The Consumer’s Journey in Making Big-Ticket Purchases

When we look at consumer behavior and what drives the purchase decision, it’s helpful to look specifically at smaller price points vs. big-ticket items. There are definite differences in the path-to-purchase for big-ticket items (i.e., items costing $500 or more).

[Today, Sue is hosting Ronda Slaven, a VP Research Insights and Thought Leadership at Synchrony Financial, as a guest blogger for The Consumer Connection.]

When we look at consumer behavior and what drives the purchase decision, it’s helpful to look specifically at smaller price points vs. big-ticket items. There are definitive differences in the path-to-purchase for big-ticket items (i.e., items costing $500 or more).

When I think about how I purchase shoes, for example, I go through a very different process than when I purchase a mattress. For shoes, I don’t spend a lot of time researching, and I must admit: Some shoe purchases have been impulse buys. But I can’t say the same for a mattress or flat screen TV.

Path to PurchaseIn the 2016 Synchrony Financial Major Purchase Study, we asked consumers specific questions about what they go through when they purchase items costing more than $500.

The results show that consumers spend a certain amount of time researching, both in-store and online. Additionally, some consult friends and check online reviews, and about one third of consumers explore financing for the purchase. But, guess where the purchase is ultimately made? Eighty-two percent of respondents said they ultimately purchase the big-ticket item in-store. Surprised? Let’s explore this further, and add some more numbers to the picture.

For 85 percent of consumers, the path-to-purchase for big-ticket items starts with online research. The vast majority of people used the internet to explore prices and purchase options, up from 80 percent only a year ago. Let’s dig a little deeper:

  • Ninety percent of consumers said they compare prices and promotions to ensure they get the best prices.
  • Eighty-two percent said they wait to make purchases until they get the best deal.

So, comparison shopping is a major part of the big-ticket purchase process.

Let’s go to the next step: in-store research. Even though in-store research takes more time and planning than online research, our study shows that about 70 percent of consumers research the items in physical stores. That’s a pretty healthy percentage.

And how much impact do friends and online reviews have on the purchase? Well, more than half said they consult with friends, and 38 percent check online reviews.

Now, after all this research on the actual purchase, how about financing it? About one third of consumers said they research financing options. It’s a good idea for brands to introduce financing as part of the purchase process, as 47 percent said they might not have made a purchase, or would have shopped with a competitor, if financing was not available. Additionally, 71 percent of cardholders said they prefer retailers that offer promotional options.

And to reiterate, about four in five people purchase the item in a store. For costlier purchases, people like to touch it, feel it, ask questions and feel confident that they know what they’re getting. After all, it’s more complicated to return a washing machine purchased online than it is a pair of shoes.

So, what is the implication for brands selling big-ticket items? Consumers value more than just price when shopping for a high-cost item. The value equation includes price comparison, consumer reviews and cost of shipping/delivery/installation, as well as financing options. Retailers who ensure that their website and communications strategy include these elements come out as winners. And as the digital channel continues to play a prominent role in the shopping journey, brands should consider strategies that increase their online presence, such as search engine marketing and website optimization.

Customers are looking for a seamless shopping experience. It’s important that brands demonstrate value early in the sales process, serve up detailed information through online channels and provide great customer service for that ultimate in-store purchase.

Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial. All references to consumers and population refer to the survey respondents.

Loyalty Programs? We Don’t Need No Stinkin’ Loyalty Programs!

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Customer loyalty programs are especially popular among retailers. During the years, retailers have found these programs to be powerful business tools within their highly competitive markets. But some retailers have completely disavowed loyalty programs, either never initiating them in the first place or canceling them, in favor of reduced pricing. In fact, this has become something of a trend. What’s behind it?

Let’s start with the biggest retailer—Walmart. The company has long claimed that a loyalty program isn’t needed because its prices are so low. Walmart believes that loyalty programs can, indeed, provide excellent information about customers who participate; however, as one Walmart executive put it: ” … some of the loyalty programs are very expensive, and we don’t think that serves everyday low cost and everyday low price.” Lower-than-competition everyday prices has been Walmart’s merchandising and marketing mantra since its inception. But, at least for groceries and sundry products, that often isn’t the case. Supermarket chains like Save-A-Lot and Aldi’s, neither of which has a loyalty program, will often beat Walmart’s item-for-item pricing by a significant margin. And other competitors can use their loyalty programs to selectively pick products, and individual customers, to offer pricing—which undermines Walmart.

