April 9, 2012
In ‘The Shopper Economy,’ Behavior is the New Currency
Between posting your updates on Twitter, Facebook, LinkedIn, Google+ and YouTube and checking in via Foursquare and ShopKick, you may get the feeling you’re a texting, walking (i.e., mobile) personal broadcast center. If so, you’re halfway to the conclusion drawn by Liz Crawford that "the shopper is the medium," an essential tenet laid out in her thought-provoking new book, The Shopper Economy.
Ms. Crawford, a RetailWire BrainTrust panelist and senior industry analyst for the Path to Purchase Institute, has a talent for corralling free-roaming trends and concepts into cogent, workable principles. Her fundamental premise is that a new style of consumer economy is emerging, one in which shoppers trade their time, attention and behavior to marketers for forms of compensation that often but don’t always result in the acquisition of material goods and services.
"Today there is a new currency that extends beyond the dollar," writes Ms. Crawford. "It is made possible by digital technology, and it can be minted by anyone who has a cellphone. This new currency is behavior."
In Ms. Crawford’s new Shopper Economy cash drawer, currency is divided into four denominations:
Attention: Any advertiser knows how difficult it is to win a consumer’s attention these days, even for a few seconds. "From an economic standpoint," contends Ms. Crawford, "attention is scarce, and scarcity creates value." Companies such as Virgin Mobile with its "The Sugar Mama" program literally pay shoppers to watch and respond to ads with calling minutes. Yes, the advertiser has to pay consumers for their attention, but they get valuable behavioral data in return. (You begin to see the new economic exchange in action.)
Participation: Similarly, shoppers are also being given incentives ("scrip" is Ms. Crawford’s term of choice) to perform tasks, but in this form of currency, active participation in shopping-related activities is required. For example, when users of the ShopKick mobile app walk into a participating store location, her smartphone automatically logs her behavior. The shopper earns "kicks," redeemable at hundreds of stores and restaurants.
Advocacy: Whereas behavioral tracking may be valuable to marketers, tying into a consumer’s personal (and in many cases extensive) personal network can theoretically have more immediate and far-reaching benefits. As Ms. Crawford puts it, advocacy is "a continuum, from simple sharing to brand evangelism."
Loyalty: For most traditional (and widely denigrated) forms of passive loyalty marketing, there’s not much of a Shopper Economy exchange taking place since, by definition, shoppers aren’t earning scrip for "behaving." However, if you believe programs such as Safeway’s new Just For U represent the new wave in personalization, there will be scads of digital currency being swapped, and maybe even some real loyalty being engendered.
Discussion Questions
Discussion Questions: If, as Liz Crawford asserts, shopper behavior is the new currency, what are some short and long-term implications for marketers? Can you see ways in which this Shopper Economy mindset could lead to less emphasis on price as a purchase driver?
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Any consumer goods brand that is not paying complete attention to the social media with a fully dedicated effort every day of the week is missing the big mother ship these days. There are no excuses anymore for ignoring, or even only lightly touching upon the marketing opportunities at Facebook, Twitter, LinkedIn, YouTube, or the others.
If you do not have the expertise, you need to find folks to help you that are up with the times and do understand today’s consumer goods social economy. I’m NOT suggesting that you sell your brands online; no not at all, you will still sell your brands through the retail mass markets, but you need to reach your audience through the social media, no matter what else you might be doing.
Price will always be in focus. With smartphones taking over the consumer’s connectivity, the challenge for most marketers is to build plans and capabilities to identify their customers — regardless of value. Then over time, investigate and invest in tools to capture discrete events. One way as well as two way dialogue with customers is to be expected in order to support all four points of engagement. Back-end technology in the form of CRM/Loyalty platforms that process all transactions and interactions is essential. Build your plans and requirements today in order to meet the challenges in the decade to come.
Liz outlines some good points in terms of current and future implications, however, there continue to be some very immediate opportunities for “brick & mortar” retailers to gain a better understanding of the shopper experience in-store and then use that on-going understanding to drive business growth.
For example, does the retailer know:
1. How long your customer spends in your store?
2. If the shopper received assistance where needed and expected?
3. If they found the items they wanted in-stock?
4. How long the shopper was required to wait in line for a fitting room, service at the deli counter, service at the pharmacy, and to check out?
