In Partnership with RetailWire

It seems everyone has some kind of customer program these days, and certainly every retailer is looking at their transaction data and customer data with an eye towards whatever insights they might be able to get out of that data. In RSR’s studies, we have found two distinct schools of thought: “I don’t need to know anything about my customers. I only need to know what they bought from me in the past. With that information, I can sell to them in the future. ” The other school of thought: “The more that I can divine my customers intentions, the more I know about them, the more successful I will be in selling to them. “

If these two positions are polar opposites, then I fall somewhere in the third dimension – not on that line at all. Rather than face a choice between analyzing past performance without any context and making presumptions about what consumers want based on their demographics or other attributes, I believe there is a third option: simply ask consumers what they want. We have the technology. We already pay consumers to get to know their preferences. Consumers overwhelmingly want more personalized experiences and products. Can’t we just let them set their own preferences? Coke vs. Pepsi? Whole wheat vs. white bread? Jeans vs. suits?

RetailWire recently hosted a discussion on this topic, started by Camille Schuster’s report on the Shopper Insights in Action 2011 event. She suggests that the second school of thought is the way to go – that retailers need a more holistic view of the customer. It’s a popular position right now. There’s so much data out there about consumers, especially when you throw in digital channels, that it’s tempting to want to pull all of that information together to know – really know – who your shoppers are.

I was pleasantly surprised to find a lively discussion – one that mostly dismisses a holistic view as a way to run afoul of assumptions based on attribute data about shoppers. You know what they say about the word assume right?  

RetailWire Discussion: A Holistic View of Consumers

By Camille Schuster, Ph.D. President Global Collaborations, Inc.

One theme emerging from the Shopper Insights in Action 2011 event in Chicago last week was the necessity for viewing shoppers and consumers from a holistic perspective. Grant McCracken, author of Chief Customer Officer, suggested that we dolly back when researching the consumer or shopper.

Dolly back is a film term meaning that the camera pulls back to get a broader shot. Rather than just view the transaction, understanding the whole consumer would allow us to get to a cultural perspective from which we could predict trends. One speaker offered a quotation from A. G. Lafley, former CEO of P&G, “We have to consider the consumer as a whole person, not just the piece of them related to our product — e.g., not just the mouth for oral care. “

Some companies have been learning about their shoppers and consumers as people with some surprising insights.

For example, Brian Lannan, Target’s group manager of guest insights, shared one surprise. Fashion forward 20-30 year-olds were asked to identify their primary fashion influence — they said their moms!

Mike Hogan, senior vice president and chief culture officer of Game Stop, found that a broad consumer group of 30+ men and women are an important segment for them, not just the younger men and boys.

Todd Hale, senior vice president, consumer & shopper insights, Nielsen, reported that, in addition to increased food sales at Target and Walmart, cookbook sales are a growth category.

Rajeev Sharma, CEO of Videomining, reported that store path research revealed that Hispanics not only buy different products, but that they shop differently.

Jonah Lehrer, author of How We Decide: The New Science of Decision-Making, presented neuroscience research indicating that an understanding of how the brain works reveals opportunities for learning what a consumer feels.

The Overall Conclusion

Developing strategy based only upon transaction attitude or attitudinal research is not sufficient for understanding how consumers shop and buy.

Discussion Questions

What are the advantages as well as the challenges of taking a holistic view of consumers and shoppers? What research methodologies are appropriate for generating a holistic view of consumers?  

RetailWire BrainTrust comments:

Paula Rosenblum — Managing Partner, RSR Research

Well, this is a wonderful idea and it is being done by more than a few retailers today. But cultural backgrounds are sort of rudimentary, it seems to me. We have the tools, technologies and information to dolly back and see far more interesting patterns in the data. That’s the value of the excellent analytics we now have available.

So, sure, cultural patterns is one way to segment — the fun starts in finding other patterns.

The impediments are finding money to fund technology to parse all that data, getting merchants to recognize the new possibilities, and getting merchandising and marketing to work together on a level playing field.

Money and culture are always the issue these days (and compensation structures, but that’s a longer story).  

