How Retailers Can Determine if Their Authenticity is Attracting Consumers
As part of my ongoing 2015 NACD
Global Board Leaders’ Summit blog series, today I will touch on one of the more significant lessons I learned during my time at the conference: The importance of retailers being authentic to build their bottom line and relationships with the right—not all— customers.
This topic is clearly at the forefront for retailers, since it was also addressed by my colleagues Doug Hart and Jennifer DiGiovanni earlier this year, in their post, “Using Authenticity to Attract Unpaid Brand Ambassadors
.” Within the post, Doug and Jennifer say that for brands to capture consumers’ attention, it is now all about demonstrating authenticity. Rather than focusing on attracting the most customers possible with discounts and promotions, it’s important for retailers to invest the time to thoroughly understand who their right customers are, as well as their interests and values.
What I learned at NACD, is that smart and authentic companies, like TOMS® or REI, who have demonstrated that they know and believe in their brand’s value don’t attempt to market everything to everyone. With limited resources and an increasingly competitive landscape, retailers need to be efficient in how they deploy their resources within their stores, through their online platform, and with effective merchandising strategies across all channels. They also need to be authentic in connecting with their customers to secure their loyalty. Today, it’s no longer about casting the widest net, but rather, it’s about casting the right and most authentic net.
This is mission critical for retailers, especially as Millennials, a generation that Adobe reports “seeks out brands that are authentic and act on their promises, rather than just talking about them,” come to control the majority of buying power. According to Advertising Age
, “Millennials between the ages of 17 and 34 are expected to spend more than $200 billion annually starting in 2017 and $10 trillion in their lifetimes.”
The concepts of authentic brand positioning and customer targeting go hand-in-hand. We see different methods for segmenting and targeting consumers. Across the board, the key is to understand how demographics and psychographic characteristics apply to a given retail sub-segment. Some consumers are focused on affordability; others on luxury at a reasonable price; while still others are looking for unique products that are not widely available. To identify the most appropriate focus for their brands, retailers need to pinpoint what lies at the intersection of their authenticity and what their customers value most.
One tool that helps provide insight for retailers–perhaps now more than ever before– is the data available through in-store purchases, e-commerce purchases, social media and mobile surfing. This information can provide valuable, timely insights on how retailers and their products are actually viewed by the marketplace compared to how retailers think or hope they and their offerings are perceived from a value and benefits perspective.
While this data can provide retailers with vital information into the effectiveness of their brand positioning, it’s up to the retailer to manage and effectively interpret this data in order to realize its full competitive advantage. But as more and more data has become available, the challenges to managing this data in a meaningful and cost-effective manner are growing as well. According to BDO’s tenth annual Retail Compass Survey of CMOs
, 89 percent of the 100 CMOs surveyed found it challenging to manage the vast amount of customer data that is available. However, as technology advances allow retailers to more easily collect and interpret this data, it will prove invaluable to their efforts to cultivate an authentic brand over the long term that keeps customers committed and coming back for more.