Winning with Digital Marketing

Transcription

1 National Association of Chain Drug Stores Annual Conference Winning with Digital Marketing #NACDSTSE NACDS Survey Insights, Context, and Considerations August 25, 2014 Todd Hana

2 Over 120 retailers were invited to take part in a digital marketing study Digital Marketing Study Target Survey Respondents Survey - Invited Retailers Revenues from Retail Invited Less than $1B 60% 29% Between $1B and $10B 24% 38% Greater than $10B 16% 33% Dominant Channel Traditional Drug Chain 53% 33% Supermarket 34% 43% Mass Merchant 6% 10% Specialty 1 7% 14% Participated A mix of survey and interviews were used to conduct the study 1. Includes specialty HBC, convenience, Dollar store retailers Source: A.T. Kearney A.T. Kearney 7/

3 The survey and interviews covered four key areas Area 1. What do consumers want? Key Takeaway At least half of retailers remain uncertain about Digital consumer behavior. This lack of clarity yields poor targeting and wasted resources 2. Extent of alignment between digital and traditional marketing? 3. Opportunity for collaboration between retailers and suppliers? 4. What s next for Digital Marketing? Integration of digital marketing is in its nascent stage large transformations remain ahead Retailers are eager for supplier collaboration, especially for analytics and content Mobile digital marketing is the future and it has potential to greatly enhance consumer engagement provided strategy and capabilities are properly set A.T. Kearney 7/

4 1. What do consumers want? 1. Shoppers behaviors in-store and online are not well understood by many of the survey participants Tracking Shoppers: How well does your retail organization track what your shoppers want by category? Understanding Digital Behavior: How well does your retail organization know how your core customers use digital media? 43% 28% 28% 34% Nearly half (44%) have little data to understand shopper preferences 38% Over half (53%) report little understanding of digital behavior 5% 5% 9% 10% Extremely Well Somewhat Well No better than average Somewhat unaware Unaware Extremely Well Somewhat Well No better than average Somewhat unaware Unaware Source: Winning with Digital Survey, Feb 2014 A.T. Kearney 7/

5 1. What do consumers want? As a result resources are spread thin across multiple vehicles with sub-optimized results Marketing vehicles surveyed Social Networks Corporate- Owned Assets Company website In-store digital In-store beacons Mobile apps Tablet apps Functional Solutions Sideline / banner ads Video ads Mobile ads Mobile loyalty & coupons SMS Text Engage passionate consumers Heighten effectiveness of omnichannel marketing Extend our reach to new target audiences A.T. Kearney 7/

6 1. What do consumers want? Retailers consider 5 vehicles most effective but for imprecise reasons Vehicle Usage / Purposes: Which vehicles do you use? For what purposes? Brand Awareness Consumer Education Customer Loyalty Sales 1 Company Website 2 Facebook 3 4 Mobile App 5 Twitter Other vehicles used much less frequently: 1. Q3: Which digital marketing vehicles do you use or are you testing? And for what purposes? Source: Winning with Digital Survey, Feb 2014, A.T. Kearney analysis A.T. Kearney 7/

7 2. Extent of alignment 2. Integration of Digital Marketing is in its nascent stage large transformation efforts remain ahead Integration: To what extent is your digital marketing integrated with your traditional marketing (loyalty data and insights)? No tailored marketing program 26% 27% Extremely wellintegrated Over half of retailers have significant Digital-Loyalty data integration to tackle only onequarter are well-integrated today 14% Integration underdevelopment 7% Modest targeting 6% 20% Loyalty offers, but not digitally enabled Somewhat integrated A.T. Kearney 7/

8 2. Extent of alignment 2. Integration of Digital Marketing is in its nascent stage large transformation efforts remain ahead Organization: How is your retail organization s digital marketing function led? And who in the organization drives the weekly circular? Marketing Merchandising / Category Mgmt Loyalty 0% 20% 40% 60% 80% Over half of retailers have significant Digital-Loyalty data integration to tackle only one-quarter are wellintegrated today Capability will shift from Merchandising to Marketing ecommerce Outside Ad Agency Who leads the digital marketing function? Who drives the weekly circular? A.T. Kearney 7/