Joan Treistman — President, The Treistman Group LLC

This article reminds me of the New Yorker cartoon of a man and woman seated at a bar. He says, “Well, enough about me. What do you think of me? “

Oftentimes consumer research is conducted with the same mindset. Marketers are anxious to hone in on their products and brands without considering the position of this product and its purchase within the array of thoughts, activities, and decisions of the consumer. Retailers tend to magnify the importance of the insights received because they don’t consider where it fits in the scheme of things for the shopper. Then they are surprised when the strategies which come from the insights are not on target.

A wise person once told me, “It’s only a toothbrush. “ When you conduct research about toothbrushes, you can get to thinking that it’s all anyone else is thinking about these days. The same is true for stores, salad dressing, etc.

When I conduct research, I start with the context. It’s a first step in true understanding regarding the product, brand and decision process. Do people make their decision at home or in the store? Is the purchase an impulse or deliberate? What influences the decision process — before entering the store, in the store or when the consumer is making that purchase on line?

At home we may think in the abstract… what we heard, saw or know. In the store, we are dealing with different trigger points — all of the above plus signs and packages, prices and channel strips, not to mention the environment of the store and experience. You don’t have to test every component, but you have to insure that the contribution of each has a place in the research thought process. That’s a holistic perspective which leads to more reliable strategies and greater brand revenues.  

Ben Ball — Senior Vice President, Dechert-Hampe

Understanding your consumer and their use of your products in context is intuitively advantageous and intellectually appealing. Who doesn’t want to know more about the mindset of shoppers as they decide what to buy? Who doesn’t want to have a greater influence in that consumer’s life throughout the path to purchase?

But the devil is in the application of that knowledge. At the extreme end of the spectrum, each one of the millions of consumers who purchase our product represents a single, unique holistic being for us to understand. As a marketer, can I afford to market only to Alice exclusively as her unique self? Even if I understand that the reason she is predisposed to cold-water, bleach free detergents is because she lives in a condo with pets, is environmentally concerned and has very expensive clothing? I have never experienced the luxury of that kind of marketing budget.

Instead, most marketers are forced to focus on the maximum number of detergent users possible who might be predisposed to their product features. And our message needs to be direct and relevant, positioned as close to the time and place of the purchase decision as possible. We simply have to have that kind of effectiveness and efficiency.

So how do we take from the best of both worlds? Finding those elements of consumers’ lives that are most relevant to our product usage and purchase decision is the beginning. Once those are isolated, concentrate on the ones that optimize the trade-off between broadest application and greatest influence.

Dolly-back is great advice when marketers laser in on messages like “Tide cleans whiter and brighter “ — but beware the siren song of researchers imploring you to go live with Alice’s family for a week so you can really get to know her.  

John Boccuzzi, Jr. — Managing Partner, Boccuzzi, LLC

I started talking about the idea of a more holistic view of the consumer while with Kenosia. I called it the One Truth or, said another way, the Whole Truth. The idea of normalizing disparate data sources (more than 2) is not a new concept, but until recently it has been rarely used for a few key reasons:

1. The complexity of the analysis;
2. The cost of the data sources required including collection costs, and;
3. The ability to normalize all the data sources into one clean easy to understand reporting system.

I remember one client a few years ago that combined syndicated data with government data to help determine sales trends for his category that were influenced by tax increases or decreases in a given state. The results of having this information and reacting to it were substantial. Imagine if that same analysis included demographic and market basket data as well as 2 or 3 other interesting data sources. Would the results have been even better? I can only assume the answer would be “YES. “

Thanks to some wonderful technology breakthroughs, access to different data sources and the ease of bringing them together has become much easier. Now the industry needs to help train their teams to look at a consumer using this more holistic approach (One Truth).  

Bill Bittner — President, BWH Consulting

I am very skeptical about getting bogged down in the details of frequent shopper data. Paralysis from analysis is often used to describe the inability to make a decision in an uncertain environment. People hesitate because they feel they need more information to make a decision. In the meantime, the opportunity has passed them by and a competitor takes advantage of the situation. I think understanding the three things you are trying to do and picking out a few key measurements that will give you the feedback necessary to monitor your progress is better than getting bogged down in too much detail.