5. How many shoppers/shopping groups end up purchasing something?
All of the above are “low hanging fruit” opportunities for every retailer with stores to measure key factors in today’s store and then manage those factors to deliver what the shopper wants/needs. The immediate benefits are increased sales, profits, and loyalty.
I agree with Crawford’s premise and one implication I see is the “Shopper Economy” phenomenon becoming another driver of the need for enhanced analytics. If retailers are going to start rewarding shoppers for behavior beyond simple purchasing patterns, then they are going to need the analytical tools to determine if the behavior they are incentivizing is truly leading to increased sales and margin.
Liz lays out some of the same ideas I did in my adaptive brand marketing paper I wrote while at Forrester. The “new Ps” I postulated in that report included Permission, Proximity, Perception and Participation — these align very closely to what she has here.
I think what you see in these is a call for a different kind of relationship marketing that requires real time responsiveness and sensitivity. Yes, it will mean data, but not necessarily the traditional CRM data we think of. Marketers will need to be very sensitive to each shopper opportunity and be there at the moment it happens with relevant, engaging information. In some ways this is the same as it’s always been — the difference today is it doesn’t necessarily happen at the shelf.
The model Liz lays out provides a great way to view the value marketers must earn from consumers if they want their participation in either communication or purchase. Putting that value into behavioral terms brings it to life in a way that it can be considered and understood when planning programming — social or otherwise. Next step — the measurements!
Liz has laid out several critical steps that marketers have to embrace about consumer behavior and how that behavior is and can be influenced by media. Important to understand the complete consumer — behavior within your own store, as well as who, what, why, where, when, and how those behaviors are being acted out away from your store.
I’m eager to read Ms. Crawford’s book; her observation that the currency for shopper marketing has dramatically changed, is spot on. I saw a study today from Time Warner that found “digital immigrants” (consumers who grew up with old-school technologies, such as TV, radio and print, and then adapted to newer ones) switched media venues 17 times per nonworking hour. But “Digital Natives” (consumers in their 20s who grew up digital) switch media venues about 27 times per nonworking hour.
That puts a whole new spin on how we value the currency of “attention,” doesn’t it?
Thank you for responding! I agree — the measurements! The analytics! I think that the companies with core competencies in Big Data Analysis will be great investments! 🙂
Sam Walton told us that the customer is the boss and can fire anyone including the chairman of the board anytime they want by not shopping at our store. Today we know both the cost of gaining a customer and the cost of losing a customer, so yes, the customer is still the boss. These various methods to connect to the customer are also a new behaviour for a retailer. A customer can shop a single retailer from six different locations including coming to the store.
So I agree, we need to “in a sense” orchestrate a customer’s behaviour while they are shopping in our stores. I mean we can make their shopping trip a better one. We can do that with full shelves and or a greater variety of products. We can do that with knowledgeable staff. We can also do that by communicating with our customers in a way that they prefer using the latest technology as well as the good old fashion “Hello, welcome to our store.”
I have always felt that it is all about investment. Ms. Crawford’s denominations are all related to getting the consumer invested, the idea being that once the consumer is invested to a certain level, the ‘switching cost’ of taking their business elsewhere is too great, and voila!
Liz Crawford’s essay makes a valuable contribution first and foremost by delivering a thought vocabulary we can work with. Her focus on tracking shopper behavior is on-target and timely. The integration of the physical and digital is essential, as is the recognition of the value of shopper information.
Early innovators in the social-mobile-local-global arena assumed that shopper behavioral and other data could be observed for free. They got paid for aggregating it and providing digital access to marketers — a model that still in many ways reflects mass media. I’d call it “multiple mass media.”
Now that the immense value of such data is proved, digital citizens may begin to rightly demand various forms of payment in exchange for allowing access. The Googles and Amazons of this world will resist this for as long as they can, of course. So will established ad agencies who earn their keep on the media buy.
This implies an innovation opportunity for an entity that can provide a suitable clearinghouse where individuals can fairly trade personal information and behavior for fair value. This is a disruptive idea — one that inverts the mass marketing paradigm.
The enduring solution may be based upon a secured personal profile manager, digital wallet or other mechanism not yet imagined, that allows individuals to selectively expose elements of their personal data to marketers and each other in exchange for several types of value: monetary, personalization, entertainment, convenience — even privacy, the commodity that is about to become scarcest of all.
