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In recent years, the retail sector, including the grocery channel, has been undergoing significant changes. With these changes continually comes a critical challenge retailers and CPG marketers face: They have access to more data than ever before, yet all too often, so much of it isn't useful or relevant for their marketing efforts.
So what must be done to separate the useful from the useless? Perhaps most important, grocers need to consider factors that actually drive purchases – such as consumers' personalities and worldviews – as opposed to rudimentary points such as demographics, argues Duke Perrucci, chief revenue officer of Cambridge Analytica, a New York City-based behavioral marketing and research firm.
Although food retailers have largely done a good job managing their businesses with the data available to them – POS, household panel and loyalty card – most limit the holistic understanding of each consumer. This more granular data affords grocery retailers the ability to see a holistic picture of all consumers that live in a grocer's trading area.
“A grocer can then segment their buyer base, and then build communication and offers that appeal to that particular segment,” Perrucci says. “But that is simply not enough: Sending a marketing message to a consumer, no matter how well informed by data it is, is not going to drive higher basket rings or greater loyalty.”
The Case for Retailers Modifying Behavior
Behavioral science is key to successfully resonating with consumers. Brands are just starting to realize how behavioral psychology and the science of persuasion can make marketing messages dramatically more impactful, and Perrucci argues that grocers should be no exception to this “revolution.”
“First and foremost, behavioral communications can be used to increase store loyalty – getting a consumer to come to your store for more shopping occasions,” he says. “Next, it can be used once a buyer is in store to get them to expand off the 'racetrack' and explore aisles they weren't planning on.”
Connecting offline purchase data with online behavioral data, too, is critical to getting a more complete understanding of what customers are doing outside the “store” experience.
“Merging Big Data – both online and offline – with digital behavior from cookies serves to give retailers the clearest picture into their consumers,” Perrucci says.
Although grocery e-commerce is still in its infancy, any brick-and-mortar grocer is limiting its success if it isn't using all available data to determine who its customers are, which would allow it to better interact with them.
“It's not enough to understand shopping occasions, transaction size and share of wallet,” Perrucci notes. “The currency of tomorrow is data: holistic data around a customer's digital life, media tendencies, affiliations, purchases, lifestyle, hobbies, etc.”
Additionally, targeting the right consumers at the right time with the right message – in a context that will resonate with each one – is important for grocers, though quite tricky. Perrucci notes that he doesn't believe any grocer has perfected how to target ads based on someone's current emotional or state need, or when that person is in the store. However, targeting ads to the right person and having those ads crafted in a way that will resonate with his or her personality has proven to be quite effective in digital campaigns.
Grocers that follow these methods of using better data smarter will not only understand consumers better and make marketing more effective, but also lower marketing spend, as each dollar spent will be more efficient and effective. Additionally, creating messaging that resonates with consumers works to improve the overall relationship and shows that the grocer truly 'gets them.'
“It comes down to two things: Are you ready to change your ways, and are your partners up to the task? A grocer has to be prepared to embrace change and to get out of their comfort zone to be effective deploying these approaches,” Perrucci says. “It also comes down to your partners: Are you working with skilled big data practitioners, experts in behavioral communications, savvy digital people?”