Small Retailers Have the Edge godigitalmarketing.com

Transcription

1 Consumers Love Local: Small Retailers Have the Edge

2 Table of Contents INTRODUCTION... 3 MAJOR FINDINGS... 4 LOCAL MATTERS...5 DISCOUNTS & INCENTIVES... 6 REVIEWS & REPUTATION MANAGEMENT... 9 MOBILE SOCIAL MEDIA E-COMMERCE CONCLUSION

3 Introduction According to the National Retail Federation, the retail industry impacts $2.6 trillion of the United States overall GDP. It s a massive and a crucial part of the economy, and what s even more interesting is the majority of those retailers are small, local businesses. The same report found 98.6 percent of all retail businesses employ fewer than 50 people, showing the majority of these retail establishments are small-tomedium-sized businesses. The local business community is strong, but with the rise of superstores and omnipresent national retailers having the steepest discounts and profits, it s oftentimes difficult for local retailers to see that strength. The retail industry is fiercely competitive; each business looking to get their portion of that $2.6 trillion. Because of this, local retailers need to spend more to stay on par with the larger retailers, but their budgets are less than half of the size so how can they compete? Local businesses need to know their audience from the inside out and that starts with understanding how they use and consume digital media in today s always-on, always-connected world. Local retailers must understand why consumers choose to shop with them, what discounts are the most attractive, what role social media plays in marketing and so much more. By focusing on what is important to their local audiences, local retailers can win consumers business over big national brands. With the right information about online search and digital marketing tactics, local retailers will be poised to influence in-store and e-commerce purchases. Methodology & Objectives G/O Digital conducted a research study to understand how digital marketing influences consumers propensity to visit and purchase at local retail establishments. The survey was fielded from April 1, 2016 through April 4, 2016 and garnered a total of 1,761 responses from US adults aged 18 and up who have shopped at a non-national local business in the past six months. 3

4 Major Findings LOCAL MATTERS Consumers shop local because they love local 55 percent of respondents shop at a local retailers because they like to support their local community. Additionally, 38 percent of respondents shop at small e-commerce retailers over national retailers (Amazon, Nordstrom, Home Depot, etc.) online because they prefer to support small businesses. DISCOUNTS & INCENTIVES Consumers don t need discounts to shop local 1 in 4 respondents don t need a monetary incentive (promotion, sale, etc.) to shop at a local retailer. When incentives are used, discounts and loyalty programs top the list. 42 percent of respondents prefer having a percentage-off discount at a local retailer while 27 percent are incentivized by local loyalty programs. Getting and staying in front of shoppers is key 55 percent of respondents would be somewhat to very likely to click on an ad from a previous website they had visited, known as retargeting. REVIEWS & REPUTATION MANAGEMENT Reviews make a difference to the consumer Only 8 percent of respondents said online reviews never factor into their decision to purchase at a local retailer. Outside of traditional review sites (such as Yelp), 66 percent of respondents would review a local retailer on Facebook and 31 percent would review on Google+. MOBILE IMPACT Showrooming is still an in-store factor for local retailers 31 percent of respondents say they re likely to search for competitive pricing on a mobile device while instore shopping. SOCIAL MEDIA All major channels are necessary for retailers When asked which social media channels they re most likely to follow, respondents highest ranking network was Facebook, but Instagram, Twitter and Pinterest needed a photo finish for second place. The positive outweighs the negative on social 87 percent of respondents are motivated to engage with a local retailer on social media because of a positive experience with that retailer. Far fewer 13 percent choose to interact because of a negative experience. Relevant Facebook ads work for local retailers Almost 1 in 2 respondents are likely to click on a Facebook ad that aligns with their personal needs and interests. E-COMMERCE Friendly referrals are most important in spreading the e-commerce word 54 percent of respondents hear about small e-commerce retailers from word-of-mouth referrals. Search is also an important motivator, with 28 percent saying they find these retailers through organic search results. If you can hook consumers online, they re likely to spend more 62 percent of respondents say they re at least somewhat likely to purchase more than they originally intended when shopping online. Consumers don t have patience for poor mobile experiences 57 percent of respondents who shop online using a mobile device wouldn t purchase from a retailer that doesn t have a mobile-friendly site. 4

