Gone are the days of black cats and witch hats. Instead, consumers have redirected their attention toward twinkle lights and velvet bows. Yes, the holiday shopping season has officially begun. (What's Thanksgiving, again?) But, as retailers dive into this increasingly complicated, nuanced time of year, leaders must recognize that the busy season presents critical lessons that are the true gifts that keep on giving.Here we speak with Johann Wrede, global senior director, solution marketing and customer engagement at SAP, to explore how Black Friday, social media, and ad-blockers will influence emerging strategies throughout this season and beyond:
1to1 Media: Why will Black Friday's popularity likely continue to decline? What does this mean for promotional sales and the bottom line?
Johann Wrede: As the digital economy continues to evolve, consumers are becoming more demanding. Their tolerance for the long lines and potential conflict of the Black Friday in-store experience continues to diminish as their preference for the convenience of digital experiences increases. And, while discounts are important to the modern consumer, according to annual research from American Express, more than two-thirds of consumers are willing to spend more for better customer service, with 16 percent of consumers willing to spend 20 percent more. This translates into a serious threat for in-store events that are built around steep discounts and competition to get limited quantities of deeply discounted merchandise, especially when there are plenty of online alternatives, like Cyber Monday.
In short, the novelty has worn off and people just want a less stressful experience, which they are willing to pay for. It's time for retailers to reimagine Black Friday as a customer engagement event rather than a promotional sale. If they can deliver an event that draws customers with the promise of an amazing experience, then discounts can be lower and they can set themselves up for a longer, stronger customer relationship after the event. Alternatively, retailers can opt out of the whole thing as REI has elected to do in order to demonstrate an understanding of what's important to their audience, and attract positive attention upon which they can build ongoing sales momentum.
1to1: How will social media impact sales this holiday season? How will retailers use this channel to drive innovation?
JW: Social media is already helping decide what will sell well this holiday season and which retailers will or won't make the cut. Stories of bad experiences, poor customer service, and defective products are circulating and influencing consumer sentiment--sentiment that will be hard to overcome, even with low prices. The opposite is also true. Stories of great experiences are also circulating and savvy brands are encouraging those with thoughtful social media campaigns that build awareness well ahead of the holiday season. While social seems to be all about the moment, it has a long tail and needs to be a part of a retailer's holiday strategy long before the holidays.
In terms of innovation, social still has so much to offer the retailer who is committed to meeting customers where they hang out. To attract new customers and make the most of their marketing budgets, retailers can combine enterprise customer data with Facebook profiles to reach new audiences that look like their best customers. On the other end of the buying journey, retailers can now embed purchase functionality directly into the consumer's social feed, significantly upping the convenience of mobile commerce and eliminating barriers to purchase. It's important to note, however, that the real potential in these examples is not just the experience the consumer has--a relevant ad in their feed with a simple checkout process--but rather in the integration of these experiences into the overall brand promise. That the order placed via Twitter can be tracked in the Web store, call center, or retailer's mobile app later on. That the reaction of new audiences is captured and used to shape and personalize future interactions. And that after-sale customer service is just as personal and convenient as the purchase process was.
1to1: How will ad-blockers on Apple devices hinder non-customer engagement? What are some alternative ways for retailers to connect with this group?
JW: Ad-blockers won't hinder non-customer engagement at all. In fact, it will actually boost it, because it will force brands to consider strategies that are harder to execute, but more meaningful to the consumer. Traditional online advertising, while a valid way of reaching an audience, isn't really a great tool for creating engagement. Even without omnipresent ad-blockers, consumers are becoming adept at simply ignoring advertising. Ad click-through rates averaged 0.15 percent across all countries, media types, and verticals through the first 6 months of 2015 according to Google's Display Benchmarks tool. Taken another way, 99.85 percent of online ads fail--not a great statistic when considering the effectiveness of ad spending.
If, instead, retailers focused on meeting customers' needs at each stage of their journey, ad blocking and abysmal click-through rates would matter a lot less. Retailers need to consider an engagement strategy that includes branded communities, social media engagement, great content that informs (and winds up in Google's organic search results), and highly personalized experiences. And, when spending money on advertising, they need to think carefully about targeting a receptive audience with relevant and timely content on the channel that they trust most.
1to1: What lessons can leaders learn from these holiday trends that they can then apply to their retail strategy all year long?
JW: Consumer values are changing as the digital economy evolves, and experiences are becoming more important--more important even than deep discounts. Consumers are looking for more than just a day of low prices, and retailers can capitalize on this by adopting a strategy that emphasizes great, personalized experiences across channels all year. Retailers can also benefit from the desire of the modern consumer to co-create content--sharing photos and experiences with the brand and their friends--and encourage participation in ways that are more aligned with their customers' core values, which will turn customers into loyalists and advocates faster than standing in a long line in the hopes of getting a doorbuster before they run out of stock.