Retail TouchPoints: Google VP Of Commerce – Moving Beyond the Daily Deal
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Retail TouchPoints website.
Stephanie Tilenius, VP of commerce for Google, believes that in order to develop closer connections with consumers, retailers need to develop a strategy focused on personalized offers based on past transactions and browsing behavior to cash in on the ever-growing daily deal audience.
"What you’re going to see is a whole new set of formats where you’re able to talk to your loyal customers with personalized offers," Ms. Tilenius said during her keynote speech at the Shop.org Annual Summit in Boston, MA. "You’ll be able to do a direct communication, which is much different than a daily deal."
She believes a core reason why daily deal sites and localized outlets such as Groupon and LivingSocial are generating more buzz among consumers is specifically because they are designed to connect offline, local services to online, tech-savvy consumers. Currently, a majority (80 percent) of spending is done locally, Ms. Tilenius said. This equates to nearly $14 trillion globally and approximately $1 trillion in the U.S. "We’re seeing local services become another huge market in commerce, online and offline," she noted. This new trend coincides with the persistent growth of mobile, which is a necessary facet in the next generation of retail.
Ms. Tilenius emphasized the importance of developing a mobile strategy by commenting on a number of industry statistics. Nearly 80 percent of smartphone users are tapping into their mobile devices in-store to compare prices, search product information, and find promotions and sales, she said. With mobile subscribers checking their phone up to 40 times a day, the handheld devices are dramatically changing the way consumers interact with brands.
By leveraging other tactics such as flexible shipping options, including "buy online, pick up in-store," and "mobified" sites for smartphone and tablet, customers can obtain a rewarding shopping experience that will drive them to point of sale.
"You need to make sure your entire website is seamless when you go from a mobile phone or tablet to the browser," Ms. Tilenius said. "It needs to be a great experience. It sounds obvious, but you’d be surprised when you go to some of these different websites. The experiences are subpar from where they should be."
Flash site retailer Gilt Groupe was the top example Ms. Tilenius provided as a retailer that has rolled out an exemplary iPad application. Its media-rich site drives nearly 25 percent of its total sales, she explained, showcasing potential growth within mobile and native applications across devices.
In response to the growth of a new tech-savvy and empowered shopper, Google is rolling out multiple solutions including:
- Google Catalog
- Google Offer and Google Shopper
- Google Wallet
- Google+ and Google+ Business Pages
"It’s still early days for mobile commerce and social commerce," Ms. Tilenius said. "But you can see that it’s going to transform retail. You’re definitely going to see more innovation in the next 10 years because of all of the technology within mobile phone penetration, and you’re also going to see the connection between online and offline create a whole new experience for consumers and for retailers."
Discussion Questions
Discussion Questions: What do think of the opportunities as well as the challenges for retailers looking to deliver personalized offers to mobile-enabled shoppers? What, if anything, should retailers be taking from the popularity of daily deal websites?
Something has to change with these daily deal sites. They are not building the loyalty that merchants need when offering a discount. The inclusion of a ‘middle man’ makes it more difficult for retailers to control the deal and exploit the information that can be harvested from this type of marketing. Obviously sites like TeamBuy and Groupon have extensive followings on Facebook and huge mailing lists, but the ROI is questionable. The whole purpose of coupons is to get customers in the door and spending beyond the coupon and coming back and spending more. I don’t see that with the existing providers.
The opportunities to use mobile for personalized shopping are numerous. The challenges are the same. It’s not about daily deals and “markdowns of the day” as that is a mass-marketing approach which might lift sales comps but it also has the potential for being highly dilutive for existing customers.
Ms. Tilenius is right that being more targeted and personalized is the key to success. The bigger problem is that few retailers are discriminant when it comes to sales and markdowns, as well as promotion in general. Loyal customers should be more profitable, more willing to buy even without markdowns and more receptive to marketing communications that are personal and more relevant.
“Personalized” offers via smartphone seem one step away from the grocer checkout coupons offering me $1.00 off the dog food I don’t buy. Yes, you can know a customer’s past purchases but is that able to deliver a personalized experience, or just another algorithm?
Customers are already being bombarded with an avalanche of “likes” to get deals, discounts via email and coupons by tweets — is anyone looking at how, as mobile ramps up — no one will be listening?
That is except the extreme couponers who’ve been courted so heavily at great cost to profitability?
The difference between retailer think and GroupOn think and what Stephanie Tilenius precisely describes is an understanding of the purchasing process. GroupOn, et. al., never had a sustainable competitive advantage and retailers rarely think about the big picture.