5 Local Matters Consumers shop local because they love local 55 percent of respondents shop at a local retailer because they like to support their local community. Additionally, 38 percent of respondents shop at small e-commerce retailers over national retailers (Amazon, Nordstrom, Home Depot, etc.) online because they prefer to support small businesses. WHAT PROMPTS YOU TO SHOP AT A LOCAL BUSINESS RATHER THAN GOING TO A NATIONAL RETAILER FOR PRODUCTS/SERVICES? 55 % 18 % 9 % 8 % 8 % LIKE TO SUPPORT MY LOCAL COMMUNITY CONVENIENCE PREFER THE VARIETY OF GOODS AT A LOCAL BUSINESS INTERACTION WITH LOCAL BUSINESS OWNER STAFF KNOWLEDGE OF PRODUCTS AND SERVICES It s easy to assume there are a number of reasons people support local retailers, from the various discounts and loyalty programs to the one-on-one interactions with shop owners. However, survey respondents overwhelmingly said that they shop at local retailers for a more altruistic reason: they just love supporting their local community. The same was true for smaller e-commerce retailers; 38 percent of survey respondents shop at small online retailers because they prefer to support small businesses even if they aren t in their local community. So what does this all mean? Local retailers have a leg up on the competition because they have customers who are predisposed to helping and supporting the local community through purchases. Stores can center marketing messages on the idea of shopping local to reach customers in their area and facilitate instore visits and online purchases. While every other national retailer is clamoring to reach the right audience and gain the most customers, small, local retailers have a built-in customer base, they just have to make those real connections and build rapport. 4 % BETTER DEALS AT A LOCAL BUSINESS 5

6 Discounts & Incentives Consumers don t need discounts to shop local 1 in 4 respondents don t need a monetary incentive (promotion, sale, etc.) to shop at a local retailer. Retail businesses can spend countless hours finding the right deal that will click with customers and bring them in-store for actual purchases, but the reality is that discounts aren t necessary to bring shoppers to a local business. Keeping in line with the finding that consumers shop at local retailers because they like supporting their local communities, 27 percent of respondents said none of their local retail purchases are influenced by promotions, sales or incentives. These shoppers are likely to purchase from local retailers as long as the shop has what they need. For many local business marketers, this fact then begs the question, What should we advertise? Instead, focus on local inventory and your community-supporting efforts, but always keep deals in the rotation. Although 27 percent don t need deals or incentives to shop at local retailers, there are still 73 percent that are interested in promotions. Instead of focusing on the monetary discount, retail businesses should concern themselves with creating a positive atmosphere that naturally invites customers to return. WHAT PERCENTAGE OF YOUR LOCAL BUSINESS SHOPPING IS INFLUENCED BY PROMOTIONS/SALES/INCENTIVES? PERCENTAGE OF RESPONDENTS 0% 25% 50% 75% 100% PERCENT OF SHOPPING INFLUENCED 6

7 Discounts & Incentives When incentives are used, discounts and loyalty programs top the list 42 percent of respondents prefer having a percentage-off discount at a local retailer while 27 percent are incentivized by loyalty programs. 42% PERCENTAGE OFF PURCHASE (10%, 15% OFF, ETC.) The type of discount makes a big difference when it comes to incentivizing those consumers looking for a deal at local retailers. Although the majority frequent local retailers because they like to support the community, some consumers need extra motivation to buy their goods from the local store, as opposed to shopping at a bigbox retailer. 4% GIFT WITH PURCHASE WHAT TYPE OF INCENTIVE WILL GET YOU TO SHOP AT A LOCAL BUSINESS? 16% BUY ONE, GET ONE FREE 9% FREE DELIVERY/ SHIPPING 27% LOYALTY PROGRAM 2% REFERRAL PROGRAM Additionally, the survey revealed that 48 percent of respondents only need a discount of 10 percent to be enticed to shop at a local retailer. Large retailers often boast sales of percent off a single item or even an entire purchase. Many local retailers struggle to keep up with those immense discounts but they don t have to. The other half of survey respondents would look for steeper discounts to shop at local retailers, but the data tells us that offering a base discount of 10 percent is helpful for bringing people in-store. Local retailers should plan their larger discounts more strategically to compete during high-selling seasons or to encourage customers to stop in during the slower months. This finding also underscores the point that many consumers don t need enormous, storewide sales to influence their purchasing habits at local retailers. They just love supporting their local community. WHAT IS THE MINIMUM PERCENTAGE OFF A PURCHASE THAT WOULD MAKE YOU BUY AT A LOCAL BUSINESS? 30% DISCOUNT 5% To that end, it s important to know what kinds of incentives are most important to local business shoppers. When asked what discounts would get them to shop at a local retailer, 43 percent of respondents said having a percentage off of a purchase is their primary motivator, and 27 percent prefer to frequent local retailers because of loyalty programs. 48% 20% DISCOUNT 25% DISCOUNT 15% DISCOUNT 10% DISCOUNT 21% 17% 10% 7

