Don’t Step on Your Own Toes! Our Coming “Big Data” Dilemma
At the recent annual meeting of the National Association of Chain Drug Stores (NACDS) in Florida, I was struck by the conflict that will inevitably arise due to all of the “Big (consumer) Data” that’s increasingly available. Each of the three major drug retailers in America (CVS, Walgreens and Rite Aid, as well as other major and minor retailers with substantial HBA/OTC presences) possesses enormous volumes of data they are now using, in part to better personalize messaging for their shoppers and target folks in their marketing.
One very rational use of this data is to inspire a “trip mission” in which someone who wouldn’t normally buy either a brand or category at that retailer does so. That’s terrific for the retailers goals, but it may present a bit of a quandary for the manufacturing community. I fear we are heading back to a very old argument: “Whose customer is it?” (The whole notion of artificially discriminating between a shopper, a consumer, a customer and an actual person is a topic for another day.)
Stepping on Your Own Toes
Retailers are enticing brands to spend shopper marketing dollars at their chain in order to increase their category sales, and, of course, brand sales at that retailer. But from the brand’s point of view, this expense often does not make the brand’s share of the category pie any bigger. Many categories are lucky to even be growing at the rate of GDP (very low single digits). Brands are being asked to support Retailer W’s program to draw more people into Retailer W’s store, but all that may happen is that buyers move from Retailer C, where they were just as likely to purchase the brand’s product.
At the end of the day, if all I’m doing as a brand is moving the size of the pie slices around, how does that truly help my business grow? I’m engaging shoppers to shop here first, and then shop there, etc., yet my overall market share could easily remain stagnant.
Manufacturers are being put in the position of having to play the game of helping their brand at Retailer W grow at the expense of their brand at Retailer C because that’s what Retailer W wants them to do. Yes, this has always been the reality in the real world of retailer competition. I have been around since the 80’s. But now that the game has changed to incorporate new abilities to laser-focus on specific individuals (clustered intelligently), somewhere along the line, brands have to say, “Wait – this doesn’t really work for me. If the person you are targeting is already a loyal customer of mine (in multiple retail outlets), do I really need or want to give them an incentive in a manner that fits the retailer’s program?”
How do you avoid this kind of friendly fire? It’s an interesting in-the-shadows dilemma that is becoming brighter as retailers leverage their data and its value (you can read that as “data fees” if you’d like) to make ever greater use of all of their unique insights.
What happens in the future? In order to be truly successful, promotional efforts and programs will require far more real, open and fact-based collaboration than ever before. If they are forward-looking, brands will realize that expressing their brand’s true value to a retailer is well beyond profit, turns, performance or any particular shopper marketing investment. To me, true brand strength lies in bringing unique insights about brand buyers to the table, then determining how this depth of knowledge about the category and brand buyers may or may not efficiently marry up to retailer’s category or even total store strategies for that quarter, promotional period or any other measure of sales performance. Today, collaboration requires an ability to be flexible, to permit change without chaos, and to adapt to genuine consumer needs (which are far from fixed). Plus, likely one needs to do so in a time frame that’s faster than our current organizational structures can support. So, together we need new paths to collaborative outcomes – finding new metrics by which we can judge success and embracing the far more open communication potential offered by our new data streams.
Retailers do seem to be back on a “data power” upswing now, because they possess tremendous amounts of customer data and are using it in an ever more intelligent fashion.
Yet, our absolute reality is that neither the brand nor the retailer really holds any true power today. The power is moving inexorably to the shoppers themselves. Technology gives shoppers new ways to shop with far greater intelligence, ease, transparency and less friction. So it is no surprise we are using this gift quite happily – and adoption curves are getting steeper as things that truly help people live better appear with greater frequency.
I’m very interested in seeing how our vibrant and entertaining industry evolves this time… since the rules of our marketing game are clearly in the process of significant and perpetual change
The old proverb/curse, “May you live in interesting times,” once again rings so very true.