UNDERSTANDING THE MIND OF THE MULTICHANNEL CONSUMER

Presented at NEMOA Spring 2009 by Monica C. Smith, President and CEO, Marketsmith, Inc.

As Winston Churchill said, It is well said, there is nothing wrong in change, if it is in the right direction. However, as we all know these days, change does not seem to be in the right direction.

At Marketsmith, we talk about The Next Mile, how we define the next level in marketing: the best way for each Brand to understand its customer path to purchase through the Brand experience. To reach the next mile, marketers must:

1. Be obsessed about your customers’ experience – how they perceive your communications, consume your product, respond to price points, and move through every contact point in your Brand.
2. Know the numbers (all the numbers – key performance indicators of customer behaviors and characteristics, costs, competition) to know when to disengage from ineffective marketing, when to test new media, when to reevaluate pricing models, and most importantly, how to identify and focus on the opportunities.
3. Understand the Mind of the Multichannel consumer - today the consumer reacts more quickly than ever to the change in economic conditions. Therefore, it is imperative to know, comprehend, and use your customers’ feelings, perceptions, belief systems, and ideals to ensure that the customers continue to find your Brand an essential part of their life.

Recognizing that we must all market in the context of a new reality, Marketsmith studied industry and economic data. We then did our own reality check through a series of individual and group interviews which confirmed our understanding of the Mind of the Multichannel Consumer – how it has changed and what it means for us as marketers. We presented our assessment and recommendations for succeeding in this time of turmoil at the NEMOA conference in early March. What follows is a synopsis of our main findings and recommendations

Our World Has Changed
The consumer’s mindset has changed. People who six months ago were shopping for entertainment and fun as often as five times a week are now thinking very carefully about whether they need something or not before they make any purchase decision. Consumers have moved from Entertainment to Necessity when it comes to shopping. We also see that customers are more willing to stick with what they know and less likely to take chances with unknown brands. Housefiles are still buying, but spending less per order. Both response rate and average orders are down for prospects.

Overall motivations have not necessarily changed but some have become more important . People are still browsing – they open emails, they look at catalogs, they go online – they want to find that necessity or deal that justifies the buy.

Major Findings Snapshot
Consumers are still buying, but they need a reason. Also one person’s extravagance may be another’s necessity.

Our major findings show:

• People have not stopped shopping; they are more likely to buy for others than for themselves, such as gifts, or for their children or their pets, or for charitable events.
• On average people received 15-30 catalogs per week; the copy and visuals on the cover are the main enticement for opening the book.
• People received as many as 10-40 emails a day; they are most likely to open ones with some sort of deal in subject line.
• Paid search was used less than we expected.
• While being green is important, most consumers only use it to tip the balance when all else is equal.
• Customer service is a critical component of choosing a merchant.
• People were split on whether or not they would like to receive SMS messages or not informing them of offers.

Marketsmith’s Recommendations for Improving the Bottom Line in Today’s Economy:

1. Be Grounded.
   1. Be able to articulate and communicate why your customer/prospect would want to be engaged with your brand.
   2. Make sure you know and understand all of your costs.
   3. Make sure that customer service is unimpeachable.
   4. Know your customers; be obsessed with understanding their path to purchase.
   5. Define your best customers and know everything about them that you can.
   6. Know your merchandise, who is buying what, and what is not being bought.
   7. Identify and understand the reasons for shifts in key performance indicators year over year and event over event.
2. Anticipate.
   1. What will be happening in the economy when my communication hits?
   2. What will be the value to the customer?
   3. Is what I planned a year ago still relevant? Six months ago?
   4. Is my strategy grounded in customer purchase patterns, channel trends?
   5. Have I communicated what the consumer needs and wants to know?
   6. Have I made sure the contact is relevant to the consumer who will receive it?
   7. Be on the same wave length as the customer – in both the difficult and better times; so when the economy changes, you will be ready?
3. Innovate.
   1. Develop partnerships with non-competing entities to share resources and customer opportunities.
   2. Delight and surprise customers with unexpected benefits.
   3. Court your best customers; let them know you value their patronage through special offers.
   4. Show customers you are willing to do your part in this bad economy through tactics such as a price freeze, etc.
   5. Match contact strategy to buying cycles; time contacts to observed seasonality.
   6. Step customers into your brand through good, better, best strategy. Give customers various stages through which they can engage with your brand; so they can move up over time.
   7. Segment (e.g. younger customers may still be buying though older ones are not).
   8. Consider other media.
   9. Remember content remains king.

As always, Marketsmith is available to help you dig deeper into analysis and strategies that are specific to your customer base, contact strategy, merchandising policies, online and offline marketing programs and execution, and database marketing initiatives. Call us at 973 889 0006 to discuss how we can help you understand your data and build strategies that will solidify and grow your customer base and revenue.

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