Salmat Marketing Report
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1 Salmat Marketing Report SPECIAL SALE 2019 REACH CONVERT SERVE
2 Introduction SALMAT MARKETING REPORT 2
3 New marketing technology, an abundance of channels to choose from, and audience segments being sliced and diced regularly marketers in Australia are being pulled in many directions to reach new customers and keep existing ones loyal. This could be why marketers are failing to invest in the same channels that consumers are using to make purchase decisions a discrepancy that is costing marketers not just money but customers too. On top of that, Australian consumers have less brand loyalty, and are increasingly driven by price and rewards. They turn to online materials for recommendations such as Search Engine results or online reviews, they rarely use in-store technology provided by brands, and their trust is also harder to earn. This results in a very competitive marketing landscape with disparate audiences. Marketers need to ensure they are investing budgets in the most effective way possible to achieve brand impact and reach their targets and objectives. Marketers also need to be on the cusp of what drives awareness with consumers, how consumers consider buying a brand and then what finally drives them to purchasing a brand. In our 2019 Marketing Report, we compare the behaviours of Australian marketers and consumers to give in-depth analysis and advice on recommended marketing strategies for the year ahead. The report produces insight on how marketers are investing budgets, what channels they are focusing on, and how they re evaluating their strategies. Looking at the three stages of the customer buying journey Awareness, Consideration and Purchase it also explores how consumers research products, the factors influencing their purchasing decisions, and general shopping behaviour. The aim of this report is to arm marketers with in-depth insights into consumers and how these compare to current marketing practices across the country. It also provides recommendations and tips for marketers to help them achieve the highest return on their marketing investment. 3
4 TABLE OF CONTENTS Introduction 01 The state of marketing in Australia 7 Continued mismatch between marketer and consumer behaviour 8 The top 3 challenges facing marketers 8 So where else is marketing spend going? 8 02 Awareness: how to reach more customers 11 Australian consumers turn to Search engines rather than friends and family 12 How are consumers making purchase decisions? 12 In-store vs online consumer purchase behaviour 13 Recommendations for marketers 14 Case study: Retail Apparel Group (RAG) Consideration: the goal is brand loyalty 17 Australian consumers need to trust brands 18 Marketers shouldn t just turn-off the charm 18 Loyalty programs work 18 Brand loyalty for specific products 19 Top 3 reasons consumers buy a specific brand beyond price and quality 20 What drives brand loyalty amongst Australian consumers? 20 Recommendations for marketers 21 4
5 04 Purchase: the deciding factor 23 Australians say that price counts for close to 70% of their purchase decisions 24 Everyone is discounting: how do marketers compete? 24 Be sure to send the right message 25 Consumers top concerns when buying products from a brand 25 Recommendations for marketers Conclusion 29 About Salmat 31 About the Salmat marketing report 31 Methodology 31 5
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7 01 The state of MARKETING IN AUSTRALIA 7
8 Continued mismatch between MARKETER AND CONSUMER BEHAVIOUR Our research found the biggest challenge for Australian marketers is reaching new customers (46%). Why? Because marketers are failing to invest in the same channels that consumers use to make their purchase decisions. The channel that most marketers invest in is social media, with over half (54%) of marketers investing in this channel in the last year. This is despite only one in four consumers (25%) saying they use social media as an information source for making purchase decisions. Instead, the most popular channel Australian consumers use purchase decisions is Search Engine results (49%) however only a quarter of marketers are investing in SEO and SEM (28% and 25% respectively). The top 3 challenges facing marketers 1 Reaching new customers Creating customer loyalty Generating new leads 35% 3 46% 43% So where else is marketing spend going? To raise brand awareness and reach more customers, Australian marketers have also chosen to invest in the company website (49%), marketing (40%), online advertising (37%) and TV advertising (33%). But looking at the top channels marketers invest in and what consumers use to make purchase decisions they don t align (see chart). This discrepancy is a huge concern given this industry prides itself on reaching the right person, with the right message, at the right time. Marketers need to have a 360-degree view of their customers, understanding all the touchpoints of a customer buying journey in order to have the greatest impact on brand and customer experience. It s important that marketers understand the influential points along the customer buying journey so they can invest in the channel most likely to reach and influence their target audience. Ultimately this will help marketers overcome the challenge of reaching new customers. 8
