7 Ways Connected Consumers areDriving Retailers to Change for the BetterJim Nichols, VP Marketing – Conversant ®

THE CUSTOMER IS STILL ALWAYS RIGHT

Table of Contents

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INTRODUCTION

7 KEY CONSUMER TRENDS

1: The Era of the Omni-Channel Shopper is in Full Swing

2: Consumers Enter Stores Better Armed and Prepared

3: Showrooming is Growing as a Retailer Opportunity

4: Mobilized Shopping is Changing the In-Store Experience in New Ways

5: Consumers Expect Content in Addition to Product Listings and Ads

6: Social Media is Creating Brand Openness

7: Demand for Shoppertainment is Becoming the Rule, Not the Exception

CONCLUSIONS

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There’s that old saying – the customer is always right. When the retail and service industries originated and popularized the statement, it was primarily about making sure that we were meeting people’s needs in the category. Whiter whites and brighter colors. No more frizz! More peanutty goodness.

We still have to execute on those promises, of course, as the need to get the product right is stronger than ever. But there are other sets of needs these days, brought on by the always-connected consumer.

• The person that’s never more than five feet – usually even less – from a screen

• The person that can type 140 characters and potentially reach millions

• The person who gives something three stars instead of two

Today’s retail customers are constantly connected, and that has made them savvier about price comparison and information gathering. They’ve also got expectations for engagement with, or about, a brand. Radical shifts in consumer behavior are shaking up the industry in profound ways.

Far from creating only problems, however, these new customer dynamics are creating more opportunities for savvy retailers to drive connections and sales. It may be harder to do everything right, but the results are worth it. Here are seven key consumer trends that the best and brightest retailers are responding to – and using to their advantage.

These days, meeting customer

expectations is a lot more

complicated than just getting the

product right. But retailers are

learning that pleasing the always-on

consumer yields big dividends.

INTRODUCTION

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Until recently, brick-and-mortar stores and their online counterparts were often managed separately, with different strategies, teams, managers andexecutives driving each piece of the business.

But customers don’t see themselves as dot-com customers or in-store shoppers. They want to be able to buy something online and return it at the physical store. Or vice versa. They want shopping that allows them to call the shots. They want to see a product or sale in a store and find it online to show their friends later.

It’s one big shopping universe to them. Smart retailers have a strategy that maps to the consumer as they move from online to in-store and back. Following the omni-channel customer journey helps the brand engage with the customer at the right time and in the right way.

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THE ERA OF THE OMNI-CHANNEL SHOPPER IS IN FULL SWING

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Because millions more shoppers do their research before hitting the checkout line and making a purchase, there has been a power shift. Consumers are far more knowledgeable about pricing, products and offerings. In turn, retailers have less explicit control over information and experience. No longer are customers walking into stores looking to a salesperson for advice and guidance. They enter informed, or with a mobile tool in hand to get informed.

Study after study indicates that consumers are more likely to be influenced by peers and online reviews than by a rep on the sales floor. But the growth in consumer power hasn’t made the best retailers pack up their toys and go home. Rather, they are capitalizing on the trend by enhancing their real-world and digital shopping experiences. Many are integrating and personalizing all of the touchpoints reaching each shopper based upon a deeper understandingof individual needs and purchase patterns.

They’re even connecting people with other consumers who have used and reviewed a product to provide that final encouragement or “permission” to buy. For example, a growing number of online retailers are integrating consumer videos into their sites and apps.

When showrooming began, many retailers were convinced it was bad news. The conventional

wisdom was that the sale would always go to the cheapest seller, likely an online-only

property without the complexity and expense of maintaining physical stores.

But the latest research shows that showrooming can be more opportunity than danger forthe savvy retailer. Showrooming instances are an opportunity to connect with customers in new ways. Mobile devices not only let customers compare prices and products, or look at reviews while

in-store, but also open the door to new touch points. For example,

when a customer does a search for a local store, they usually only see an

address and phone number, and maybe a website link. But now, stores can take

advantage of this interaction to provide information, offers and other links.

Consumption of a retailer’s rich site content while in-aisle can drive more retailer interactions and sales, not fewer. And when a retailer already has a relationship with a customer, they can use these new touchpoints to deliver tailored communications based upon what they already know about each shopper – something that listings on a comparison site can’t do.

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SHOWROOMING IS GROWING AS A RETAILER OPPORTUNITY

3CONSUMERS ENTER STORES BETTER ARMED AND PREPARED

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I’ll bet dollars to donuts that the big change in digital advertising over the next two-to-three years is going to be the nearly ubiquitous use of first-party “brand relationship” data to inform targeting and messaging. Brands will embrace the idea of putting their big customer data to work in all of their digital programs and campaigns.

Traditionally, it has been tough for agencies to convince clients to share their first-party data for targeting – it can seem like a hassle and requires the heavy participation of client IT teams. But that is changing fast. Tag management has made it easier, and the value of first-party brand data for targeting has proven massive.