As for generating customer purchase data, Walmart has a “scan & go” app for mobile devices, which allows customers to scan their own items as they shop; and this provides the company with valuable information on what customers are purchasing, the length of time they’re shopping in the store, and what offers and coupons might drive future purchases. Walmart uses additional methods of understanding individual customer purchases. One of these is Walmart credit cards. Another is reloadable MasterCard and Visa debit cards. A third is “Bluebird,” a prepaid debit card which functions as Walmart customers’ alternative to having a checking account, with which they can make deposits, pay bills—and shop at Walmart. Like Tesco is already doing in the U.K, Walmart has been considering development of its own bank, which would provide even more customer data.

Asda, a Walmart-owned supermarket chain in the U.K, also has no loyalty program. It’s the second-largest supermarket company, behind Tesco; and, as in the U.S., newer low-priced chains, such as Aldi, are actively competing with Asda. In place of a loyalty program, Asda believes it provides customers with what they want most, a “great multichannel retail experience.” The chain, according to executives, focuses on the key fundamentals: prices, quality, convenience and service. Alex Chrusczcz, Asda’s head of insights and pricing, offers two explanations of how the organization is endeavoring to build customer loyalty:

  • “Aspire to treat customers equally, or you’ll create a fractured brand and shopping experience. If you have someone paying one price and another customer with a coupon paying a different price, the perception of the brand is becoming fractured. Make sure it’s consistent.”
  • “Be pragmatic in terms of technology and analytics. They aren’t a silver bullet. Use these tools and combine them with the experience of your team.”

From my perspective, the second explanation is common sense; however, the first statement is really questionable—even counterintuitive, if a subordinating goal of loyalty behavior is to help drive customer-centricity. Simply put, all customers are not equal in value; and marketing strategies which treat them as such often create lower revenue.

In the U.S., regional supermarket chain Publix has no loyalty program. The company doesn’t have, as a result, the ability to track, at a household level, what customers are and aren’t purchasing in their stores. What Publix does, instead of loyalty cards, is try different alternative approaches to build sales. One of these, for example, was to test a program where shoppers could set up an online account where they could digitally clip coupons; and then, in the Publix store, the discounts they’d set up online could be automatically applied by typing in their phone numbers. Publix also has a BOGO program for their own brands, and accepts competitors’ coupons in their stores.

Some retailers do more than emphasize the sales and service fundamentals. They build genuine passion for, and bonding with, the brand by creating a more human, emotional connection. And, though there are few organizations like this, retailers such as Trader Joe’s are the exception that proves the rule. Trader Joe’s has no customer loyalty program. What they have is enthusiasm, achieved through differentiated, every-changing customer experiences, enhanced by upbeat, helpful employees. This has enabled Trader Joe’s to generate sales per square foot that are double the sales per square foot of Whole Foods. So, another way of stating that Trader Joe’s creates loyalty behavior without a program is to say: The shopping experience is, defacto, the loyalty program.

Now, we come to retailers which had customer loyalty programs, usually of long-standing, and elected to discontinue them. Actually, much of this has been done by one organization, Cerberus Capital Group, the early 2013 purchaser of multiple regional retail supermarket chains from Supervalu (Shaw’s, Acme, Star, Albertson’s and Jewel-Osco). Calling the new positioning “card-free savings,” and reflective of the first strategy stated above by Asda, each of the chains issued statements with themes like “We want buying to be simple for all, so that every (name of company) customer gets the same price whether a loyalty card has been used or not.” Additionally, and again like Asda, these chains have said they will go back to the basics: clean stores, well-stocked shelves, reduced checkout time, clearly marked sale items and creation of a more customer-focused culture. Some of their executives have also theorized that the chains will now adopt a more local-level approach, rather than customer-level, to their decision-making, and that individual store managers will now be more actively involved in driving successful performance.

So, the chains acquired by Cerberus appear to believe that “sunsetting,” or eliminating these programs, is a calculated risk and that they would still find good ways of providing value to retain more loyal customers, as well as incentives for those with the potential to move from purchase infrequency. Most analysts, however, felt that Cerberus eliminated the programs largely because the chains they purchased were either not mining card data, or not effectively analyzing and applying this material for better marketing and merchandising, thus making the loyalty systems too expensive to maintain.

Cerberus has entered into takeover discussions with California-based Safeway, which also owns Vons and Pavilion. If this sale takes place, it’s a good bet that these chains will also drop their reward cards, because Cerberus-owned supermarkets clearly don’t need, or want, no stinkin’ loyalty programs.

Email Marketing: 5 Steps to Better Results

The biggest challenge with email marketing is that it is so easy to be successful marketers don’t reach for the next level. After all, when something isn’t broken, why invest time and energy in making it better? Most marketers don’t make the effort to optimize their strategy because “good enough” serves them well enough. For those who want more, optimizing emails delivers more than additional sales—it turns casual shoppers into long-term loyal customers by creating a better shopping experience.