9 Salmat Marketing Report 2019 Disconnect between marketing spend and consumer buying behaviour There s a mismatch between the channels that consumers use to make their purchase decisions, and the channels that marketers invest in. The top channel marketers are investing in is social media, however the top source of information for consumer purchase decisions is Search Engine results. Top channels marketers invested in the past 12 months Top sources of information for consumers when making purchase decisions 54% Social media Search engine results 49% 49% Brand website Recommendation from friends / family 40% marketing TV advertising 32% 37% Online advertising Brand website 30% 33% 32% TV advertising Events / trade shows 30% Online consumer reviews 28% Letterbox catalogues 9
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11 02 AWARENESS how to reach more customers To reach and entice new customers, a marketer first needs to understand their customers shopping behaviours and patterns. Salmat found that Australian consumers are turning to Search engines and online reviews for recommendations, are focusing on comparing prices and finding the best deal, and placing high importance in a brand that offers free delivery services. This section offers insight into how Australian consumers behave online and in-store, and how they interact with different technologies, to give marketers a deep dive into their target audiences. 11
12 Australian consumers TURN TO SEARCH ENGINES RATHER THAN FRIENDS AND FAMILY People friends, family and colleagues will always be the ones turned to for advice, right? Wrong. Australian consumers are increasingly turning to technology more specifically, Search Engines for recommendations, over their own friends and family. Despite recent events highlighting the questionable ethics of technology giants, consumers are increasingly turning to technology for advice, over real people who they know and trust. Search Engine results topped the list of 23 channels, making it more influential than recommendations from friends and family which came in second (49% vs 46%). This is a dramatic shift from last year, where friends and family topped the charts with 72% of respondents choosing to go to them first before making a purchase. Recommendations from friends and family 46% of consumers look for recommendations from friends and family before making a purchase % % This is a dramatic shift from last year, where friends and family topped the list with 72% of respondents choosing to go to them before making a purchase. One reason that consumers are turning to Search could be convenience. Search is easily accessible and can be done instantly wherever and whenever using a mobile it s even more convenient than talking to friends and family. And it s private. Seth Stephens-Davidowitz s book, Everybody Lies, explores this concept in more detail that an individual s internet search history can reveal much about a person. According to Seth, consumers are more inclined to tell a Search Engine their deepest darkest secrets more than anything they post on social media or tell their closest confidants. Feedback from peers still important However, just because less consumers speak to confidants directly for recommendations, that doesn t mean they are shunning peer feedback altogether. Online consumer reviews have also increased in influence for consumers and are now a key part of their path to purchase. Just under a third (30%) of consumers said that online consumer reviews were a top source of information when making purchase decisions. Last year, reviews didn t even make it in to the top five influential channels. 12
13 Salmat Marketing Report 2019 Invest in the technology that matters to consumers Clearly, technology is becoming more influential in the customer purchasing journey but not all technology is equally influential. For example, when shopping in store, consumers are more inclined to use their own phone to go online to compare prices, find the best deal or access specific retailer apps (57%); or research product information (56%); rather than use the technologies that retailers offer in store (31%). Therefore, in place of investing in tablets & ipads and virtual reality experiences in-store, marketers should look at investing in SEO / SEM, online catalogues, online reviews and owned online assets such as a brand s website. In-store vs online Consumer behaviours when buying in-store 57 % Go online to compare prices & find the best deal / access specific retailer s app when buying in-store 56 % Go online to research product information when buying in-store Consumer behaviours when buying online Search for retailers that offer free delivery Search for retailers that offer different payment options (e.g. PayPal, AfterPay, Bitcoin, WePay, AliPay) Search for retailers that offer free returns Search for retailers that offer same or next day delivery 63 % 45 % 41 % 32 % When developing a website, it pays to offer the best delivery and payment options. In fact, two-thirds (63%) of consumers will always or often search for retailers that offer free delivery. Behind free delivery, consumers look for retailers that offer different payment options such as PayPal and AfterPay (45%). In fact, payment options are deemed more important than being offered free returns (41%) and same or next day delivery (32%). 13