8 Discounts & Incentives Getting and staying in front of shoppers is key 55 percent of respondents would be somewhat to very likely to click on an ad from a previous site they visited, a tactic known as retargeting. Retargeting ads follow users who have already visited a retailer s website around the web and it is incredibly effective for local retail marketing. In the survey, 55 percent of respondents said they would be somewhat to very likely to click on a retargeting ad from a past site they visited. This digital tactic is crucial for staying top of mind with consumers who visited a local retailer s site but haven t yet converted to a purchase, or even for consumers who purchased but are likely to make additional purchases. This also encompasses search retargeting, where search engines monitor the queries a user types into the search field, then delivers ads based on those queries. For example, if a person searches for Best bridal flowers on Google, that person is likely to start seeing retargeting ads for flower shops in their area on other websites. Local retailers will be even more likely to convert users with retargeting ads by including the appropriate discounts or promotions in those ads. Not only will consumers see the brand or product they were already considering, but now they ll have an added incentive to actually purchase. Retail businesses also need to have diversified retargeting campaigns that align to the different users search queries. In the example above, a floral shop would be remiss to have a single floral ad for all retargeting efforts; instead, it should have a wedding-centric ad to serve to the user in this hypothetical scenario and different ads for other floral inquiries. IF YOU VIEW A PRODUCT ONLINE BUT DON T PURCHASE, THEN SEE ADS FOR THAT PRODUCT AROUND THE INTERNET (KNOWN AS RETARGETING), HOW LIKELY WOULD YOU BE TO CLICK ON THAT AD? NOT LIKELY VERY LIKELY 45% 8% 14% LIKELY 33% SOMEWHAT LIKELY 8

9 Reviews & Reputation Management Reviews make a difference to the consumer Only 8 percent of respondents said online reviews never factor into their decision of purchasing at a local retailer. Additionally, outside of traditional review sites (such as Yelp), 66 percent of respondents would review a local retailer on Facebook and 31 percent would review on Google+. HOW OFTEN DO ONLINE REVIEWS FACTOR INTO YOUR DECISION TO BUY A PRODUCT OR SERVICE FROM A LOCAL BUSINESS? OCCASIONALLY ALWAYS 7% MOST OF THE TIME 26% 36% SOME- TIMES 23% NEVER 8% Online reviews and rating systems are increasingly important in our digital world. In the G/O Digital survey, only 8 percent of respondents said online reviews would never factor into a decision to purchase at a local retailer. That means 92 percent of consumers look at reviews and consider them for at the very least some purchasing situations. Potential customers can easily go to any business Yelp, Facebook or Google+ page and see what everyone else has to say about the establishment. Retailers should be concerned about maintaining a high rating; the errant negative review (with appropriate response) can be forgiven if the overall score is high enough to merit a visit. However, if negative reviews overwhelm and lower a business overall rating, potential customers are likely to scroll past the business and on to a competitor. Additionally, negative reviews are important to address, but they don t always affect a potential customer s perception of your retail establishment. In the survey, 42 percent said they don t worry about negative reviews at a local retailer if those reviews aren t relevant to that individual s planned experience at the retailer. Reviews have enormous importance for potential customers, but sometimes, negative reviews won t affect how a customer experiences the business. It s still important to respond to a complaint with positivity and honesty and never blame the customer for a poor experience. Even though that negative review might not affect the next customer, potential customers can see the business cares about resolving the negative experiences that do occur. 66% OUTSIDE OF TRADITIONAL REVIEW SITES, ON WHICH SOCIAL MEDIA CHANNEL WOULD YOU BE MOST LIKELY TO REVIEW A LOCAL BUSINESS? 31% 3% 9

