BrainTrust Query: Ideas for Building Loyalty in Spite of System Beaters
Through a special arrangement, presented here for discussion is an excerpt from an article from the Joel Rubinson on Marketing Research blog.
Marketers are training us to become system beaters, or those shoppers who time their purchases to when their favorite brand is on sale or just load up on another acceptable brand on sale the day they shop.
We all see a continuous flood of e-mails offering deep discounts and free shipping. Increasingly, marketers are making it easy for us by going paperless as we download the offers into our smartphones and loyalty cards. Remember when we had to wait until Dec. 26 for big sales? Now they start at midnight on Thanksgiving.
And social media is a dream come true for system beaters; not only do we find the deals we want for ourselves but now we get to share them with all of our fans, friends, and followers. Indeed, looking for deals is a main motivator to "like" a brand page on Facebook in the first place. Also, digital and mobile have compressed the timeline. I now know I can wait until the last minute to start my research.
But all is not lost as system beater behavior is itself habitual and selective in how a particular shopper goes about finding deals, just like we only use about 10 percent of the apps on our smartphones and watch only 10 percent of the channels on our TV.
Here are six marketing ideas to get loyalty lift from system beaters in return for hot deals:
- "Like-gate" your promotion offers on Facebook.
- Use paid search to drive traffic to your owned media, where the landing page offers a relevant discount in exchange for some lasting marketing benefit. People sign up for your e-mails, become members, download your app, or at the least, receive a cookie for subsequent promotional ad targeting.
- Make all of your offers shareable by including a sharing widget in the offer. Reward the fan who shares the most.
- For retailers, price matching should include matching Amazon online prices (as long as the item is new) so your store doesn’t become a showroom and you convert the trip into a sale.
- Retailers should attach promotions to check-ins (like $5 off your purchase of $50 or more) to win the trip and build loyalty. (Check out Levelup, which David Berkowitz from 360i made me aware of.)
- Mastery of mobile is a must. Build apps that offer useful information as well as discounts so they turn your brand into a mobile portal. Also, optimize your website for mobile.
Discussion Questions
Discussion Questions: Is the combination of discount deals, social and mobile turning shoppers into better system beaters? What do you think of the marketing suggestions offered in the article to create more loyal customers out of hot deals?
Matching the Amazon price is a recipe for disaster — especially in categories like toys, music and books.
Alexander Graham Bell didn’t design the telephone or Steve Jobs perfect the iPhone to be an always on FSI.
No question whether or not shoppers are finding myriad ways to beat the system. Coupon sites and all the other ways mentioned in the article drive loyalty to the best deal of the day, rather than the retailer. Incentives and services typically help drive true loyalty to retailers and brands. The key is to create a constant flow of new ideas…to actually have a dedicated team of “loyalists” to introduce new, compelling reasons to shop one retailer, and keep the competition from copying you by introducing new ideas each month.
Consumers have been trained by retailers and manufacturers to expect deep discounts. The suggestions offered in the article would seem to promote system beating behavior, rather than building loyalty.
Loyalty is built through value pricing (not deep discounting) combined with great customer service and products that are in stock, and doing this day in, day out.
Gimmicks are nice, but they don’t build loyalty.
I am not sure what we mean by “system beaters.” This is the “system” and it has been for decades. Are we suggesting that marketers and retailers don’t really want their customers to buy on deal? The suggestions above lead to one of two alternatives. The shopper either ends up getting a bigger deal, or the hurdle is so convoluted that the shopper goes somewhere else.
Winning on price — from a shopper’s perspective — is a game. The only way to circumvent system-beaters is to instill brand loyalty, brand affinity. At the end of the day, marketing isn’t about offering cents-off, but about creating an emotional bond.
No matter what system or marketing initiative that gets put into place to promote, advertise or merchandise a sale, there will always be savvy, digitally empowered shoppers that will use an arsenal of tools and apps to ‘discover’ the best deal.
I recently watched with amazement how my 20-year old son deftly maneuvered through the web and mobile in order to maximize the value of the purchase of an NHL hockey jersey. It wasn’t planned it simply was an understood ‘game’. When asked, he simply stated that it would be “stupid” to do anything less! He went to great lengths to ensure his selection was from a reputable source in order to avoid being “ripped-off.” And as far as loyalty is concerned, forget it! Other than the e-mail confirmation and the information it contained, he had no idea the actual source of the jersey. It seems to me that trying to create loyal customers from ‘hot deals’ will simply ensure that margins will continue to erode and with it any viable and sustainable business value.
All good ideas, and the retailers who do this well will probably retain some customers. However, loyalty is also about convenience and customer satisfaction. Kroger has the recipe right now for both! They are utilizing their shopper card data to offer promotions but they are also sampling and promoting their store brands to offer shoppers items and quality that they trust. Social and mobile need to be a part of the marketing plan but relying on promotion and brand switching as your major marketing thrust may reduce your margins and allow more sophisticated retailers to keep their shoppers and build new loyals.
I’m not sure I understand the term “like-gate,” but think it refers to requiring customers to “like” your page in order to access the promotion.
If so, this behavior dilutes the value of a “Like” over time and speeds us to the day where consumers don’t even think about what they’re clicking. They will “Like” anything in order to get what they really want. In the end, we create meaningless traffic stats for the website and distort customer data for the web page owner.
Adding a game feature by rewarding those who share most is a solid idea but needs to be executed in a clever way to make it “sticky.”
