Channeling the Right Digital Demand Gen Strategy

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Retail marketers must first consider consumer behaviors in their efforts to target shoppers in digital channels properly.
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Since the dawn of digital, retailers have come to occupy two worlds: the physical and the virtual. While brick-and-mortar stores still play an integral role, e-commerce now represents an essential element of the retail experience, as well. Consumers are no longer limited by in-store availability, as online "e-tailers" provide options that augment and expand upon the traditional shopping experience. However, because this digital world remains relatively new, many retailers are still in the process of developing the right demand generation strategies for their particular audiences.

Overall, the retail industry spans far and wide, with each area attracting its own distinct audience. Thus, when establishing demand gen tactics, retail marketers must consider consumer behaviors in their effort to target shoppers properly, as success depends upon knowing your audience first and foremost.

"Obviously, the world is digital right now-there's no doubt about that," says Lisa Paglia, vice president, marketing at Davies Murphy Group. "Everybody's online, which opens up many channels and lots of opportunities for retailers to reach out to prospective and existing customers. However, it doesn't change the very basic principles at the heart of an effective marketing strategy. Everyone gets really excited about the concept of personalization, and what such strategies can do, but it all keeps coming back to the foundation of marketing, which is 'know your audience.' Understand what drives them, what motivates them, how they're spending their time, and then reach out to them accordingly."

Before retailers can determine an appropriate demand gen strategy, they must clarify to whom they're selling. Though digital may be here to stay, there are many markets in which said connected channels hold little to no relevance. Unfortunately, retailers often become unnecessarily consumed by what's "cool" at the moment, causing them to lose focus on what truly resonates with their audiences. Instead, retailers must begin by observing preferences and behaviors to establish the correct avenues of communication. In numerous cases, consumers are more receptive to traditional channels, such as print and broadcast media. Thus, the best digital demand strategy might be none at all.

Ultimately, retailers must pursue elements that drive business and increase opportunities for revenue by reaching people when they're in-store or walking down the street. For some, this means sticking with older media, such as display advertising, while more modern companies may wish to explore mobile and the benefits of location-based communications. No matter the strategy, everything must tie back to the core of marketing, which remains grounded in voice-of-the-customer sentiment, feedback, and behavior.

Digital, by nature, enables flexibility, Paglia notes, thereby allowing retailers to evolve alongside shoppers. But, in order to understand shifts in such behavior, retailers must closely monitor metrics, such as Web traffic, sales, and conversion rates, in order to decipher which strategies drive demand and which efforts fail to deliver. Most businesses understand the importance of consumer insight, though many continue to collect data for the sake of collecting data. These metrics and data points, however, must correlate with overarching business goals and campaign objectives if they are to truly impact the bottom line. Specific metrics, of course, depend upon the retailer itself and the underlying mission of its given initiative.

Going right to the source and asking shoppers for feedback via surveys and focus groups often results in the sort of granular insight retailers need to hone their efforts and make decisions. Consumers are now in the driver seat with regard to the customer experience. While retailers were once able to dictate how information got pushed to the customer, shoppers are now responsible for deciding what they want when they want it and how they're going to get it. Thus, direct consumer input provides retailers with insight into what they're doing right, what they're doing wrong, and how best to correct these mistakes.

Paul Donovan, director, retail at SAP emphasizes that successful retail demand gen strategies come from those companies that effectively bridge the physical and virtual divide and synchronize these two sources of data so they may harmonize their traditional and digital tactics to ensure consistency. Such retailers put great effort into understanding the nature of their business, particularly as it pertains to the customer experience, and developing an approach that reflects the preferences of their most profitable shoppers.

Grocery chains, such as Trader Joe's and Wegmans, for instance, recognize that they have massive in-store loyalty, but require little attention on the e-commerce front. Apple, of course, builds hype prior to new product launches by tapping traditional channels, such as public relations and broadcast media, which blend seamlessly with its in-store and online shopping experiences once these items have been released. Staples, on the other hand, sees that its future lies in e-commerce. Thus, the brand has begun closing unprofitable stores as it begins to grow its assortment beyond office products into adjacent verticals in an effort to retain its competitive lead and sustain consumer stickiness. Wal-Mart also envisions a future where more customers buy online. Last week the company announced it would increase its investment in e-commerce and digital initiatives in 2015 in the wake of six consecutive quarters of weak in-store spending.

Thus, while demand gen strategies aren't all cut from the same mold, each must pinpoint which channels garner the most attention and focus upon engaging consumers via these popular avenues. Donovan notes that, in today's market, loyalty is no longer driven by discounts, as shoppers can find the best available pricing with just a few clicks. Instead, this era of loyalty 2.0 requires companies to focus on engagement as they create experiences that stand out from the competition. Acquisition may be the key, but remarketing and retention rely on establishing the trust and satisfaction necessary to sustain demand and ensure repeat purchases.

Wal-Mart's 'LEGO Loophole' Highlights Digital Failure at its Finest

Like most modern shoppers, Clark Howard, nationally syndicated consumer advice expert, conducted his price research online prior to visiting any brick-and-mortar stores. His son-an avid LEGO fan-wanted a new set, so Howard scoured the Internet to find the best available price. Ultimately, Wal-Mart was the best option. But, when Howard arrived at the store, he found that the in-store price was 35 percent higher than the online price. He mentioned this to an associate, but was informed that the store couldn't price match against its own online offerings. Instead, they recommended that he place his order online and choose to pick up the LEGO set in-store. Thus, he ordered the item on his smartphone only to find he wouldn't be able to pick it up that day.

Despite the fact that the given location had the LEGO set in stock, Wal-Mart's internal processes require 24 hours notice for pick-up. He and his son witnessed an associate take the item and put it on hold behind the pick-up desk, but he didn't receive the confirmation until the following day. Therefore, Howard had to wait an entire day before he could pick up his order.

Not only does this example demonstrate an extreme level of inconsistency, but it also highlights the issues that may potentially arise if retailers don't ensure that they've closed any aggravating loopholes. Donovan suggests that Wal-Mart should quicken its cycle of approval and synchronize its in-store and e-commerce pricing to prevent frustration and churn. No matter how important digital becomes to the bottom line, companies cannot treat their physical and virtual entities as two separate brands, he adds, as doing so will not generate demand, only discontent.

EXPERT OPINION
EXPERT OPINION