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TCS 2019 CMO Study Industry Report Retail

ARTICLE

The TCS 2019 Chief Marketing Officer Study

 

This report is based on TCS’ larger study on digital marketing opportunities for CMOs in 11 global industries. Our findings are based on just one part of the study: how marketers are using digital technology to personalize the way they communicate with prospects in what we refer to as the first stage of the brand experience. (This is the awareness stage, one of four.)

Retailers far more frequently than all 516 survey respondents said marketing creates communications in Stage 4 of the brand experience—getting current customers to buy more offerings. About three-quarters of retail marketers do that vs. less than half of all survey participants (47%).

 

KEY FINDINGS IN STAGE 1—Creating Market Awareness

How Retail Marketers Personalize Communications to Attract the Digitally Distracted

#1 Digital Channels Dominate, and Social Media is a Key Tool

Every retailer creates awareness of its offerings through both digital and non-digital channels (including print media). So print newspapers and magazines are still key marketing vehicles. Fewer retailers—but still a majority—use broadcast media. And more than two-thirds use their social media presence to reel in prospects.

Some 100% of the retail CMOs we surveyed use print media advertising to attract the attention of potential customers. That compares with 89% of the survey population as a whole. And 87% of retail marketers advertise in broadcast channels—again, higher than all industries (75%). However, not one retailer uses direct mail marketing.

But digital channels are crucial. Retailers were much more likely to use their mobile apps to snare the attention of prospective customers. Some 92% of retailers use their apps as a channel for creating awareness vs. 69% of all companies surveyed. Other research confirms the value of retailers’ apps. Among several categories of apps that it studied, retail and ecommerce apps enjoyed the highest retention rates of users worldwide in the second half of last year, according to Localytics.1

About two-thirds of retailers use their social media pages to get their messages out. Savvy retailers go another step: They use social media to interact online with prospects. For example, U.S. home improvement retail giant Lowes replies to consumers who ask questions on the firm’s Facebook pages. And according to one article, they aren’t formulaic responses.2 As of April 2019, Lowes had more than 4.5 million Facebook followers.

About 92% of retailers use their apps to create awareness vs 69% of all companies surveyed.

About one quarter (26%) run digital ads on e-commerce sites such as Amazon.com. That number was the same as the entire survey population.

This might sound surprising: A retailer running ads on another retailer’s e-commerce site? But other research shows it is not unusual. A survey conducted this year found retailers with at least $100 million in online revenue spend an average 14% of their digital ad budgets on Amazon.3

A much higher percentage of retailers (37%) than survey population as a whole (10%) uses ads on online review forums (such as Yelp, Google and others).

#2 Retailers Latch on to Social Media and Geo Location Data

Retail marketers are more likely than survey respondents as a whole to use data for personalizing communications to create awareness of their offerings. Most retailers use demographic data, followed by social media behavior, and website traffic data, to personalize their marketing messages.

Retailers are also much more attentive to using social media behavior to personalize messages. Some 61% of retail marketers use this data vs. 41% for the survey population overall. One reason is that the products retailers sell are highly tangible and can attract consumer attention. For example, Lowes in 2013 began running short videos on the social site Vine about how to fix things around the home.4 The video ads were meant to help consumers believe they can make the repairs, and thus increase the chances of selling products that Lowes sells. “Often people are intimated by home improvement,” the company’s CMO at the time told a reporter.5Lowes extensively uses Facebook, Pinterest and other social media as well.

About four out of 10 retailers are using geo-location data to personalize their communications with prospects. This is a crucial piece of data for retailers to use—especially given more and more consumers are buying products online. That means those who are out and about and are close to a retailer’s store become bigger targets.

 

#3 Retailers More Often Push Useful Info, Not Price

The last question we asked retailers on how they personalize marketing in Stage 1 of the brand experience was about the kind of information they provide to prospects, based on the data they have about a potential customer. Surprisingly, more retailers (78%) furnished useful information than hawked special deals and prices (68%).

How Lowes uses social media – to not only display its products but also to engage online customers – provides testimony to the value of helping consumers online, not just promoting products and services. “Digital gives us ways to connect more deeply with our customers than traditional media ever could,” Lowes CMO Jocelyn Wong said. “We can be there throughout the customer journey, in many different ways and across many different moments. We’re able to create more value, more often, and engage on a more personal level.”

The retailers we surveyed provided additional evidence of the power of digital marketing at the very start of a new customer relationship—when a retail brand is trying to reel in a new customer to its stores.

More retailers (78%) provided useful information than special deals and prices (68%).

Demographics

TCS surveyed chief marketing officers at 62 retailers in North America and Europe, all of which had annual revenue of at least $500 million. Nearly two-thirds had revenue of $5 billion or more. Average revenue was $9.3 billion. Half the executives work at retailers headquartered in the U.S., and about a quarter are based in the UK.

We surveyed retailers across more than eight subsegments.

1As mentioned in an April 15, 2019 article by eMarketer. Accessed April 20, 2019. https://www.emarketer.com/content/retail-apps-gain-real-estate-on-shoppers-smartphones

2As mentioned on the site DIY Consumer. Accessed April 18, 2019. https://diyconsumer.com/article/7-lessonslowes-can-teach-us-about-social-media

3Survey conducted by Nanigans, as mentioned in Marketing Charts web article on Feb. 14, 2019. Accessed April 22, 2019. https://www.marketingcharts.com/industries/retail-and-e-commerce-107410

4Fast Company, July 2015 article on Lowes. Accessed April 17, 2019. https://www.fastcompany. com/3048021/how-lowes-brought-social-savvy-and-a-sense-of-humor-to-home-improvement

5Ibid

6Lowes CMO interview with Google published May 2018 on Think With Google, accessed April 22, 2019. https://www.thinkwithgoogle.com/marketing-resources/digital-loyalty