Overall, we should encourage retailers to seek to build a customer experience that adds more than just price to the purchase decision process. Unless retailers intentionally wish to compete solely on price, they have to break away from this mold.
I absolutely believe that new technology and mobile applications are enhancing the consumer’s leverage over retailers. In the past, much of marketing and merchandising was designed to lure the shopper into the store with a couple of door busters…and trust the shopper would impulse buy dozens of full margin items to create the needed ROI on the promotion.
Today, much of the unplanned (impulse) purchases are not made, as the shopper understands how the game is played. They also have more deal options that continuing to drive up the number of promoted items and drive down the purchasing of non-promoted SKUs.
In addition to the suggestions listed in Joel Rubinson’s post, I see two other imperatives for retailers emerging from this new environment:
1. Bill out gross margins will be difficult to maintain at traditional levels, implying that net profit must be enhanced by operational efficiencies, or it will decline.
2. Other departments and services (such as perishables, nutritional expertise, etc) that lend themselves to differentiation beyond “price” must be improved and re-emphasized to offer the “deal-drive” shopper a reason to build their basket. Simple cross-merchandising and other traditional in-store merchandising methods will continue to diminish in their effectiveness.
Consumers are at the center of the marketing message these days. With digital in the mix, the shopper tells you where they are, what kind of message they’ll respond to and why, and which products they’re interested in. So naturally, marketers need to jump on board.
All of the suggestions above make sense, and they all fall under the category of “nontraditional marketing” tactics. Of course, as they become more habitually utilized, they will fall under “traditional.” But for now, they still fall under the former.
If marketers run their nontraditional marketing campaigns in the right way, they’ll capitalize. But it can be a sensitive space to maneuver around, and implementation is key. When you do it right, you’ll drive loyalty.
System beaters will always exist, so I say “if you can’t beat them, leverage them.” What we know about system beaters is they are committed to beating the system. Meaning, they spend more time than most looking for the great deal and then sharing it with friends. As a retailer, why not leverage that commitment and make them ambassadors of your brand? For example, create exclusive levels of membership; the free level that only includes the basics and a paid loyalty program that offers more exclusive discounts and offers including special holiday shopping hours and advanced notice of sales. These new ambassadors (formally system beaters) would have the ability to share these exclusive deals with a limited number of friends creating demand for becoming a paid member. Will paid membership work? Just look at Amazon Prime, Big Y Grocers’ Silver Savings Club, GameStop’s Power Up Rewards, and F.Y.E’s VIP Club loyalty programs as shining examples.
Turning the system beater into your Ambassador is a winning strategy!
I suppose these are great suggestions if you are interested in creating gimmicks. None of them create loyalty.
Loyalty is created when your customers return again and again, though they have other options for the same goods and services. Loyalty is not owned by the retailer or gained through hokey promotions that make you wonder how much you really paid for what you bought.
When I think of all of the retailers, both bricks and mortar and online, that I am intensely loyal to, none of that loyalty is or has been created by any type of promotion. I have to believe that at some point, retailers will quit throwing good money after bad at this type of gimmickry and really learn about what causes a customer to grant them their loyalty.
Think about those retailers and brands you are intensely loyal to and why. Is this type of promotion what caused it?
Hello everyone. Thanks for the lively debate. System beaters have always existed as has the need to be social. However, just like Facebook is transformational vs. the water cooler, mobile enabled system beating is transformational vs. S&H green stamps and end-of-aisle displays. About emotional bonding for brands, if you’re lucky, that will describe 15% of shoppers accounting for half your sales. That’s it. I can show you the math that really comes from Hendry math around 1970. I think mobile will finally release the genie out of the bottle and we need transformational strategies.
The idea that “Today, much of the unplanned (impulse) purchases are not made” is simply untrue (sorry, Mark). If impulse buying were in decline, we’d see its effect in reduced displays in retail stores and reduced “suggestions” during online shopping at sites like Amazon.com. Have you noticed either of these developments? Me, either. The concept of a supposedly weakened impulse buying attraction is disproven in so many ways, and its application to high/low marketing remains as strong as ever.
I’m a loyal shopper, and not because of deals. Call me crazy, but I think most shoppers are like me. They want quality, service, convenience, and a reasonable price (not necessarily the lowest price). How they get there — through physical or electronic shopping — makes no difference. I shop a lot at Amazon, Zappos, Lands’ End, Griot’s Garage, and Dell. I don’t always get the best price, but I know I’ll get reliable quality, service, and communication. That comfort and reassurance is worth a couple of bucks either way so I don’t have to scour the ‘net for hours searching for a minimal price difference from a retailer I’ve never heard of. If you have time for that, you’re either underemployed or missing your kid’s soccer game.
Yes there are better system beaters today, but it’s just because they are mobile connected days. Back in ancient times, I worked for a retail furniture chain. We had monthly sales by segment: living room sets, bedrooms, dining, accessories, etc. After a few years, customers figured us out and only shopped for the home products they wanted on the weekends of the appropriate sales category. Hmmmm?
Retailers who embrace so-called “system-beaters” are foregoing the opportunity to treat customers with distinction and relevance. Social promotion might be a way to create advocacy but what is that advocacy worth if it is diluting sales? Discounting, social or otherwise, is not the answer and is unequivocally counter to customer loyalty.
The one thing that gives me some hope is that there hasn’t been another national retailer to use Groupon since Gap did it several years ago!