10 Reviews & Reputation Management Customers notice poorly integrated marketing experiences 76 percent of respondents believe it s important for retailers online experiences to be consistent with their in-store customer experience. If a local retailer has a disconnect between online and offline experiences, customers will notice. In the survey, 76 percent of respondents say it s important for local retailers to provide an experience that is consistent online and offline. That means that local retailers websites need to have the same branding, messaging and visual identity in-store and online. If a customer sees a discount for a local retailer online, but then that discount isn t apparent or isn t valid in-store, then the customer won t be happy. Local retailers should have consistent messaging and visuals from social media and s to the basic website homepage and child pages. Every communication a retailer sends is a part of their brand, and local shops can t miss out on a customer just because that customer doesn t recognize the business. Retailers should look to have similar images across social media channels (in their profile pictures and cover photos), in their weekly newsletters and on their website, and then that same imagery should translate to the in-store experience. Whether or not it s the same exact image, the vibe of the store should all align. HOW IMPORTANT IS IT FOR A BUSINESS ONLINE CUSTOMER EXPERIENCE TO BE CONSISTENT WITH ITS IN-STORE CUSTOMER EXPERIENCE? VERY IMPORTANT NEUTRAL IMPORTANT NOT IMPORTANT 10

11 Mobile Showrooming is still an in-store factor for local retailers 31 percent of respondents say they re likely to search for competitive pricing on a mobile device while in-store shopping. Although they don t always need a discount to shop with local retailers, consumers do compare product pricing while in-store. In the G/O Digital survey, 31 percent of respondents said they were likely to use their mobile device to search for competitive pricing while in-store shopping at a local retailer. They may or may not find better pricing at other stores, but if a local retailer carries similar products to a national retailer, that consumer is likely to find better deals elsewhere. Local retailers can counter this habit by offering deals or discounts through PPC ads and target a very specific radius around their store. That way, when a user searches for better deals on their mobile device, they ll find a discount for the retailer they re currently visiting, incentivizing them to purchase at the local retailer instead. The discount might not be as WHILE SHOPPING IN-STORE, HOW LIKELY ARE YOU TO SEARCH ON YOUR MOBILE DEVICE FOR COMPETITIVE PRICING? 31 % 52 % 17 % LIKELY NOT LIKELY INDIFFERENT steep as a national business could offer, but the consumer is already at or near the local retailer, which makes it easier to shop there instead of traveling to a large superstore for a better deal. This method can also help bring consumers to a local store if they re shopping nearby; a person can search for deals at a store in the area, see a deal for a retailer and choose to go there instead to support their local community. 11

12 Social Media All major social channels are necessary for retail establishments When asked which social media channels they re most likely to follow, respondents highest ranking network was Facebook, but Instagram, Twitter and Pinterest are essentially tied for second in popularity. Local retailers should prioritize Facebook since it is traditionally and reaffirmed in the survey the most popular social network. However, the survey also yielded interesting results regarding the still popular, but less widely used social media channels. Of six social-media options, Instagram, Twitter and Pinterest were essentially tied for second place behind Facebook. This means local retailers who have audiences for these different channels should still use them for marketing purposes. For retail establishments, all four of these social networks are necessary. Your products should always be front and center on Instagram, you can curate boards with topics aligned to your brand on Pinterest and you can continually tweet to your Twitter follower base. Facebook is a no-brainer for retail businesses, as organic and paid strategies are crucial for any retailer to compete in today s market. However, each of these platforms needs to have a defined strategy behind them to really make them work. You shouldn t just set up various social media accounts if you don t have a plan and time to execute that plan. Part of developing a successful social media strategy is creating content that is like-, follow- and share-worthy to actually engage with their audience. In the survey, 63 percent of respondents said they were most likely to Like or Favorite a post on social media over other potential actions, such as commenting or sharing/retweeting a post. Although comments are always encouraged for posts, local retailers ON WHICH SOCIAL MEDIA PLATFORM ARE YOU MOST LIKELY TO FOLLOW A LOCAL RETAILER? (OUT OF 6 TOTAL POINTS) FACEBOOK INSTAGRAM TWITTER PINTEREST LINKEDIN SNAPCHAT Answers ranked 1-6 by respondents; values are averages of overall ranking should find ways to easily engage followers with simpler actions, such as a post Like or tweet Favorite. Local retailers are likely to gain more engagement through these tactics over trying to encourage actual post shares or comments since the former are easier interactions for users. Photos are a great way to encourage Likes and Favorites, but retailers should also consider posting quotes, interesting statistics or even videos that are relevant to the retailer s industry. Local retailers have the luxury of sharing content about the owner or employees of the store for a more personal touch; followers will feel like they know the retailer and its employees and be that much more at ease with stopping in and interacting in person. 12