9 2. Extent of alignment 2. Integration of Digital Marketing is in its nascent stage large transformation efforts remain ahead Organization: How much organizational change do you expect in the coming 2 years for digital marketing purposes? No Change 12% Over half of retailers have significant Digital-Loyalty data integration to tackle only one-quarter are wellintegrated today Modest 47% Significant 41% Capability will shift from Merchandising to Marketing Nearly 90% of retailers expect some degree of organization change soon 40% expect significant change 1. Winning with Digital survey Q7 Source: Winning with Digital Survey, Feb 2014, A.T. Kearney research A.T. Kearney 7/

10 3. Opportunity for collaboration 3. Collaboration with suppliers is as important on the digital front as it was on the offline front Collaboration: To what extent would your organization be interested in collaboration with suppliers / manufacturers on digital sales offers, product and brand education, etc.? Some Interest 31% Very Interested 15% Maximum Interest 23% Collaboration: With respect to digital marketing, in what ways would a supplier / manufacturer be most valuable to your organization? Retailer marketers want consumer analytical support 54% 46% Shopper analytics Shopper digital activity analytics 46% Retailer analytics Modest Interest 31% Traditional chains and Supermarkets in general have expressed a higher interest in collaboration than Mass Merchants 1. Winning with Digital survey Q14; 2. Q15 Source: Winning with Digital Survey, Feb 2014, A.T. Kearney analysis less on benchmarks and supply chain 23% 8% Retailer sales vs. peers Retailer inventory, demand planning A.T. Kearney 7/

11 4. What s next? 4. The shift in vehicle priorities is swift and emphasizes mobile consumer engagement Effectiveness: Which vehicles have been most effective in the past year? Which vehicles do you expect to be the most effective for your organization in the next few years? Company Website Facebook Sideline / Banner Ads Twitter Mobile Application Mobile Loyalty & Coupons Mobile Ad Social Media Optimization Bloggers Video Ads Pinterest In-store Beacons Tablet Application YouTube LinkedIn In store digital Foursquare Google+ SMS text Company Website Facebook Twitter Sideline / Banner Ads A.T. Kearney 7/

12 4. What s next? 4. The shift in vehicle priorities is swift and emphasizes mobile consumer engagement Effectiveness: Which vehicles have been most effective in the past year? Which vehicles do you expect to be the most effective for your organization in the next few years? Company Website Facebook Sideline / Banner Ads Twitter Mobile Application Mobile Loyalty & Coupons Mobile Ad Social Media Optimization Bloggers Video Ads Pinterest In-store Beacons Tablet Application YouTube LinkedIn In store digital Foursquare Google+ SMS text Mobile Application Company Website Mobile Loyalty & Coupons Tablet Application Mobile Ad Social Media Optimization Bloggers Facebook Twitter Sideline / Banner Ads A.T. Kearney 7/

13 4. What s next? 4. The shift in vehicle priorities is swift and emphasizes mobile consumer engagement Effectiveness: Which vehicles have been most effective in the past year? Which vehicles do you expect to be the most effective for your organization in the next few years? Company Website Facebook Sideline / Banner Ads Twitter Mobile Application Mobile Loyalty & Coupons Mobile Ad Social Media Optimization Bloggers Video Ads Pinterest In-store Beacons Tablet Application YouTube LinkedIn In store digital Foursquare Google+ SMS text Mobile Application Company Website Mobile Loyalty & Coupons Tablet Application Mobile Ad Social Media Optimization Bloggers Facebook Twitter Video Ads Pinterest YouTube LinkedIn In-store Beacons Google+ Sideline / Banner Ads In store digital Foursquare SMS text A.T. Kearney 7/

