Secs doesn’t sell
Twelve minutes was all it took for an unknown bidder to pay £74m for Edvard Munch’s The Scream at a Sotherby’s auction in May, making it the world’s most expensive work of art. Twelve minutes to decide to spend £74m. That’s over £100,000 per second.
Until relatively recently, consumer purchase decisions were also measured in seconds, following a 1995 study by Point-of-Purchase Advertising International claiming 70% of purchase decisions are made in store. Since then, advertisers have focused on developing communications to generate demand and convert the consumer at the point of purchase – the shelf. Those final moments when the consumer was looking at the shelf wondering which brand to buy were crucial. In 2005 Proctor & Gamble called it the First Moment of Truth (FMOT). Decisions were made in the final seven seconds.
Now, everything’s changed. The average shopper used 10.4 sources of information to make a decision in 2011, up from 5.3 sources in 2010, Google and Shopper Sciences found. Those 10.4 sources range from TV commercials and magazine articles to recommendations from friends and family, to websites, ratings and blogs. In-store, 34% of consumers call a friend for advice about a purchase; 22% compare prices online; and 22% look up product reviews on a product found in a store, according to research from Pew Research on how consumers use their phones for help with in-store purchasing decisions. Research from Deloitte found 36% of consumers would like to access product information by scanning a bar code with their mobile device. The actual point of purchase is also changing from in-store to online. Online retail sales are forecast to continue to grow 8.8% points faster than overall retail sales over the next five years, with online sales predicted to grow to reach £43bn in 2015, accounting for 14% of all retail sales, according to Deloitte.
Consumers no longer travel down a convenient funnel, filtering out options as they move towards their ultimate decision. The funnel has been inverted and options actually increase as consumers do their research at every stage of the purchase. There is no First Moment of Truth. Decisions are not made in a matter of seconds at the point of purchase any more. Decisions are more involved, even for relatively insignificant, discretionary purchases. The customer journey is profoundly more complicated and online is the new shelf.
This new customer journey requires a new approach. Understanding the consumer decision-making process, identifying the most influential communication channels and areas of risk will help ensure relevant brand communications are available and effective. The challenge for brand owners and marketers is to map this new journey and provide interventions – or means for consumers to provide their own interventions – along the way. Data analysis forms the backbone of this approach with customer segmentation, real time decisioning and data analytics providing platforms for creative strategies.
The purchase of The Scream still illustrates the power of the point of purchase, with the starting price driven up from £25m, but no-one decides to spend £74m on a whim in a matter of seconds. The buyer had spent time prior to the auction doing their research to give them the confidence to bid £100,000 a second. Decisions are not made in the final seconds any more. Decisions are much more involved. Understanding how to adapt to this changing landscape requires sophisticated thinking and analysis. This is the challenge.
William is a Senior Consultant in Deloitte’s Customer practice and works in the Marketing & Insight Service. William has significant experience in valuing and understanding the value of brands and what drives business value. Typical engagements include brand valuation, market research, brand and business strategy, benchmarking, marketing effectiveness, brand positioning and agency management and effectiveness. He works within Consumer Businesses, specialising in Consumer Products and Retail industries.
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