14 Recommendations for marketers 1. Invest in online presence, but focus on the parts that matter Start with the company website. Ensure it is optimised for mobile, because that is where consumers go, even when shopping in-store. SEO and SEM is also going to be important in ensuring customers can find a brand s website especially after it has had some financial investment behind it. Beyond that, online catalogues and online reviews have a high degree of influence. For more tips around search and online reviews, we recommend downloading our previous marketing reports here: 2017, Look at other ways to keep consumers in-store Flashy in-store technology isn t having an impact, so explore other ways to keep customers in-store for longer. We already know they are on their phones in-store, so marketers could create a great in-store shopping experience that supports this shopping behaviour. Rather than setting up tablet & ipad stations, they could create a relaxing lounge area with mobile charging points. Brands and retailers could offer free Wi-Fi in exchange for customer address. That way, brands can invite customers to stay a little longer in-store, and marketers have the opportunity to profile their ideal customer segment. 3. Know what influences consumers, don t assume our research shows that marketers need to better understand the key touchpoints in the customer s buying journey, and match their investment accordingly. The more data and intel marketers have on customers, the more successful they ll be. In the next section we discuss how marketers can get these insights. 14
15 Salmat Marketing Report 2019 Case study: RETAIL APPAREL GROUP (RAG) Business challenge Australia s largest menswear specialist retailer Retail Apparel Group (RAG) was one of the country s first retailer to embrace the digital channel. But when it came to implementing new features for its online channel, RAG faced long lead times and high costs. This meant it simply couldn t innovate and compete a skill which had, until now, fuelled the company s success. RAG wanted a future-proofed ecommerce platform that would allow it to support its strategic roadmap and boost online engagement. RAG partnered with Salmat to: Create an exceptional user experience Embrace a mobile-first approach to ultimately increase mobile conversion Boost online engagement through a more immersive online experience Results: 30% increase in site wide conversion rate across all devices 99% uplift in page views and 82% increase in average session duration The site attracted more traffic with organic traffic increasing by 336% and paid traffic by 84% Bounce rates have reduced by 27% and there were fewer cart abandonments But it s not only the numbers that do the talking; customers are providing encouraging feedback via social channels too. All of this is translating into more sales both online and in-store 336 % organic traffic increase 15
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17 03 CONSIDERATION the goal is brand loyalty Creating customer loyalty is the second biggest challenge for Australian marketers. But what is brand loyalty? 46% of marketers believe a loyal customer is one that considers a specific brand when shopping for a product in that category. We ve seen that consumer behaviour aligns with this trend when shopping across different product categories, consumers would usually have a small repertoire of brands that they like and tend to consistently select from. This section explores what makes consumers loyal to a brand and how marketers can accomplish it. 17
18 Australian consumers need to trust brands A lot of brands have been drawn into creating a narrative around what they stand for, what their values are, their purpose and ethics. This can also include sponsoring or supporting a cause or a charity to communicate a positive message to their customers externally. But in reality, Australian consumers aren t interested in this narrative. Instead, in addition to price and product quality, trust is the top reason (67%) consumers continue to buy a specific brand. This is compared to 29% of consumers stating that they buy a specific brand because of the brand s values / purpose / ethics / corporate social responsibility. Marketers shouldn t just turn-off the charm But this doesn t mean marketers should just focus solely on the price and quality of the product. Marketing should be about maintaining consumer trust and part of building that trust is having brand purpose initiatives like CSR activities. Even though consumers rank brand values lower than trust, having a positive, strong brand message is what helps build that trust with consumers. Loyalty programs work Australian consumers are conditioned to expect something when shopping with a brand. That is why nine out of ten Australians have a loyalty card in their wallet. According to Mastercard, the average Australian belongs to 6.1 loyalty programs. So loyalty programs do work, especially with Millennials and Gen X, who are more likely than Baby Boomers to continue to buy a specific brand because of loyalty program points / rewards (40% and 38% compared to 31%). Consumers are even more likely to buy a specific brand because of loyalty points rather than because of the brand s ethics or CSR initiatives. The average Australian belongs to 6.1 loyalty programs 18