In retail, we are not asking thousands of different questions; instead we ask the same questions thousands of times. If a holistic understanding means knowing who your customers are, what departments they shop, and what brands they buy, then I am all for it. Beyond that, I don’t really feel much more is needed.  

Anne Howe — Founder, Anne Howe Associates

From the same Shopper Insights in Action conference came a perfect example of how important it is to consider the whole context of culture as part of shopper insights.

Considering a trend that’s gaining steam, which is that by 2030, 60% of the world’s population will live in urban areas, Kimberly Clark began to think about what that might mean in their product development and supply chain model as retailers change store formats, sizes and locations to match the population flow. They undertook an analysis process that led them to conclude that there are huge differences looming in the way product assortment and merchandising could likely evolve in key channels of trade within key categories they must thrive in at retail globally.

This effort used a lot of high-powered, multi-variate regression analysis, and will likely be paired in the future with more holistic shopper behavior studies as the cultural trend of urbanization takes place in both U. S. and key global markets. Kimberly Clark also learned how it must begin to think about manufacturing and productivity at the shelf of much smaller stores and how it must change its operations to sell and to service a plethora of much smaller retail operations in the future.

Shoppers can’t really articulate why they are migrating back to urban areas, nor can they articulate why they feel happier shopping in an urban area visiting the butcher, the baker and the candlestick maker. Whatever you choose to call it, deeper, more qualitative research, particularly when combined with some of the newer neuroscience findings, can indeed give the opportunity for more holistic, AHA moments that can be transformative for deciding how to go forward and win the shopper’s heart.  

Herb Sorensen, Ph.D. — Scientific Advisor TNS Global Retail & Shopper, Adjunct Senior Fellow, Ehrenberg-Bass Institute

One of the single biggest impediments to holistic research in marketing is that, in its very nature, the research itself is a commercial activity and will not be done if it can’t turn a profit. Research companies provide standardized services — surveys for example — that lend themselves to factory production. And of course the research engine on the user/client end is also a factory, usingtemplates to fill the gargantuan appetites of major corporations.

The alternative to custom research (discussed above) is to find existing data sources that can be analyzed. The largest such data source is scan data, and it is not an accident that the largest research company in the world is largely driven by sitting on the largest pile of this data.

Of course, academics typically do not have access to continuing streams of piles of cash that they can use to pursue whatever interests (holistic) they might have. Consequently, their studies are heavily driven by available data, or they are small and researchy, even if they are pushing the edges of knowledge.  

Derek Smith — Vice President, Retail Industry Marketing, DemandTec, Inc.

As was overwhelmingly obvious last week at the Shopper Insights in Action event, there are many different ways available to get to know your shopper. Critical here is not to miss the theme of the conference, which was around the in Action part. Insight without action remains academic. It is only important to gather as much information as is necessary in order to meet the needs of the shopper and convert them to a buyer.

From a brand perspective, both product and store, it’s about engaging the shopper to be interested enough in recognizing and relating to your brand for whatever reason is most top-of-mind at that time. Those insights tend to be more holistic as you’re looking for that first point of connectivity. Typical sources for this holistic view can come from any one of the great methods highlighted last week: in-store interviews, online surveys, at-home observation, purchase behavior mining, cultural and demographic understanding, etc.

For bricks-and-mortar sales, the single most important point of decision will always be the last 10 feet. It is critically important to ensure you have the right product mix, laid out in the most shopable manner, at the right price and with the right incentives to trigger conversion. These last 10 feet are the most tricky and all holistic insights can be applied, but having the history on what actually sells under what circumstances can mean the difference between a buy or no-buy decision. At the end of the day, that’s what really counts. And in this case, loyalty data, price sensitivity, promotion effectiveness and leakage become your best resources for really understanding how best to meet the shopper’s needs and convert them to a buyer.

Read the entire RetailWire discussion: http://www.retailwire.com/discussion/15391/braintrust-query-a-holistic-view-of-consumers

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