This post is excerpted from the e-book “31 Ways to Supercharge Your Email Marketing.”

The biggest challenge with email marketing is that it is so easy to be successful marketers don’t reach for the next level. After all, when something isn’t broken, why invest time and energy in making it better? Most marketers don’t make the effort to optimize their strategy because “good enough” serves them well enough. For those who want more, optimizing emails delivers more than additional sales—it turns casual shoppers into long-term loyal customers by creating a better shopping experience.

There are four reasons to send emails to customers and prospects: Acquisition, retention, sales and service. Most companies are very good at generating sales with emails, but fail miserably at the other three objectives. People miss opportunities to acquire new customers, improve relationships and increase satisfaction because email marketing is so good at generating revenue. Simple changes to your email marketing strategy make a big difference in results.

The first step is to complete a mini review of your email marketing program to see how effective it is at acquisition, retention, sales and service. Make a list of the emails sent over the last year and place them into the appropriate category.

What percentage of the emails were designed to acquire new customers? This includes all emails sent to prospects and those that specifically ask customers to share the information with a friend. (Placing a “Tell a Friend” button in the email doesn’t count.) How effective were the acquisition emails at generating new prospects and customers? What changes made them better? How much did it cost to acquire new people?

How many of the emails were specifically designed to keep customers coming back? This question is often met with the response, “our promotional emails keep customers coming back.” If your company is Walmart or you can effectively compete with low price leaders, this response is right. If your company is like most, you don’t have the margins to guarantee the lowest prices and need to create loyalty-based customer relationships.

Do your sales emails consistently generate revenue, or are you seeing peaks and valleys? Email promotional programs are very predictable once you have enough historical data. Peaks and valleys that are not seasonal suggest that there may be underlying issues affecting your revenue. Subscriber fatigue is one such issue. It happens when people receive the same type of emails over an extended period of time.

The first sign of subscriber fatigue is a decline in open rates. If there is nothing new, then why open the email? The second sign is a higher click-through rate on opened emails. When people are ready to make a purchase, they look for a discount. The combination of lower open rates and higher click-throughs indicate that your emails may have become a coupon mecca.

Are your service emails a statement of facts or a conversation with your customers? Order and shipping confirmation emails can be much more than “here’s your information, thank you for your order” notices. They can be entertaining and sharable.

A good email marketing strategy increases sales. A great email marketing strategy increases sales, introduces the company to new people, and keeps customers’ happily coming back for more. The only way to move from good to great is to optimize every email sent to customers and prospects. Tips for making the move include:

  • Partner with non-competitive companies and organizations to connect with new prospects. Selective partnerships help grow your company’s prospect list exponentially. Allies from corporate and non-profit worlds can introduce your business to new people that are highly targeted. In turn, your participation provides reciprocal information or financial support.
  • Customize emails to buying behavior. There are three very good reasons to invest time and effort into modeling emails around buying behavior. They are response, revenue and retention. Carefully crafting individually customized emails improves results. You don’t have to have the analytics chops of a large company to do this well. Even small changes can make a difference.
  • Analyze email customers differently. People who choose to receive your emails are different from other customers. They order more often and spend more money when they buy, but this doesn’t automatically translate into more profitability. If subscribers are primarily buying at discounted prices, they generate higher revenue and lower profits.
  • Use reminders to help customers. Your customers are busy people. They don’t always remember that cars need servicing or they are about to run out of consumable goods. People tend to take the path of least resistance. When your company makes it easy for them to take care of maintenance and replacement issues, they seldom look elsewhere. Pricing is less of an issue because purchasing from your company becomes a habit they don’t want to break.
  • Send people to the right place. The Internet is a wonderland filled with rabbit holes that take people away from your marketing messages. Your customers and prospects will become distracted and venture off to other activities if they do not have a clear path to follow. The emails they receive from your company are the starting point of a map to the final objective. Anything that isn’t easily recognized as the next step or requires the traveler to stop and think is a diversion that needs to be eliminated.

For more, check out the full e-book “31 Ways to Supercharge Your Email Marketing.” The e-book shows how to make simple changes that improve email marketing results with examples of what works and doesn’t.

7 Shopping Experience Tips to Make Holiday 2013 Your Best Ever

The holiday season is known as the time that makes or breaks companies dependent on seasonal sales. Competition is fierce. Already short attention spans are overstimulated with marketing messages, family demands and increased workloads. Breaking through the chaos requires more than super discounts and great copy. People expect a great shopping experience

The holiday season is known as the time that makes or breaks companies dependent on seasonal sales. Competition is fierce. Already short attention spans are overstimulated with marketing messages, family demands and increased workloads. Breaking through the chaos requires more than super discounts and great copy. People expect a great shopping experience.