Ms. Tilenius looks at the entire behavior model of the consumer. Forgive her for looking at the tech savvy demographic. In 5 years most all shoppers will be tech savvy.
It is ironic that the best understanding the future of retail behavior does not come from retailers, but from Google.
The opportunities and challenges are the same as with other personalized offers, with the addition of having to manage real-time location data. The main thing retailers should take from daily deal popularity is that shoppers like to act on the spur on the moment and enjoy being part of something that not everybody has access to (like a mass mailing, store circular, etc.).
Personalization and mobile will continue to grow. Consumers like offers tailored to their needs and being able to see and take advantage of an offer on the go fits consumers’ lifestyles.
Retailers, particularly grocers, have access to troves of data about their consumers. For the most part they have not utilized that data to talk directly and meaningfully to consumers. This needs to change. It’s expensive, but something retailers need to do as they find the marketplace getting more competitive.
Without waxing too philosophical, it’s clear that there is a sea change in the way that individuals experience, relate, communicate and interact with the external world.
We are experiencing a sort of digital phenomenology at retail — the evolution of a new form of commercial consciousness characterized by a change in the primary interface between buyer and seller.
While stores aren’t going away soon — if ever — it is increasingly clear that digital interfaces are significantly changing buyers’ behavior patterns.
Put another way — an increasing number of people relate to the world through some form of digital experience — traditional online buying sites; through social networks; or via our mobile phones.
The digital version of Ockham’s Razor tells us the simplest and most accessible interface is the one the majority of people will use and, for now at least, that’s the cell phone app.
The implications for how this growing preference for app-oriented retailing and socializing are changing the collective buying psyche are profound and require retailers to rethink everything from the content and language of offerings to the social psychology of digital culture.
The bottom line challenge is that most retailers have grown up in a world that they controlled and the new digital world is one in which the idea of control is — if not an illusion — undergoing a radical redefinition.
Future success is going to involve a whole new way of thinking not just about retail, but about the world and so far, there’s no app for that!
Delivering personalized offers to digitally enabled shoppers has already proven successful and will continue to evolve and its success is dependent on the product or service. This approach is however a digitally-enabled version of traditional marketing talking to customers and pushing offers into their world- mobile and online. Establishing a personalized dialog rather than pushing offers that provides relevant insights and information is the foundation for developing a loyal ‘customer-for-life’ strategy.
A study done by Oracle found that a brand initiated ‘offer’ resulted in 1%-5% response, whereas a customer-initiated, personalized and relationship driven interaction was 10 times more likely to result in a sale. Leveraging the digital world to provide an intelligent, innovative, personalized and relevant dialog is more difficult but far more valuable for both brands and their customers. Being digital should be opening the vista to more relevancy rather than simply using the technology to shout at shoppers with the same analog business models.
Ms. Tilenius is 100% on target (pun intended) in her thinking. The smartphone has introduced an entirely new way to engage shoppers in a rich dialogue at multiple points along the path to purchase, right up to the wait in the checkout lane. If you are hoping to influence the shopper’s behavior during that dialogue, you will need to be providing offers and information that are directly relevant to that consumer, at that place and time.
This new stage in the path to purchase is something of a blank slate. At last week’s LEAD Marketing conference, Google’s Catherine Roe gave a great talk on the subject. Google has even given this moment a name–the Zero Moment of Truth (ZMOT)–and has published a free e-book that is certainly worth a read: www.zeromomentoftruth.com.
In one sense, the ZMOT is a huge disruptive threat, because the shopper owns the interaction. Just last weekend, I was in a store and scanned the barcode on a product I was about to buy with my Amazon mobile app. The 1-, 2-, and 3-star reviews that greeted me convinced me to put it back on the shelf.
But the ZMOT is also a huge opportunity, because the retailers who embrace it well will be able to influence shopper behavior as never before. To Bob Phibb’s comment, targeted content doesn’t (necessarily) mean using that engagement to try to get the shopper to buy dog food they don’t buy. It could be telling the shopper about a special on a product they DO buy, but in a department they rarely shop.
The best practices in this space are yet to emerge, but it is clear that personalization based on shopping history will be a key component of any successful program.
There is tremendous promise in building out simple ways for local merchants to participate in the same game that national merchants have enjoyed for some time.
Three purveyors of local merchant coalitions come to mind: Kick Back Rewards, Thanks Again, and Zavee. Kick Back is tightly oriented to fuel and convenience retail, while Thanks Again has aligned with airline and frequent traveler groups. Zavee is the most pure play social shopping network in market today, with a home base in South Florida.
