Email, paid search and other marketing tools are netting far more than many retailers realize in terms of brand building, customer acquisition and retention, and sales across all touch points including stores. Those are the findings of the Shop.org Think Tank in its latest article, “Balancing Your Marketing Portfolio in an Omnichannel World to Grow Sales Across the Enterprise.”
Forrester Research recently found that almost half of U.S. retail sales are now influenced by the web in some way. The study showed 8.4 percent of consumers bought directly online, and an additional 41 percent were influenced by the web. The result: Retailers are likely under-investing in online marketing, thereby ceding awareness, store traffic and sales to savvier competitors.
Online marketers in early dot-com days were quick to tout how infinitely measurable online marketing tools were in driving online sales – in sharp contrast to many traditional marketing tools that aren’t held to the same level of accountability. But even if the proportion of online sales driven by online marketing was possibly much higher in those early days, digital retail today is by no means limited to an online-only experience. For example, it is now commonplace for customers to buy in-store with offers in hand on email printouts or smartphone screens. And we have heard of multichannel retailers with loyalty programs who report that their most valuable customers spend across multiple sales channels.
Overall, retailers appear to be over-measuring digital marketing tools and under-measuring traditional marketing tools – neither of which is the correct approach given how customers actually interact with them. Instead, retailers need to develop a holistic “portfolio” approach to marketing strategies and tactics to maximize the potential of every channel they offer their customers.
How should multichannel retailers first analyze and then rebalance their marketing strategy and spend portfolio? The Think Tank offers several suggestions:
- Algorithm-based testing. Retailers with a large enough geographic footprint can sample regionally and, by turning on and off different digital marketing tools, measure the impact on offline sales. This approach is likely easier with search and email than other online tools, and likely to be far from perfect, but should provide a directional start from which to learn.
- Modeling the impact of email marketing on stores. Retailers can explore the impact of email by doing a customer relationship management analysis of in-store shoppers who have subscribed to emails versus those who haven’t.
- Understanding how paid search drives store sales. Google recently concluded a study of 13 major Google advertisers (each with a minimum of 1,000 U.S. stores) across a variety of categories. Following a series of “real-world experiments” to see how online desktop search drove in-store sales, Google found that investing in search ads increased store sales an average 1.5 percent. Sales ranged from twice to 14 times the amount spend on the ads.
More real-world examples further demonstrate the power of digital marketing to benefit all parts of the business, including tests last year by Ace Hardware (text messaging) and Lenovo (paid search). Tell us how your company is learning how investments in online marketing strategies and tactics are driving the business forward across all customer touch points.