Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

Neil Dawson
VP, Chief Strategy Officer, SapientNitro Europe Neil leads the SapientNitro Future of Retail Group. Thanks to

Victoria OCallaghan
Associate Marketing Strategy & Analysis, SapientNitro Europe

Phillip Bott
Associate Marketing Strategy & Analysis, SapientNitro Europe

Welcome to a new model of consumer behavior: snackable consumption,

a world in which people use smart devices to shop in increments, moving comfortably from one digital destination to the next, grabbing bite-sized information such as prices about brands products and services, often doing their research while multitasking. Snacking behavior often discussed in the context of content consumption now extends far beyond content. Increasingly, were seeing this behavior extend into three new areas: how people engage in social interaction, how they buy both online and offline.

Changing Behavior
We see many signs that snackable consumption is the norm: Smartphone users interact with their phones 150 times per day thats every six minutes. Seventy-nine percent of 18-44 year olds have their smartphones with them 22 hours per day, with the vast majority checking their phone within 15 minutes of waking up (or indeed when their phone wakes them up). Furthermore, on social networks, small and frequent online interactions are the rule. Smartphone users are checking in to Facebook 14 times per day. Theyre engaging with brands through traditional channels, but now, the majority of people are also multiscreening: 60 percent of smartphone owners report theyre likely to be using another device when watching TV1 (and even more for tablet owners). The tools for this new behavior is clearly established globally. Were now seeing studies reporting up to 73 percent global smartphone penetration at least among those who already are online in emerging markets.2 Fig. 1 U.S. Page Traffic By Hour and Device
10% 09% 08% 07% 06% 05% 04% 03% 02% 01% 00%

Source: comScore, January 2013

Consumers are moving comfortably between devices throughout the day. In this environment, brands must create whole experiences (content, e-commerce and brand engagement) that can be consumed in bite-sized chunks anytime, anywhere, through and across any device combination.

1 2

Always Connected: How Smartphones and Social Keep Us Engaged. IDC, 2013. For the study, Wave 7, the IPG Mediabrands agency surveyed people in 65 countries, including the UK, the US, India and China. It found that 73.4 percent own a smartphone, up from 44.8 per cent just a year earlier. This is at the high end of SapientNitros estimates.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

And when consumers shop online, the average time between adding a product to their cart and checking out has grown 38 percent over the last five years, from 2 hours to 2.6 hours. In this new consumer reality, many day-to-day activities no longer need to be carefully planned. It is more natural for people to find ways to fit things into gaps, delaying activities until they have a moment and do several things at once (watching TV and shopping, for instance). This change in behavior challenges brands and marketers to rebuild how and where their brands engage consumers, and the systems and processes required to support engagement. Not only do we now need to create content which consumers can snack on, we need to create whole experiences (content, e-commerce and brand engagement) that can be consumed in bitesized chunks and can be accessed at any time, in any location, on different devices and in multiple need states. We need these experiences to work in the way people do adapting to context and need, consistently across devices and presenting choices in the way with which the distracted mind can deal. When done well, overall engagement with a brand can actually increase. For example, Nikes use of sensors and the Nike+ platforms3 means that although you might only engage with Nike consciously once every other day during a run and perhaps only ephemerally at that time the brand remains with you and your daily life for a period of years. When youre ready to study and evaluate your sport, Nike is the brand to which you turn. Location and context emerges as particularly important. An urban womans mindset around new shoes when she sees an ad in a magazine in the office is very different to when she thinks about new shoes when chatting with friends, on a fashion blog or in the supermarket. Brands need to relate the moments when they focus on products to their varying need states in different places at different times.

Impacts Across Your Customers Journey

Snackable consumption patterns tend to break down classical definitions of the customer journey. In many respects, the path from awareness, consideration through purchase and support has been compressed, as people buy quickly on the go. Yet in other ways, the buying process is actually much longer and complex, with significant new influences on the ultimate decision, as customers seek advice from their social networks (e.g. Pinterest), third-party information providers (e.g. Trip Advisor) and on-site customer reviews. Ultimately, the actual journey will vary by industry, product and person, but it is likely significantly more complex than in the past. In the retail environment, we explore four specific need states along this new, convoluted path to purchase. Inspiration: The ability to browse certain subjects and then purchase based on what inspires the user. Information: Anything aimed at helping shoppers find and purchase the right item for them, such as product reviews, ratings and location. Comparison: Price comparison utilities that help shoppers to be sure that they are getting the best deal. Maximisation: Coupons and reward schemes. Money is tighter for many consumers, but we still expect the same level of service we had before the recent recession.