19 Salmat Marketing Report 2019 Brand loyalty for specific products Brand loyalty is particularly important for grocery brands which sees the least brand loyalty. More consumers say that when buying groceries (28%) and clothing / fashion / jewellery / accessories (24%), they just buy the cheapest brand (28%). For groceries, just under half (49%) of consumers said they would simply buy another brand if their favourite brand was not available. This means grocery brands need to work harder to engage of their audiences. We explore this in more detail in the next section. Automotive and consumer electronics products, on the other hand, appear to have higher consumer loyalty with more consumers saying they tend to buy just one brand that they like (automotive 20%, consumer electronics 16%). More consumers say if their favourite brand is not available in store they will go online to find it or ask the store to order it in for them, rather than substituting for another brand. This shows that price isn t a huge driver for consumers buying in those categories. They stay loyal to their brands, no matter what. 19
20 TOP 3 REASONS CONSUMERS BUY A SPECIFIC BRAND BEYOND PRICE AND QUALITY 1 2 Trust the brand Special offers / promotions / sales 3 Loyalty program points / rewards 67% 49% 36% BRAND LOYALTY WHAT DRIVES BRAND LOYALTY AMONGST AUSTRALIAN CONSUMERS? Activities marketers engage in to foster brand loyalty Reasons consumers continue to buy a specific brand (beyond price and quality) 51% Great customer service Trust the brand 67% 42% Brand visibility (marketing / advertising / PR activities) 37% Special offers / promotions / sales 36% Sponsorships (events / teams / individual / charity) 36% Develop and promoting brand values 49% Special offers / promotions / sales 36% Loyalty program points / rewards 34% Like the brand personality / look and feel 30% Great customer service 20
21 Salmat Marketing Report 2019 Recommendations for marketers 1. Focus on understanding customers inside out know who they are through data collection and analysis. A good starting point is to look at website traffic, cookie data and patterns of web engagement. Once marketers know who their customers are, they can develop a bespoke approach for each persona. It differs from person to person, therefore marketers need to get to the bottom of what makes customers tick. 2. Invest in a loyalty program loyalty and rewards still score highly in driving consumers to consider products. Consider investing in loyalty programs or reward schemes to give something back to customers and entice new ones. However, one drawback is asking consumers to carry around all those loyalty cards. No one wants to have their wallet overflowing with loyalty cards, and trying to find the right one at check-out can often be seen as a hassle. So be sure to offer more convenient options. For example, the online catalogue aggregator Lasoo.com.au has a loyalty card functionality which means consumers can store all their loyalty cards on one app. 21
22 22 SPECIAL
23 04 PURCHASE the deciding factor When it comes to making purchase decisions, Australian consumers are largely driven by price. Price is often the deciding factor for consumers when it comes down to deciding who to buy from. Marketers are all too aware of this, and are discounting their products regularly. Whilst that might work in the short term, it s not a sustainable marketing strategy in the long run. This section explores how marketers can target consumers when they are ready to make a purchase. 23
24 Australians say that PRICE COUNTS FOR CLOSE TO 70% OF THEIR PURCHASE DECISIONS Money money money. It s what makes the world go around. And it s what drives Australian consumers when they are deciding on buying a brand. With more than half (57%) of Australians saying price counts for between 80%-100% of their purchase decisions it s clear to see that price continues to influence consumer decisions. Marketers are all too aware of this and are discounting their products regularly 26% are discounting weekly, and 28% discounting monthly. This trend is amplified in the groceries category. Over half (53%) of marketers in the groceries sector discount weekly, and 41% believe their company discounts 'too much. The primary motivations for marketers to discount their products are to encourage customers to try their product (51%), move old stock (46%) and to match competitors prices (46%). Everyone is discounting how do marketers compete? But there are ways to stand out SALE 70 % Following their initial purchase, have a robust nurture plan in place to encourage consumers to come back to your brand: On average, Australians say that price counts for close to 70% of their purchase decisions. Track them Create relevant content Provide a high quality relevant and personalised experience on your website 24
25 Salmat Marketing Report 2019 Be sure to send the right message When asking consumers what their top concern was when buying products from a brand value for money (85%) led by far. This beats product quality / features (73%), convenience of purchase (44%) and values / purpose / ethics / corporate social responsibility (28%). This means that brands shouldn t focus on undercutting the competition on price, but instead demonstrate why the product delivers the best value for money. It s all about the tailored message. Consumers top concerns when buying products from a brand: 85 % 73 % 44 % 30 % Value for money Product quality / features Convenience Values / purpose / ethics / corporate social responsibility Another important nuance in messaging is the concept of saving money. When we asked consumers if they would prefer to be able to spend more or save more, the majority chose savings. One third (37%) of consumers said they would prefer that things cost less so they can save more, and another third (35%) would prefer they get paid more so they can save more. Only 20% of consumers wanted to spend more if they had extra money. Therefore, by focusing on a message around savings, this will appeal to more consumers. 25
