times brands and agencies know how bad it is out there, but do not employ the tactics needed because they are not committed to really changing things.
Thanks for your comment Dan!
As far as the in-store measurement, which is the only true missing link at the moment, we need a tool that is: accessible, reproducible, inexpensive, timely and generally undistorted (i.e. accurate).
Where RFID is expensive and prone to misplacement and Task Management or other forms of self reporting are prone to distortion and are impossible to reproduce…a picture–interpreted into meaningful exception-driven information solves for all of the criteria above. That is the ShelfSnap service, with image recognition, a spatial analytic engine and a metric comparative engine to determine exceptions to the plan.
This tool, coupled with proxy measures such as labor costs and POS sales results give the complete view of how to interpret the success of failure of a particular program.
We have a core belief that people do what they’re paid to do. If you reward good execution, you’ll get good execution.
It’s not so much about what kind of technology one uses (RFID is still a technology looking for an application–I found the notion of using it on spinners even more strange than using it on pallets), it’s about observing, measuring and REWARDING.
Having said that, the MOST important finding in the report is that retailers and manufacturers must work together to deliver a compelling message to the customer.
It’s kind of an interesting conundrum. “Mass-marketing” has been declared moribund more than once–it’s harder and harder to quantify who’s watching or reading, or who’s fast forwarding through. Now it’s moribund again, along with a lot of the media it has been riding on (newspapers, magazines, network TV).
If we can fix the last mile of in-store marketing, and reward performance, manufacturers and retailers alike will see a far better ROI than they have in the past.
On the one hand, of course it is good to be able to track execution. And it’s good to be able to improve execution. On the other hand, of course there is some limit to the ability to execute well in-store. I suspect that no matter how good retailers and their vendor partners get, panels like this one will always point out they lie short of perfection.
The middle ground is to figure out how to make the execution as good as it can be in a rollout, then to measure the true effect of a program, execution flaws and all. Good programs that can’t be executed aren’t good programs. The only thing that matters is: how much do my sales, margin, share, etc, change when I execute the program exactly as well as I can really execute it?
It’s about execution first and measurement second. Retailers and manufacturers are stuck in this endless loop, with manufacturers blaming retailers for the lack of execution. But how many retailers are asking the manufacturers for the information and results of promotions? There’s a disconnect on both ends. It’s less about achieving something vs. just doing something. Both sides need to take a big step back, look at the forest through the trees, and perhaps think about testing some new and innovative ways to execute and measure in-store activities. We can use technology to do this but it’s going to continue to drive the notion that store experiences lack well, an experience.
We’ve boiled down the experience to be so operationally proficient that shopping has become a chore versus something to enjoy. Retailers and manufacturers should try to create deals that rely on store execution and interaction with customers as a way to create a great experience for customers. Easier said than done, but it could be a huge differentiator for the brands and the stores that carry them.
Hey you can make all the excuses you want but the whole issue boils down to honesty and training. Retailers don’t perform because they have been trained that they will be paid anyway. Suppliers have done this to themselves and they deserve what they have received. The DSD guys control their own merchandising, and because the retail personnel are too lazy to do it themselves, DSD controls much more shelf space than is justified. If DSD only got what they deserved then there would be room for bicycles and lawnmowers.
I think the key here that a lot of people are forgetting is who owns the data, what value the data has, how the data can be mined and how the seller of the product has supreme power of the CPG that has been disintermediated from their customers. CPGs are looking for ways to increase the proximity to their customer. Companies such as Group Aeroplan/LMG and Alliance Data Systems are working to bridge that gap.
Clearly, this is a topic that hits home for all of us. I’ve worked on both sides of the table for many years, as a retail merchant as well as a manufacturer. Here are my thoughts….
Technology alone is not the answer to these questions. However, it can help, but not on the compliance end of the spectrum. Technologies such as loyalty programs and mobile activated calls to action will allow traditional POP materials to be implemented once and changed on the fly. They will also allow customers to get what they need when they need it.
However, the bigger question here is one of discipline. Understand retailer capabilities. Design multifaceted, meaningful programs that think first about execution before committing funds. It’s WAY to easy for an account manager and a buyer to agree on a promotion, fill out a form and have co-op dollars flow without first creating a detailed execution plan.
Next, we as an industry, have to get to a place where the people responsible for implementation, (store, district and regional managers) actually share in the P&L responsibility for these programs. Too often, the funds paying for these programs are never part of an individual store’s P&L. They simply defray some marketing budget back at corporate.
Finally, manufacturers are their own worst enemy…spending millions on improving the execution of poorly run retailers and not allowing well run retailers to benefit from their diligence. This is a HIGHLY inefficient state of affairs.
There isn’t a silver bullet here. Technology will help, but improving corporate discipline will eventually carry the day. Well thought out promotions that deliver consumer value get implemented, it’s that simple.
There is a major reason, not often commented on, for lack of accurate knowledge about what is going on at retail. Think about it. What manufacturer wants people all over their operations, poking and probing, measuring and assessing? Absurd you say? Of course. And retailers are no more anxious to have a bunch of people knowing the truth about what is happening in their stores, particularly if it is something they themselves do not know, or possibly couldn’t possibly be in their interest to have others know.
The fact that anyone can walk into a store and observe anything within eyesight is a double-edged sword. First, it is deceptively suggestive that there is nothing to hide. (Once I wrote a paper, “Hidden in Plain Sight.”) The second edge of the sword is the fact that anyone could observe and MEASURE a great deal, if they were willing to take the time. The effective obfuscation of the first edge helpfully diverts attention from the obvious vulnerability of every retailer, as a consequence of the heart of their business being on very public display.
I believe that these two perspectives go a long way to explaining many abject failures at attempts to rationalize retail action through measurement and accountability.