For more information on the Nike+ Digital Platform, see Evaluating Real-World Experience: A Study of Leading Brands in this report.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

Fig. 2 Consumers are shopping in increments connecting to brands throughout their life and locations in short bite-sized chunks.

As brands struggle with this new behavior, they are growing to recognize that they need a more intimate understanding of people in different contexts along the shopper journey. Increasingly, marketers are using sensors, mobile phone studies and shopping data to understand their customers journey from awareness through to purchase. Brands are then designing experiences anticipating short, non-linear interactions for each of these contexts. In this example, a women is shopping throughout her day. Her trip starts at her house, and touches on her commute into work (thinking about new shoes and her plan for the day). She then spends 5 minutes at work to see if the nearest store has the shoes in stock, walks to the store, shops for 20 minutes in the store, and then heads back to work.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

Inspiration
Fresh Content from Great Sources Snacking during the inspiration phase has increasingly involved mobile services. For retail shoppers, bloggers and mobile street-style discovery tools very much lead the way fitting in very well to busy young female professionals commuting lives and snap purchase judgments. For example, young fashionistas can get inspiration from world-wide streetstyle photographs while on the move in the Pose app. They can also use Pose to create collections and gather feedback from the community of fashion-savvy friends on outfits theyre not sure about, and they can use a tagging function to find retailers with similar products. Snackable inspiration leverages these social interactions and the community to provide reassurance to shoppers. This is massively important in segments where it is difficult to experience a product prior to purchase, such as personal care and beauty items, or even travel and hospitality. Offering snackable inspiration for consumers is a great way for a brand to more deeply engage a wider audience, building an emotional connection that can naturally lead to or actively nudge a purchase at the relevant time.

Information
Local Discovery Small bits of content when available at key steps in the journey (e.g., the Information phase) can help shoppers move forward with a purchase. Shoppers often need specific information: for example, where they can buy it, its provenance, product reviews or rating. When this information is unavailable at key moments, the journey can be stalled. For example, a shopper can search for items across their local high street using Udozi, so they can find out which local retailer has it in stock, allowing them to purchase, collect, and enjoy it immediately. Or indeed, if they need something specific but dont know where to look, ShopStyle by PopSugar comes into its own. They type a description and the app shows which stores stock it. The purchase can then also be completed instantly through the app. And because purchase decisions dont always hinge on the best value for money, Good Guide helps shoppers to identify products and companies that are safe, healthy and sustainable. After supplying information, it also provides a list of alternatives.

Pose inspires female shoppers by collecting crowdsourced photos and grouping those photos by events, outts and location. The platform enables rapid feedback on your own looks and encourages you to provide feedback on others.

ShopStyle allows customers to browse multiple brands through one site, which is mobile, tablet and web optimized. Products are shown by the latest trends, hottest sales, or grouped by occasion.

Local inventory information is essential during the information phase of shopping. Udozi attempts to deliver this information in a timely manner to high street shoppers.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

Comparison
Compressing the Sales Funnel In addition to social tools, community and brand engagement, consumers online and offline shopping patterns are changing. To satisfy this new behavior, retailers and third parties are developing tools to surface content and drive conversion ultimately shortening the sales funnel. For example, at the point of purchase many savvy shoppers get that niggling feeling that they could get a better deal, and, in that moment, balance convenience and instant gratification with getting the best price or deal. A purchase in progress can easily be abandoned in the confusion, and thats where price comparison utilities help shoppers, either by completing the transaction in that moment, or going elsewhere.

Maximisation
Driving Repeat Sales with Analytics and Loyalty Programs The final step, maximisation, occurs as people seek to get the best deal. Maximisation means that people are ever more game to take part in coupons and reward schemes particularly those that are fun and fit around how they shop. Where maximisation really comes into its own is when big data is used to understand shopping behaviour and identify unmet needs. The Tesco Clubcard applies multiple segmentations to generate the 10 million mailings the brand sends to households in the United Kingdom. Each is unique, tailored to needs, lifestyle and household shape -- effectively a segment size of one! Offline retailers can use these techniques also to great effect. For example, Guatemalan sneaker retailer Meat Pack created a mobile app called Hijack, which activates when customers walk into a competitors store. It offers a discount that starts at 99 percent and counts down by 1 percent every second while the customer races to the Meat Pack store. Meat Pack has hijacked 600 customers in a week! Understanding peoples needs for maximisation and their specific shopping needs presents a range of opportunities to apply insightful promotional campaigns and tactics that will nudge consumer behaviour at different points in the buying cycle.

With over 20 million downloads through 2012, ShopSavvy scans product bar codes and nds online and local-stores with inventory. This simplies price comparison, and ultimately makes buyers more condent.