Companies that want to win the holiday challenge start early, plan well and focus on the customer. They invest their resources in understanding what their customers want so they can deliver. Surprisingly, price is not the top priority when people choose brand loyalty. They care more about the experience than the discount.

This is really good news for companies that don’t have the negotiating power of big box stores. Instead of creating promotions that destroy profits, they can invest in programs that improve the shopping experience. There is one caveat: If your company has been participating in the “how low can we go” marketing strategy, you will have to retrain your customers. Once people have been trained to expect deep discounts, marketing that doesn’t include them won’t be as effective.

Marketing for the holiday season needs to start now to optimize your return. Connections have to be established between your company and the people who will buy your products or services. If you already have good customer relations, focus on making them better. If your relationships need improving, focus on fixing them. The things you do today make selling easier tomorrow. To get started:

  1. Think lifetime value when creating the shopping experience. Most marketing plans focus on sales for specific campaigns instead of looking at the long term value of loyal customers. This can create an environment where hit-and-run customers generate revenue while reducing profitability. By the time the problem is recognized, it may be too late to save the company.
  2. Walk in your customers’ shoes to find the pain points. The easier and more enjoyable you make the shopping experience, the less people care about the price. Test every marketing channel to see how easy it is to understand and navigate the buying process. When you have finished, watch someone who doesn’t normally shop your business test it. Fix everything that needs it.
  3. Integrate channels for efficiency and effectiveness. Consistent messaging and the ability to cross channels with ease provide quality branding and keep people engaged. Find ways to make the channels work together where they leverage strengths in one to offset weaknesses in others.
  4. Optimize communication to insure exposure and accessibility. Email deliverability, copy effectiveness, website usability and social media engagement can be optimized to maximize the return. Paying attention to the details makes the difference between a good communication and a great one.
  5. Educate visitors on products and processes. People that understand the products your company offers and how to use them tend to buy more. Create content that teaches the best ways to use products and services. Your prospects will convert and customers will keep coming back.
  6. Simplify Everything. Making the buying decision and purchasing process simple endears people to your company. Life is complicated. Shopping with your company shouldn’t be.
  7. Target to provide the right offer at the right time. Part of the simplification process is making it easy for people to buy what they need with minimal effort. Targeting people with the right message based on their behavior improves the shopping experience.

Finally, Online Shopping With Friends

Don’t you just love shopping with friends? I do. I love getting opinions from them about what items of clothing look good on me, what would be considered a good value, what would
make a great gift and so on. When shopping with friends, I bet I also spend
more.

Don’t you just love shopping with friends? I do. I love getting opinions from them about what items of clothing look good on me, what would be considered a good value, what would
make a great gift and so on. When shopping with friends, I bet I also spend
more.

That’s why I was
interested in a new, free widget called Shoplication
that I received a press release about recently.
Placed in the checkout areas of
online retailers’ websites, the widget — which says, “Shop With Friends”
— enables shoppers who click on it to shop and share products with their
friends in real time. And online retailers can drive more sales.
The widget is the brainchild of Josh Bochner, CEO of Boston-based FriendShopper, a social platform that allows web shoppers to chat with their friends while shopping. The chat function docks to the right side of browsers to create an interactive shopping environment, and the dialogue feature allows users to converse and share with multiple friends simultaneously.

To use the tool, shoppers add the FriendShopper bookmark into their browsers’ toolbars, surf any
online storefronts and click the bookmark button whenever they find items
they’d like to save or share with friends.

The Shoplication widget takes this experience to the e-tailer.

Here’s how the widget
works: After FriendShopper members click on the Shoplication widget, they see a
pop-up featuring that product’s data that can be used to save the item, share
it with friends or both. If they’re currently shopping with a FriendShopper
member, that product data is added to the conversation. Users can also share
the online merchant’s store with FriendShopper friends by clicking the
“Add New Store.”

If consumers who aren’t members click on the widget, they see a co-branded pop-up window that
says the online retailer’s store has partnered with FriendShopper to bring them
a new shopping experience. Consumers can then sign up. Then they’re offered the
option to have the item be discussed in their “My Items” pages so
they can share it with their friends.

There are also some cool search options available for retailers. When they add the
widget to their sites, for example, they’re listed on the FriendShopper portal.

I thought this was a great way to allow friends to shop together and help online retailers expand
their reaches.
What do you think?