Shoppers with smartphones should be able to combine geo-location with deal of the day and reap great rewards based on registered payment cards. This just might be the way that coalition loyalty marketing becomes a reality in America – built from the ground up.
It should be of concern that Price is King on the Internet. Daily deals, shopping sites that compare on price, etc., all of these make items nothing more than a commodity competing on price. Since this is not going away, it would appear that retailers need to create a daily value or daily experience instead of just a daily deal. It is easy to offer a coupon or price deal. It is much harder to create value-added propositions that increase the actual overall value a customer receives. So I expect that we will see more attempts to use targeted coupons. At least from a customer point of view I can target offers that I may really want a lot easier now. It also means it is now easier for me to filter out all the ones I could care less about.
Ms. Tilenius is right that past behavior is the best fuel for personalized mobile offers. According to a survey of 2000 adults by Luth Research, a full 60% of smartphone users say they prefer offers based on interests compared to only 14% by location.
But the choice of mobile platform is important. A few observations:
1. No single channel is sufficient–email, apps, and SMS are each preferred by different users.
2. Check-in type mobile is questionable investment. Only 12% of smartphone owners (4% of all adults) use a geosocial service such as Foursquare, Gowalla, ShopKick or Loopt, according to a Pew internet study from May.
3. In the future, Google Wallet and a similar program from Isis will add transaction data to refine the mobile-delivered offers. Google Wallet already has lined up payment partnerships with Citi, Mastercard, Visa, American Express and Discover. Merchants include 20 chains and 900 stores, including Macy’s, CVS and American Eagle.
Gene, Amen! Think long term, think real loyalty (not transactional) and think about the whole path to purchase, not just the part where you make money.
I figure that Google can out-Groupon, Groupon! But that business (Groupon) is in serious trouble. The problem is that retailers in general, and people presuming to help them, think that “retailing” is about matching specific people with specific products, and then goosing the transaction by paying the customer to buy, aka couponing, discounting or what-have-you.
This is essentially a Neanderthal, brain-dead approach to shopper marketing, pretty much devoid of any understanding of how shoppers shop and make purchases.
If you think I am wide of the mark here, let me just tell you that last week, a senior executive from one of the top 3 global retailers said to me, in a public forum, “Why would we promote these items [what shoppers mostly want,] if no one is paying us to?” Don’t kid yourself that retailers have deep shopper knowledge. Their knowledge is focused on their suppliers, the brands, and the brands are focused on competitive issues.
The only reason the whole thing works is that shoppers have learned to cope moderately well with an adequately stocked warehouse, IF management will refrain from too much interference by shuffling things around. Shuffling is often at the behest of a paying supplier, who, one way or another, is expecting to gain some competitive advantage.
The idea that this is all “shopper-focused” is delusional. It is product and money focused. And there is absolutely nothing wrong with that, per se. But millions of people in the industry seem to be seriously confused about these issues.
The reality is that there are potential large increases in sales and profits available from working closely with the shoppers, right along with the existing logistics based business model. But this is unlikely to happen, driven by non-in-store research, and without careful measurement of what shoppers actually do, rather than what they say. (Shoppers themselves share in a significant amount of the “delusion” about what is happening in-store.)
Retailers have the opportunity to engage with their customers across all channels and all locations. With the growth of GPS and m-commerce, retailers are provided with so much information to personalize communications to the benefit of their customers, in a unique way compared to their more generic competition. The challenge will be to organize and use that information to create customer intimacy in a way that is to the benefit of the customer and not “creepy.”
The daily deal sites predominantly appeal to non-loyal discount shoppers, with some exceptions. Daily deals have the ability to clear out old inventory, or drive traffic in a low-volume period. They just have to be used strategically.
Any time you can personalize a promotion to consumers, you’re making a good move. Consumers often like to feel personally connected to their brands, and more so, if they can redeem a deal that fits into their lives, even better.
But while it’s a great idea, if it’s not implemented properly, it could prove to be too large-scale and not effective. The process needs to be tight.
The main concern a lot of companies have with the daily-deal sites is that they don’t drive brand loyalty and return customers. These sites are great for making a little extra cash, and perhaps getting some new eyes on the brand. But a lot of Groupon users, for instance, grab the featured deal, redeem it, and don’t necessarily return to purchase at full-price. I suppose, though, that it’s then the marketers’/brands’ responsibility to provide consumers with an experience that drives return, and you should be sure you do this if you’re going to participate in the daily-deal sites.