Amazons latest apps barcode scanner lets you quickly compare prices, add items to your wishlist or buy using the Amazon Prime two-day delivery service and one-click checkout.

One of the more creative examples of Maximisation, Meat Pack takes price checking one step further and gives the customers a limited amount of time (100 seconds) to get from a competitors store to their own. The percentage discount declines 1 percent every second.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

Whats Next
To respond to the snackable challenge, CMOs should focus on five areas: 1. Insight: CMOs need to understand consumer behavior much more intimately than they do today. New data is available to us in the form of the digital exhaust of our mobile phones and the use of modern sensor technology to wire people, products and environments. By analysing this data in real time, we can develop patterns and see dependencies that allow us to change the future, not just look at the past. For example, SapientNitro is currently running a programme to develop a deep, intimate understanding of how people buy today. Our initial study of 200 people uses desktop and mobile technology to understand what people are focused on in different contexts and measures the emotional state and behaviour at different stages of the shopper journey to gain insights not only around the retail moment but also to fully understand the process which led to it. 2. Storyscapes: A CMO needs to build a Storyscape4 of communications and experiences around a central organising idea. The Storyscape delivers bite-sized interactions and responds in real time to the snacking consumer. It needs to work as a constant to and fro, consistent across all channels, responding to individual needs and mindsets, never reaching a dead end. Cognitive science will help us frame experiences and decisions in the right way for a snacking consumer. For example, our work with a major travel and hospitality company invited todays explorers to share their own treasured memories. A compelling organising idea inspired stories about families and their vacations. Then, to inspire other families to book, a system for sharing vacation stories and building customised itineraries was created. Each story was the sum of numerous smaller interactions: from tales of exhausted kids and jubilant parents, to a gamified 360-degree view vacation maker, to a web-mapped customized itinerary with ready-to4

book partner deals. Each interaction added to the overall story and itinerary for each family, and each story added to the overall story. 3. Digitising the Shopping Environment: We can no longer distinguish between online and offline behavior. People are comparing prices, checking reviews and even ordering while in-store. They are just as likely to do research, try demos and ask friends for advice at home as they are to go to the store. For example, our work with a major shoe manufacturer has delivered breakthrough product-centric experiences in-store. We developed interactive display maps, inspirational video and product information onto a digital representation of the person standing in front of it. The experience is cut up into smaller chunks to cater to the modern, distracted shopper with distinct content designed to amplify, engage, attract, and ultimately convert the shopper. Ultimately, we allow people to participate in immersive brand experiences at the point where the product and purchase is highest in peoples minds. 4. Technology: You need the right technology platform that can deliver the right bite-sized content and experiences at the right time, in the right format. It needs to be easy to use, manage and maintain so that it enables rapid, fluid marketing at scale. Each platform should be customised to very specific brand and consumer needs. For example, our platform at Chrysler, which operates as multiple brands across different regions, is very different than a platform such as one to support Ladbrokes, which is a single brand in a single geography. 5. People: A different approach to marketing requires new skill sets publishing, technology, curation, social, data, experimentation, and invention. A new generation of marketers needs to be empowered to take brands forward, to break old marketing models and create the

For more information on our Storyscaping approach, see Connecting Brands and Consumers at the Intersection of Technology and Story: Storyscaping at the beginning of this book.

Shopping in Increments: The FUtUre of Online Behavior and Its Implications for CMOs

sustainable brands of the future. Leading companies are rethinking marketing global structures and skill sets to allow them to succeed in this changing world. From organisational design and digital maturity audits to learning tools and content development, we are helping them redefine the purpose and value of marketing and delivering clear competitive advantage. For example, for one major financial services company, we helped re-imagine the organization by creating a job called the customer journey manager, aligned to a specific financial products (e.g. buy a new home, finance a car, open a bank account). This realignment broke the traditional silos of the organization to create a better experience for customers and align responsibilities of this role with that experience. Several years in, the results have been quite positive.

Conclusion
Were seeing a new type of consumer behavior, which weve called Shopping in Increments. The penetration of smartphones and the availability of mobile Internet has created an environment which demands companies innovate, and create shopping experiences which are instinctive, bite-sized and adapt to context. Fulfilling peoples snacking shopping desires requires a brand reconsider most areas of their marketing mix. In response, senior marketers are rethinking consumer insights, digital storytelling, digitization of physical environments and the role of technology and people. Together, this shift in consumer behaviour, and the creation of new platforms by marketers, is reshaping the relationship between brands and customers. From brand engagement, to social interactions with our peers, to purchasing behavior, the connection between brands and their current and potential customers will never be the same.

The digital exhaust oF our deVices (in the Form oF data) is enaBling CMOs to anticipate Future shopping patterns, not Just look at the past.