26 Recommendations for marketers 1. Be prepared: Discounting. Everyone s doing it. Be sure to monitor competitors and be prepared to compete whenever they discount Have the brand website ready for a busy rush if it crashes during a sale, customers will disappear fast 2. Cut through the noise: Use effective channels like letterbox and SEO / SEM to drive purchase look at what consumers are using to Search or browse brands Use marketing copy that is going to get customers clicking Think about the audience and what they will see as value for money target the right person with the right promotion 3. Following the initial purchase, have a robust nurture plan in place to encourage consumers to come back to the brand helping with brand loyalty: Gather insights monitor their behaviour to build a comprehensive profile of them Create relevant adverts nothing is more annoying than an irrelevant advert and it delivers zero ROI Keep in touch make sure that the appropriate follow-up methods are put in place to stay in touch with customers. These could be in the form of edms or tailored, personalised offers Provide a high-quality experience on the website - if the experience is poor, it is unlikely they will come back 26
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29 05 CONCLUSION Looking at consumer shopping behaviours and habits should drive marketing budget decisions across a range of digital and traditional channels but only if investment is made in channels that consumers use. 29
30 We ve looked at three key stages of the customer s buying journey Awareness, Consideration and Purchase. Not all consumers are the same, but when shopping they will have awareness of a brand, they will go through a process of considering what brand to buy, and then they will close the sale and buy what the brand offers. From our extensive research into marketers and consumers in Australia, Salmat recommends marketers consider the following areas when reviewing their marketing strategy: Investing in the things that matter Whether that is improving a brand s website with Conversion Rate Optimisation (CRO), investing in rewards programs or brand experiences, or revising a brand s SEO and SEM strategy, be sure to invest in the things that matter most to customers. Keep doing research Make sure that marketing spend matches consumer behaviours. This might take further research and it also might sound obvious, but our research showed again this year that there is a mismatch between what marketers are investing in, and what channels consumers say influence their purchasing decisions. Stand out with the right message The message is equally as important as the channel it is being displayed on. We found that consumers do look beyond price and look at the value that a brand s product is giving them, against the money they are spending. By highlighting a brand s value for money, it can stand out against competitors who are continuously discounting. Looking at the Australian marketing landscape, it s clear to see that there are struggles with reaching new customers and maintaining them, whilst also staying ahead of competition. We can help show marketers and brands where, when and how to invest so that it makes a difference and so that these struggles aren t still issues the next time we conduct this research. Needless to say, there is a successful customer strategy for everyone the key for marketers is to find out what the audience wants and how to reach that audience. 30
31 ABOUT SALMAT Salmat is a leading Australian marketing services provider. We help clients connect with their customers, week-in, week-out. Salmat s unique combination of targeted letterbox and online marketing channels enables clients to Reach, Convert and Serve their customers. We also provide a wide range of back office solutions, through our Philippines-based Managed Services business. Founded in 1979, Salmat has evolved from a small letterbox distribution business to an ASX-listed company. With a talented team across three countries we work with some of Australia s most recognised and trusted brands. Reach: We offer the broadest reach media (online & offline), with the ability to target individuals and up to 17 million people. Convert: We deliver conversion across multiple channels, creating more opportunities for our clients customers to buy. Serve: We make every one of our clients interactions count online and offline. METHODOLOGY All figures, unless otherwise stated, are from YouGov. Salmat commissioned YouGov to conduct two online surveys one with consumers and one with marketers. The consumer study was conducted between 28 September and 1 October, 2018, while the marketers study was conducted between 26 September and 5 October, The consumer sample comprises of 1,039 Australian consumers aged 18 years and older. Age, gender and location quotas were applied to the sample. Following the completion of interviewing, the data was weighted by gender and region to reflect the latest ABS population estimates. The marketers survey was based on 512 Australian marketers who are key decision makers in the marketing of products in businesses with 25 or more employees. 31
32 Salmat Marketing Report Level 2, 116 Miller Street, North Sydney, NSW REACH CONVERT SERVE
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