From my point of view, here’s the question: If everyone knows everything about everyone else and everything else, how will people influence other people’s behaviors? Particularly when some of the people wanting to influence are commercial in nature?
I admire Liz’s work because it grapples with the “total” part of this equation, and posits metrics, and levers to move people that will move the metrics. At that same time I am boggled by the explosion of available information — and the TOOLS!
I am trying to make relevant to self-service merchandising, personal selling skills that long ago vanished from mass merchandising. And suddenly, the tools available for “selling” have gone from inanimate products and displays, to sophisticated science fiction-like electronic “personal” sales persons. So it isn’t just the explosion of information/transparency that boggles, it is the capability of humanoid-like selling.
I will say that personal selling skills MAY give a leg-up to this process. On the other hand, machine learning of how to sell, may transcend human knowledge in the field. It’s frightful, but seems obvious.
Very interesting set of thoughts here. Right now, there are many complex schemes emerging to trade understanding of shopper behavior for specific rewards. It seems too complex to me.
What will eventually emerge will need to be something that is much simpler for consumers. The value of cash money in an economy is that I can trade it for a huge range of goods and services in almost any location. That’s why I like my employer to pay me in money rather than goods, and that’s why I ascribe a lot of value to coupons and other rewards (e.g., free airline tickets) that turn into money in my pocket in a clear and transparent way. And that is why traditional loyalty programs work the way they do.
What is hard in the model Liz is describing is understanding what I am giving and what I am getting — both as a retailer and as a shopper. It isn’t very transparent in a lot of emerging schemes, which will cause many retailers to fail by giving too much in exchange for information that feels valuable but really isn’t. Or, conversely, shoppers will turn off if the “value” they are receiving doesn’t feel enough like cash money. It will be a very tricky balance to get right.
What a great framework from a great thinker and contributor to these discussions! Liz is completely on point that there is a new way to value the relationship with each shopper, and these four components make a compelling model for thinking about that non-monetary value.
Of course, at the end of the day, you still need to be able to convert these “currencies” into real sales. Attention, Participation, Advocacy, and Loyalty plus $3.65 will buy you a Grande Latte at Starbucks.
And how does one capture Attention, trigger Participation, foster Advocacy, and earn Loyalty? Through relevance. Shoppers engage when you communicate in a way that matters to their interests, their preferences, their state of mind. And they disengage when you deliver tone-deaf messages at inconvenient times about irrelevant products or uninteresting values.
Determining relevance is a tough challenge that requires intensive analytic and measurement capabilities, coupled with fast-cycle tools for developing and managing test-and-learn programs. Liz’s own response in the comments is dead on — this is a Big Data problem, and the companies that can differentiate in that are will have a significant edge in winning the behavioral currency of the new Shopper Economy.
Price will always be important, especially until the economy improves further, instilling more lasting confidence in consumers.
Millennials and those that behave like them (Consumer 2.0) like to research and that’s why I think Attention might be the most valuable aspect of this currency. With it, brands can work towards goals with higher value. Without it, they will have difficulty moving to the next step along the value chain.
Thanks to Liz for allowing me to part of this compelling book.
OK, when was the last time you heard someone talk about their iPad and mention the price/cost/value, etc.? For certain brands, shopper behavior is a culture. This culture can translate to less expensive items, including foods, like soft drink brands, etc. No one ever complains about the price of Coca-Cola, do they? It’s a great product with a loyal following.
If marketers focus on the brand, and truly build a culture of behavior, then the brand will thrive long-term.
It’s well demonstrated that retailers make decisions that influence these four factors of behavior. So if you adopt the currency model given here, that means retailers have the opportunity to increase their income by making smart decisions to maximize these decisions. The good news there is that it doesn’t have to be about price. Instead retailers can invest in other levers that promote desirable behaviors and in the end yield better returns (and certainly better profit) than if they focus solely on price.
Such an approach has been the practice in the e-commerce world for years. Veterans of that space know full well that while price is a lever, e-tailers in most segments have more to gain by optimizing the shopping experience or their promotions than by just slashing prices. Knowledge, testing and study have been the great liberators that have rescued many online retailers from simply playing the thankless price discounting game.
This viewpoint is gaining ground in bricks-and-mortar retailing, which I expect to be healthy for that entire industry.