13 Social Media Relevant Facebook ads work for local retailers Almost 1 in 2 respondents are likely to click on a Facebook ad that aligns with their personal needs and interests. People aren t on Facebook to shop; they re on it to stay in touch with friends and family. However, they can still be persuaded to consider shopping through ads that align with their interests. In the G/O Digital survey, 44 percent of respondents said they would be likely or very likely to click on a Facebook ad that is relevant to their personal needs, meaning almost half of consumers can be swayed by ads on the social network if it solves a problem for them or relates to other expressed interests. HOW LIKELY ARE YOU TO CLICK ON A FACEBOOK AD THAT IS RELEVANT TO YOUR WANTS AND NEEDS? 15% VERY LIKELY 29% LIKELY 56% NOT LIKELY The key to connecting with consumers through Facebook ads is ensuring the targeting coincides with the messaging. Retailers can run multiple ad campaigns at once, targeting different audiences, and each campaign s content and photos should reflect the needs of the audience to whom Facebook is showing the ads. Because people aren t on Facebook to shop, consumers might need to see an ad a few times before actually clicking on the retailer s page or website, but that interaction is important for staying top-of-mind and enticing new customers to come in-store. 13

14 Social Media The positive outweighs the negative on social 87 percent of respondents are motivated to engage with a local retailer on social media because of a positive experience with that retailer. Far fewer 13 percent choose to interact because of a negative experience. It s easy to imagine that the majority of people only go to social media to complain about a business service or offerings, but the reality is that people are more likely to take to social media because of a positive interaction with a local business. In the G/O Digital survey, 87 percent of respondents said they were motivated to engage with a local retailer on social media because of a positive experience with that retailer. If customers have a positive interaction, they become predisposed to engage with that retailer on social media, but, oftentimes, business owners need to make the offline to online connection for them. Local retailers can remind customers to interact with them on social media through in-store cues, like social icons on product packaging or telling customers about special offers for social media followers. Facilitating these interactions while in-store with a customer will make them more likely to visit a business social pages and maybe even leave a positive review for that business. WHAT MOTIVATES YOU TO ENGAGE WITH A LOCAL RETAILER ON SOCIAL MEDIA? 87% HAVING A POSITIVE INTERACTION WITH THAT RETAILER 13% HAVING A NEGATIVE INTERACTION WITH THAT RETAILER 14

15 E-Commerce The most important way to spread the e-commerce word is through referrals 54 percent of respondents hear about small e-commerce retailers from wordof-mouth referrals. Search is also an important motivator, with 28 percent of respondents saying they find these retailers through organic search results. 5% 6% 8% Consumers are interested in supporting smaller e-commerce retailers, but it s not always easy to connect online shops with actual customers, since they can t use their physical location to reach a local audience. Instead, people are most likely to come to them through word-of-mouth referrals 54 percent of survey respondents said they hear about small e-commerce retailers through personal acquaintances. Although personal connections lead to word-of-mouth referrals, local retailers still need to get in front WHERE DO YOU HEAR ABOUT OR FIND THE SMALL BUSINESSES THAT YOU FREQUENT ONLINE? SOCIAL MEDIA ADS SOCIAL MEDIA RECOMMENDATIONS SEARCH ENGINES (PAID LISTINGS & SEARCH SHOPPING FEATURES) of that initial customer and engender loyalty. Digital marketing is a great strategy for meeting those ground-level customers who will go tell their friends about the great small business they found online and that interaction can even happen online as well through reviews, Facebook and other online channels. Well-executed SEO is an important asset for small e-commerce retailers, with 28 percent of survey respondents saying they find these businesses through organic search results. E-commerce retailers should focus on important SEO factors, such as content, review management and social media to bolster organic search presence. It s important to remember that any page on a retailer s website could be the #1 listing for an organic search not just the homepage so online retailers should build out content pages that cover a range of topics related to their business. The benefits of this tactic are two-fold: each individual page could be the top search result for queries related to the business, and secondly, search engines will see the retailer is knowledgeable about their industry and give it more search authority. SEARCH ENGINES (ORGANIC LISTINGS) 28% WORD-OF-MOUTH REFERRALS 54% 15

