According to the South African Council of Shopping Centres (SACSC), we must create products and experiences with and for specific consumer audiences if we want them to become loyal customers.
Gone are the days when we could say, ‘Advertise it and they will come’. That’s because consumer behaviour has undergone a huge transformation in an incredibly short period of time, as part of an evolution that continues to exert a profound impact on shopping and retail trends and relationships.
Yes – that’s largely down to the internet. But remember that, in South Africa, consumers don’t view shopping options as either/or. They take a hybrid approach, partly as a function of the accessibility of mobile solutions in a country where data remains exceptionally expensive.
A wise man once said that the progression of any institution, including the retail industry, ‘is linked to the progression of the economic and social system’. In other words, retail is at the mercy of economic and social forces and it must constantly adapt if it intends to win and keep customers.
But it was 1939 when he said it. And the wise man was Professor NSB Gras of
Harvard Business School, the inventor of the discipline of Business History. Today, 80 years later, Prof. Gras is perhaps more correct than ever – because we’ve watched the consumer metamorphose over the last decade from a complacent instore browser to a manic researcher who’s ravenous for responsive retail and expects the ultimate customer experience.
So, what has changed? What did the consumer caterpillar look like a decade ago, and what developments have created today’s virtual-basket-toting butterfly?
11 years ago in 2009, Twitter conquered the world, according to many analysts. But it
wasn’t the only social media company to do so. Facebook grew even more rapidly, adding 200 million new users and raising $200 million dollars.
By 2009, Amazon had moved beyond being a book-seller to trading in groceries and music too, and the iPhone had reached its third generation. But back in those days, particularly in South Africa, the way consumers shopped for products was very different to the way they shop today.
They trusted brick-and-mortar stores above all else. They didn’t have access to widespread price comparisons. And they found themselves at the mercy of large companies and seasonal sales if they wanted discounts.
It took three primary paradigm shifts, including the emergence of technologies and platforms like Facebook, Amazon and smartphones, to make consumers into the creatures they are today: Deloitte’s ‘consumers-in-chief’. The starting point is commonly referred to as ‘The First Moment of Truth’. This is how, in the early 2000s, marketers at Procter & Gamble referred to shopping behaviour at the point of purchase.
Theirs was a linear, retail-focused model, which accurately captured the consumer’s decision process when buying a product (First Moment of Truth), experiencing a product (Second Moment of Truth), and eventually becoming loyal to the brand. But soon shift number one happened.
The connected consumer and the Zero Moment of Truth (ZMOT)
With access to smartphones and the internet enabling shoppers to go beyond
the shelf when evaluating a product, they became ‘connected consumers’. The internet disrupted the essential mission of retail – product, place, price and time – because it could (arguably) deliver on all of them. Consumers demanded the ability to engage with brands at will, no matter where they were. Companies responded by investing in e-commerce, moving into social media and mobile, and providing the first heady tastes of ‘omnichannel’: shopping anytime, anywhere and any way we want to.
Therefore, when consumers needed something – say, razor blades – they
wouldn’t go to the shops to buy them. They’d go online to search for ‘the best razor blades’. And that’s the Zero Moment of Truth: when digital channels – social media and search – influence the customer decision journey. The ZMOT signalled a significant pivot in marketing, by encouraging companies to begin search engine optimisation and search engine marketing.
But then, shift number 2 happened:
The empowered consumer and McKinsey’s Consumer Decision Funnel
A new model popularised by McKinsey & Company gave marketers a more relevant
way to think about the customer journey. It had begun as a sales funnel, around the same time as the ZMOT, with the consumer moving linearly through awareness, familiarity, consideration, purchase and loyalty. But then the ‘empowered consumer’ emerged, straying from old-fashioned shopping to their own path to purchase.
The empowered consumer needed a more iterative decision process, and so McKinsey presented the loop model, instead of the usual straight-line approach from awareness through purchase to loyalty. The empowered consumer hopped between different stages of the funnel, and between multiple companies.
This article was sourced from www.sacsc.co.za