"A fantastic opportunity for Tier 3!"

Youtility: Why Smart Marketing Is about Help Not Hype

by Jay Baer

Chapter 6 --- Real-time Relevancy

Not only is the mobile research and commerce lifestyle more ubiquitous in other areas of the world, it is also more ubiquitous among today’s younger consumers. The Social Habit research found that more than 41 percent of twenty-four- to thirty-five-year-old American social media users with a smartphone purchase products directly from that device at least monthly,7 compared to 16 percent of forty-five- to fifty-four-year-olds who also use social media and don’t own a smartphone. Today’s younger consumers aren’t just researching and buying via mobile either. The app-ification of brands is actually more persuasive to this generation than other forms of marketing. In an amazing 2012 study, SymphonyIRI found that Americans in the Millennial generation are almost four times more likely than American consumers overall to have their purchases influenced by smartphone applications.8 The impact of these apps on their purchase decisions is greater than recommendations from blogs and social media, and from manufacturers’ websites or e-mail.

Within a generation every customer and prospective customer of every company in every developed nation will have never known a world without the ability to access information at any time through a mobile device. A popular 2011 YouTube video uploaded by UserExperiencesWorks called “A Magazine Is an iPad That Does Not Work” (ar.gy/ipad) provides a fascinating and visceral examination of this reality. In the clip, a one-year-old child is shown navigating an iPad with seeming purpose and facility, and, when given a magazine, immediately attempts to access its contents via touch and pinching movements.

There are three ways to provide real-time, circumstantial Youtility. The first is to be useful based on the customer’s location. The second is to be useful based on the customer’s situation. The last is to be useful based on seasonality or external factors.

In nearly every case, app-ification and providing value via mobile is the easiest path. When using a mobile device, customers and prospective customers are often sending a steady stream of information about what they might need. Tapping into a consumer’s location and then providing geography-specific usefulness is the most common way companies can be helpful in a mobile context. Many of our most used applications—like Google Maps—rely on it. Each time Google Maps prompts you to get driving directions from “your current location,” Google is polling your mobile device and using geolocation to create usefulness. We may not always perceive it, but this is a massive advance over the previous generation of way-finding that required you to know your current position to plan a route.

Meijer Saves Shoppers Time with In-Store Mapping

Sometimes you need to plan a route not across town, but across a store. That’s where the Meijer Find-It application becomes relevant.

Point Inside is a mobile mapping technology company based in Bellevue, Washington. Unlike Google Maps (and the new, recently maligned Apple Maps), Point Inside specializes in indoor cartography, providing shoppers with enhanced experiences. In 2010 the company partnered with Meijer, a family-owned, Michigan-based retailer with more than two hundred stores in the Midwest, to develop the industry’s first mobile product locator. The typical Meijer store includes more than one hundred thousand items: a mix of grocery, hard goods, and soft goods. Jeff Handler, former chief marketing officer for Meijer, became aware of Point Inside’s indoor mapping technology and wondered whether it could be applied in a retail environment. The resulting collaboration became the Meijer Find-It app, a mobile locator for Apple and Android devices that provides real convenience to shoppers.

Within Find-It (ar.gy/meijer), consumers can locate specific products anywhere in the store (to within a few feet), view and clip virtual coupons, create and track personal shopping lists, route a trip within the store to maximize efficiency, locate store services such as restrooms, and view items currently on sale. There is also a built-in locator showing all Meijer stores across the country. A short demonstration video on YouTube (ar.gy/finditdemo) shows Find-It at work, and illustrates how easy it is to locate products at the individual SKU level.

Todd Sherman, current chief marketing officer at Point Inside, says that providing consumers with the routed shopping trip inside the store defies long-standing tradition, but it is much in demand among shoppers. “The conventional wisdom for years has been to put the products people want in the back of the store. They’ll have to walk through the entire store and something will catch their eye, and they’ll put it in their shopping cart. What’s been found is that really doesn’t work. People are kind of in a hurry, and in fact, they get annoyed that they have to walk all the way to the back of the store to pick up the milk.”

Sherman and Point Inside claim that many shoppers think about trips in time chunks, and “beating” their presumed time by making that trip more efficient creates additional, spontaneous purchases. “What happens is people go to the store and they have a mental number: ‘I’ve got twenty items. I’m giving myself thirty minutes to shop for them,’” Sherman says. “If you can help somebody pick up those items in twenty minutes, they’ll use that extra ten minutes to look at other items in the store and add some of them to their shopping cart.”

In a highly competitive retail setting, it doesn’t take many instances of adding or subtracting shopping list items to make a material impact on sales and profits. As Sherman notes, if the consumer has twenty items on his or her shopping list and cannot locate one item on their trip, it’s a potential 5 percent decrease in revenue, using an average cost across all items. “By bringing the shopping lists into an application that drops pins and shows customers within a couple of feet where each of those products are, it eliminates that 5 percent reduction,” he says.

Point Inside continues to build on the original technology deployed for Meijer with new mobile couponing opportunities and maps for major airports and shopping malls. A major new retailer (still a secret at this time) is readying a store mapping application with Point Inside, and, as part of the development process, conducted interviews with shoppers using the pilot version. The potential impact on loyalty is significant. According to Sherman, “Sixty-five percent, I think, of the customers said that they would shop at that store, and not their competitor, because the application gave them the ability to find products so easily.”