Integrating site interaction data – available when a brand tags all of its pages – is a great start because it helps reveal the preferences, interests, browsing and even purchases that customers conduct online. Further, by using first-party data and cookies, you can actually identify more of your customers and hand raisers as they browse the web. However, when you rely exclusively on third-party cookies, a high percentage of your users are hiding in plain sight because you won’t know that they have a pre-existing relationship with your brand.

Data from other digital interactions can also enrich your insights – and through them, your overall program effectiveness. In most categories, 80 percent or more of products are purchased offline. Offline brand interaction data is a very powerful tool allowing you to understand and measure the offline impact of your online programs.

MOBILIZED SHOPPING IS CHANGING THEIN-STORE EXPERIENCE IN NEW WAYS

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Due to the growing content cravings of consumers, many retailers are starting to behave more like media companies. Retailers are increasingly becoming content machines, from generating social content and blog posts to turning their catalogs into mini-magazines.

Personalized advertising and web content are driving greater relevance and brand engagement, and consumers are rewarding brands that generate or showcase high-quality, product-related content with their attention and purchases. Consequently, retailers are developing rich partnerships with content

leaders to leverage their ideas. Visit your favorite retail website for examples. From content partnerships with cable networks to expert-led branded blogs, retailers are upping their content games in myriad ways.

Many retailers are seeing that while Facebook and Twitter are great environments to be active in, blogs are still fantastic for delivering rich content. And one of the most important trends in affiliate is leveraging bloggers as affiliates, where esteemed content creators can connect their product recommendations to places where the products can be purchased.

Consumers are rewarding brands that generate or showcase high-quality, product-related content with their attentionand purchases

CONSUMERS EXPECT CONTENT IN ADDITION TO PRODUCT LISTINGS AND ADS5

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Consumers demand open and honest communication from brands, and view engagement with a brand as more akin to person-to-person communication. Those brands that screw up in this area get flayed. These days the retailer must have a concrete action plan for the angry customer who uses his digital soapbox to publicize his complaints.

But more and more retailers realize that they needn’t be paralyzed by the potential social media dangers. We’re learning that customers – angry or delighted – understand that we are all human. They don’t expect perfection. Rather they expect ownership of one’s own actions.

The rule of thumb here is to be direct and personal on Social – own your mistakes, nobody is expecting you to be perfect. But it’s more than just owning up to an error. Since consumer opinions now carry more weight than ever, retailers who are doing it right are taking advantage of these communications to engage with the customer. For example, when someone posts a negative (or even positive) review, the brand should be there to engage and provide proof that they are listening. And today, brand campaigns are frequently tailored based on the feedback they receive from customers.

Perhaps originating in part from the shorter attention spans of the younger generations, shopping

is increasingly incorporating entertainment to put people in the aisles. Brick-and-

mortar stores are adding elements of entertainment to draw in shoppers.

Bringing in musicians and authors to encourage consumers to come in. Scheduling yoga classes in the aisles near yoga wear. Or just look at Bloomington, Minnesota’s Mall of America and its theme park rides and attractions.

Digital is following suit. From “making of” videos for

TV commercials, to musician interviews on musical instrument

sites, to webisodes of branded content, to elf games at Christmas

time, retailers recognize that they need more to draw people in than

200x200 product shot gifs.

DEMAND FOR SHOPPERTAINMENT IS BECOMING THE RULE, NOT THE EXCEPTION

7SOCIAL MEDIA IS CREATING BRAND OPENNESS

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CONCLUSIONS

Retail has long promulgated the philosophy that the customer is always right. Perhaps the massive changes retailers are making in the ways that they do business are best understood in that context. The one thing that we can be certain of is that the face of retail in 10 years will be completely different than its face today, and the customers, who are still always right, will have a major hand in shaping that future.

ABOUT THE AUTHORJim Nichols is VP-Marketing for Conversant, Inc. His 25-year advertising agency, brand management, and market research career spans over 80 categories, from packaged goods and beverages to financial services, software and technology. Brands he’s helped develop include ABC Daytime, Bank One, Brach’s, Cablevision, Cap’n Crunch, Comcast, Darden Restaurants, Disney Parks and Resorts, Hyundai, Kodak, Lakerol, Microsoft, Ofoto, Oracle University, Pfizer, Register.com, Schick, Sega, Showtime, SOAPnet, Suave, Symantec, Unilever (36 brands), Virtual Makeover, Wachovia, Zone.com and more than 40 digital media companies and technologies. Jim’s experience spans B2B and B2C, and includes a strong track record marketing to both broad audiences and specific market segments including African Americans, Hispanics, and Mothers. He holds a BA from University of Pennsylvania and an MBA in marketing from University of Chicago.

ABOUT CONVERSANTConversant, Inc. (NASDAQ: CNVR) is the leader in personalized digital marketing. Conversant helps the world’s biggest companies grow by creating personalized experiences that deliver higher returns for brands and greater satisfaction for people. We offer a fully integrated personalization platform, personalized media programs and the world’s largest affiliate marketing network – all fueled by a deep understanding of what motivates people to engage, connect and buy.

For more information, please visit www.conversantmedia.com.

Copyright 2014, Conversant, Inc. All rights reserved. Conversant is a trademark of Conversant, Inc. 9