14 4. What s next? 4. The shift in vehicle priorities is swift and emphasizes mobile consumer engagement Effectiveness: Which vehicles have been most effective in the past year? Which vehicles do you expect to be the most effective for your organization in the next few years? Company Website Facebook Sideline / Banner Ads Twitter Mobile Application Mobile Loyalty & Coupons Mobile Ad Social Media Optimization Bloggers Video Ads Pinterest In-store Beacons Tablet Application YouTube LinkedIn In store digital Foursquare Google+ SMS text Mobile Application Company Website Mobile Loyalty & Coupons Tablet Application Mobile Ad Social Media Optimization Bloggers Facebook Twitter Video Ads Pinterest YouTube LinkedIn In-store Beacons Google+ Sideline / Banner Ads In store digital Foursquare SMS text A.T. Kearney 7/

15 4. What s next? With renewed capabilities, retailers anticipate shifting the type of marketing offers Growing offer types Time-bound offers Sign-up-based offers First-time transaction offers Limited number offers Inactivity offers Stable offer types Temporary Price reduction Loyalty Points Declining offer types General Sales BOGO or product linking Manufacturer Coupons To align with retailer preferences, CPGs should include increasingly digitalfriendly offer types in their presentations A.T. Kearney 7/

16 Platforms are only a part of the equation - to have a successful digital strategy, consumers need to be engaged Retailers have to shift from only providing platforms to truly engaging consumers in a meaningful way A.T. Kearney 7/

17 Want to engage consumers in a digital world? Don t think digital, think human Three core human needs Connection Self- Expression Exploration Source: A.T. Kearney A.T. Kearney 7/

18 Samsung s pop-up store in NYC turned into a permanent store because customers love it Case Study : Samsung Community Builder Pop up showroom has central coffee counter where customers sit together and order coffee using Samsung s latest tablets Conversationalist Design studio allows customers to design their own bags, take photographs and print medallions on 3D printers Educator Associates showcased the company s technology in a hasslefree, no pressure environment What Customers Are Saying Although I am an Apple fan, I must admit that the Samsung Store is very organized and delivered excellent customer service flawlessly Definitely worth the visit After an hour at the store, we were amazed by the Samsung experience. It was great to try all their products without anyone hurrying you to buy them but actually giving you the info you need without pressuring you Source: Yelp.com; A.T. Kearney Client Debrief Submissions Jan 2010 Aug 2010 A.T. Kearney 7/

19 Nike has built digital connections with its customers through its Nike+, NikeID and Nike Lab apps Case Study : Nike Community Builder Leader in building digital connections Nike+ app allows everyday people track their runs, share their results online and connect with an interactive community Conversationalist NIKEiD allows customers to design their own Nike gear Helps train and track progress for a run App provides links to purchase gear and music Educator New consumer destination, NikeLab, provides consumers with previews of innovation within a demonstration that bridges physical retail, online commerce, and digital engagement By the Numbers. Nike+ running app has more than 18 million users Nike+ Running for iphone is sure to impress both casual and serious runners. The app leverages social media, making an individual challenge seem like a social event. What Customers Are Saying Nike creates top notch apps that help you track and motivate your health exercise routine A.T. Kearney 7/

20 Burberry has built deeper customer connections, from the runway to the retail store Case Study : Burberry Community Builder Burberry s online community brings together current and future customers and allows them to be connected with each other and the brand. Conversationalist Burberry s The Art of the Trench, allows customers to express their individual styles through posts on Instagram or Pinterest Educator Website features rich history of company and collection Details new collections and colors available By the Numbers. What Customers Are Saying Burberry created online community with more than17.5 million Facebook fans Art of the Trench had 20 million unique visitors on various platforms in its first three years Burberry has so seamlessly integrated its online and offline experience that it never feels like two different companies A.T. Kearney 7/

21 Implications to role that companies play in industry and society transcending the transaction What do consumers want? Connection What is the retailer s role? Community Builder Self-expression Conversationalist Exploration Educator A.T. Kearney 7/

22 Want to engage consumers in a digital world? Don t think digital, think human Three core human needs Connection Self- Expression Exploration Source: A.T. Kearney A.T. Kearney 7/

23 Thank You! Todd Huseby Partner Hana Ben-Shabat Partner A.T. Kearney 7/