The Fight Against Show-Rooming

While applications like Find-It provide retail Youtility that can increase average order size and customer satisfaction, a more insidious combination of mobility and location is creating substantial teeth gnashing among some merchants. Increasingly, consumers are using their mobile devices to comparison shop in real time, determining whether the product in front of them on the shelf is being sold for the best price, or whether consumer reviews are positive or negative for the product. Widely known as “show-rooming” in the retail world, it’s a phenomenon that’s very real. Research from the Social Habit found that 56 percent of American men who use social media and have a smartphone use that device to comparison shop or check reviews when shopping locally. Forty-three percent of women do the same.

Consumers are assisted in this effort by apps that enable in-store browsers to scan the bar code for nearly any product and have prices and reviews from dozens of websites pushed to their mobile device in seconds. Amazon’s Price Check application is often used to show-room, and it even includes the option to take a mobile picture of any product, which Amazon will attempt to find, using advanced photo recognition technology. Other options focus on a particular category, including Wine Spectator’s mobile reviews application, that provides, for a small monthly fee, the company’s full database of wine reviews.

Retailers have been in the habit of “matching any price” for many years, but until recently those offers did not extend to online. Now, show-rooming is forcing retailers like Best Buy and Target to match prices of major online competitors.10 Other, more nefarious attempts are being made by retailers to defeat the show-rooming trend, including using store-specific bar codes, disabling Internet access in-store, and using sensors to determine if a consumer is accessing a site like Amazon, and, if so, offering a real-time offer.

But as Steve Deckert, marketing manager for e-commerce loyalty-rewards company Sweet Tooth, writes on his blog, these efforts to defeat show-rooming are “attempting to solve the wrong problem.” The problem, he explains, “is not that less expensive products exist, or that customers are able to easily check for less expensive products. The much more dangerous problem is that customers have commoditized your product and brand. Your customers have reduced your brand to a product and a price; you are offering no more value than a vending machine. Retailers and show-rooming solutions that try to prevent consumers from accessing the Internet on their mobile devices are essentially trying to ‘battle’ the Internet. They will lose. . . . You need to provide value to the consumer other than simply giving them a product at a cheap price. You need to differentiate yourselves to offer value that is beyond a product and a price."

Beauty retailer Sephora, with more than three hundred stores in the United States and Canada, is taking Deckert at his word. Sephora is, somewhat ironically, attempting to differentiate the in-store experience with technology. An iPad application, available only within physical Sephora retail locations, gives shoppers additional product review details, personal shopping histories, and other Youtility features that cannot be replicated with a bar code scanner.

Others, like luxury goods manufacturer Burberry, are attempting to differentiate by making the in-store shopping experience itself powerful and noteworthy in a way mobile devices cannot. As documented on the blog of Pointsmith, a point-of-purchase marketing management company from Texas, the Burberry flagship store is equal parts retail and rock concert.13“Burberry’s flagship store in London has drawn a great deal of attention, and for good reason,” Pointsmith writes. “They have developed an upscale shopping experience that is not only impressive, but also personal for the shopper. Interactive signage greets shoppers as they walk into the store and displays key points of interest within the building. Once in the store, associates armed with iPads containing customer information, such as past purchases and preferences, greet shoppers. Certain clothing and accessories contain RFID chips that allow shoppers to interact with digital mirrors that show videos on craftsmanship or pairing recommendations. The store features digital signage throughout the showroom that shows Burberry fashion shows. Occasionally, there are ‘disruptive digital takeovers’ where thunder booms out of 500 in-store speakers and all 100 signs and mirrors display an iconic London downpour.”

That level of personalization may seem remarkable for an in-store environment, but just wait until it’s all around us. That’s the future, according to Asif Khan, founder and president of the Location Based Marketing Association. As proof of their concept, Khan’s group has been working with transit authorities in New York and Chicago to customize marketing messages every time a bus comes to a stop. “We’ve taken buses with digital screens on the side, and instead of selling the ad inventory in the normal way based on the route the bus travels, what we do is when the bus stops at a red light in an intersection, we gather all the check-in data of everybody who is standing at that intersection,” Khan says. “In real time, we build an aggregate demographics profile, and then we serve an ad on the side of the bus based on who’s actually there. And then we do it again at the next intersection when the bus stops again.”

Khan says location is a functional layer that will make all kinds of not-yet-envisioned Youtility possible for smart marketers. “It becomes about, ‘Well, you know where I am right now, you know where I’ve been before, and you can know where my friends are and where they’ve been.’ You can infer a bunch of things and kind of get to this point where you can kind of predict, it’s almost like predictive marketing in terms of where I am going next,” he says. “And if you can do that, location becomes really, really valuable.”

Location is a valuable opportunity for marketers, to be certain, but its power must be tempered by providing information and offers that are useful to consumers, not just brands. The tendency to overplay the location hand has resulted in a string of interesting but vaguely off-putting platforms that allow companies to intrude on consumers in new and novel ways. But at least in the United States none have yet reached mainstream usage and acceptance at the customer level.

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