16 E-Commerce If you can hook consumers online, they re likely to spend more 62 percent of respondents say they re at least somewhat likely to purchase more than they originally intended when shopping online. According to CMO.com, online shopping retail sales are expected to grow to $370 billion by Part of this explosion of e-commerce might be due to consumers adding more to their online shopping carts than they would while in-store. In the G/O Digital survey, 62 percent of respondents said they re at the very least somewhat likely to purchase more than they originally intended when they re shopping online. This means they go to a retailer s website looking for a specific product and end up purchasing more than that item. It may be a factor of a retailer s marketing that shows the products in their best light online through photos and messaging, or it could be that online shopping is sometimes the result of an impulse purchase during the workday. Whatever the reason, e-commerce shops have a distinct possibility of upping a customers shopping carts once they re on the site. To that end, smaller e-commerce retailers should focus on bringing the customer to their site in the first place. Organic SEO efforts are great, but don t work alone. They should be supplemented with search ads to ramp up the visibility and overall authority of the site. Facebook advertising is another great way to reach a very specific audience; retailers can even target a group of people similar to those who currently like their Facebook page, known as a look-alike audience. All of these options will increase website traffic, which will lead to more product visibility and online purchases. WHILE SHOPPING ONLINE FOR A SPECIFIC ITEM (OR ITEMS), HOW LIKELY ARE YOU TO PURCHASE MORE THAN WHAT YOU ORIGINALLY INTENDED? 47% VERY LIKELY 15% SOMEWHAT LIKELY 38% I ONLY PURCHASE WHAT I INTENDED TO 16

17 E-Commerce Consumers don t have patience for poor mobile experiences 57 percent of respondents who shop online using a mobile device wouldn t purchase from a retailer that doesn t have a mobile-friendly site. It s necessary for all local retailers to have a mobile-friendly website, but it s crucial for e-commerce retailers to provide a pleasant mobile shopping experience. In the G/O Digital survey, 57 percent of respondents said that if they encountered a site that wasn t mobile friendly while shopping on a mobile device, they wouldn t purchase from that business. As an e-commerce retailer, ensuring a positive mobile experience can be the difference between creating a returning customer and losing them entirely. Retailers sites need to have a different version specific to mobile devices that includes intuitive navigation, simple functionality and large buttons that people can easily tap using their fingers. They should also consider having users create their own personal account to save their credit card, billing and shipping information so returning customers can simply log into their account and purchase quickly and easily. Today s consumers won t put up with a poor mobile experience; they expect their online retailers to have mobile-friendly versions of their websites. If a retailer doesn t have it, then they ll move on to another retailer with a better mobile experience. IF YOU RE SHOPPING ON A MOBILE DEVICE AND ENCOUNTER A SITE THAT IS NOT MOBILE FRIENDLY, HOW LIKELY ARE YOU TO MAKE A PURCHASE FROM THAT BUSINESS ONLINE? INDIFFERENT 34% 9% 57% NOT LIKELY LIKELY 17

18 Conclusion Today s retail customers are easily influenced by online channels because they re always online themselves, and with the right tools and information, local retailers can compete with the national brands. Businesses can meet these customers by building out a robust online presence that helps consumers find their business and consistently engage with them. Creating that initial brand awareness is a crucial step for building a relationship with potential customers. If they don t even know about a specific shop, it s not likely they ll stop in or visit the website to make a purchase. Retailers need an established digital strategy to be found in those consideration stages, connect with customers during the process and stay engaged even after the initial purchase. About At G/O Digital, we understand that marketing can no longer be limited to traditional advertising methods and that digital integration is the future. The conversation between consumers and businesses has changed and will continue to evolve, and our team of digital marketing specialists has the expertise to meet these changes head on. Boost leads, retain customers and grow your business with G/O Digital s team of digital specialists. For more information, visit. Contact us For PR and Media Inquiries, please contact: Tiffany Bolton Communications & Media Relations Manager tbolton@ 18