Why Isn’t Shopper Marketing on the CEO Agenda?

Sam Walton once said “There is only one boss.  The customer.  And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”  It is clear to most of us that Mr. Walton had a pretty clear handle on what the focal point of a company should be.  As a shopper marketing community, we know the common wisdom that 70% of shopping decisions are made in-store.  Miller Zell research indicates that while 65% of customers are now making lists prior to entering the retail store, 60% of those same shoppers will make brand decisions inside of the store.  Given the importance of the customer, their pre-disposition to make shopping decisions inside of the retail store, and the fact they will brand-switch inside of the store, why isn’t in-store marketing (and by implication the shopper marketing discipline) higher on the CEO agenda?

To understand the answer to that question, let’s first start with a definition of the CEO agenda.  Traditional elements such as maximizing shareholder value, improving return on invested capital and hiring the best talent will always top the CEO agenda.   The corner office is also historically interested in critical business processes like new product development, supply chain management, assortment management and inventory management.  These functions have common elements.  They have a consistent definition.  They have a common understanding of the underlying business process and associated performance management metrics.  The professionals in those areas know what their career ladder and success elements leading to promotion consist of.  Most importantly, there is a clearly understood and quantified link to the company’s financial statements.  Stated another way, CEO agenda business processes have a business architecture that is commonly understood.

Peter Hoyt at the In-Store Marketing Institute at the In-Store Marketing Summit  in the Spring (which was a fabulous conference) stated “he is concerned that our shopper marketing initiatives will become a fad.”  Why would he state that publicly?  We need look no further than the state of shopper marketing.  What is our common definition of Shopper Marketing?  What is our common definition of success metrics?  What is our common understanding of shopper marketing business processes.  What is our shared understanding of the career ladder for our practitioners?  What is the common end-goal of shopper marketing?  How do we draw a direct link between in-store marketing activities and the financial statements of the company?  What is our commonly understood business architecture?

Words are important.  Definitions are critical.

President Bill Clinton once infamously remarked “that depends on what your definition of ‘is’ is”.  In order to have any common ground, we must know what our definition of Shopper Marketing is!  Reveries Magazine conducted a study that identified “Lack of a commonly understood Shopper Marketing definition within your company” as a major issue.  Deloitte Consulting’s seminal study on Shopper Marketing in 2007 and 2008 highlighted the issue.  They identified six different Shopper Marketing definitions.  They then identified a seventh as their creation stating Shopper Marketing is “all marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand equity, engage the shopper (i.e., a consumer in ‘shopping mode’), and lead him/her to make a purchase.”  My cursory review of other sources uncovered a number of others including:

Chris Hoyt, President of Hoyt & Company, defines it as “leveraging shopper insights to create retailer-centric executions that delight shoppers and benefit both brands and retailers.”

Dave Gerba’s definition is “shopper marketing can be in-store marketing, loyalty marketing, or even customer relationship management — basically anything that eschews broadcasting ads to the masses in favor of systems that narrowcast relevant, targeted ideas and messages to the individuals who will value them most, thereby improving the overall shopping ‘experience’”.

Lisa Klauser, VP of Consumer and Customer Solutions at Unilever defines it as “Translating shopper insights into actionable programs or solutions with our retail customers that are going to drive business”.

How can shopper marketing be a CEO agenda item if the professionals in the discipline don’t have a common understanding?

Who is accountable for what business outcomes?

Stephen Covey said “Accountability breeds response-ability.”  We know the outcome marketers strive for is return on marketing investment (ROMI).  Anne Chambers, founder of Capre Group notes “ROMI provides a vehicle for articulating clear definable returns in the marketing discipline.  This financial measurement rigor has sustained the CEO’s investment in marketing as it is directly linked to company growth.”  The question becomes how do you get there?  What comprises the processes and capabilities the Shopper Marketing group is accountable for?  What are the associated sub-processes, tasks and outcomes?  How are the outcomes linked to marketing return on investment?  Covey’s point is that without process accountability, how can senior management know who to turn to in order to improve the process?  Without process definition, how can senior management know what exactly needs to be improved?  Without outcome definition, how can senior management know if the accountable group improved the right process and achieved the desired outcome? 

In order to understand who in the organization is accountable for particular shopper marketing business goals, we have to start with the end in mind.  What is the overarching goal that will be the glue to pull the shopper marketing discipline into a cohesive goal?  The end goal must be to “create an environment to bring retailers and manufacturers together using the shopper as the focal lens”.  If that is an end goal, then strategies, processes and metrics should be defined (or redefined) with that in mind.  It also can connote a process differentiation to the CEO.  If the CMO tells the CEO that the single business process that integrates retailer and manufacturer demand and insight is the shopper marketing business process, we will have successfully positioned the discipline in the CEO’s mind. 

We must also understand where process ownership lies.  Where does shopper marketing end and category management begin?  Where does brand management end and shopper marketing begin?  How does the research function interact and integrate with shopper marketing?  We already know one bad practice.  Chris Hoyt identified that when shopper marketing is integrated with sales the “[g}ap widens between marketing and sales.  This happens because the shopper-marketing function is perceived to be tactical (because it reports to sales).  As a result, marketing tends to default all shopper-related decisions to the Shopper Marketing Department and divorces itself from the process – at the very time that both marketing and sales should be drawing closer”.  He concludes that the sales group is the wrong place for shopper-marketing.  A core requirement of our shopper marketing profession must be a set of best practices that outlines cross-functional process ownership and organizational alignment.

Establishing the right foundation

David Allan Coe said “It is not the beauty of a building you should look at; it’s the construction of the foundation that will stand the test of time.”  How do we establish the right shopper marketing foundation?  We must establish the shopper marketing business architecture.  The Business Architecture Working Group identified these critical business architecture elements:

                Business strategy view:  Captures the tactical and strategic goals that drive an organization (or unit) forward.  These tactical and strategic goals are mapped to metrics that provide ongoing evaluation of how the organization or unit is achieving its goals.  The metrics in turn must be mapped to the financial statements of the company.

                Business capabilities view:  Describes the primary business activities and pieces of an organization that perform those functions.

                Business process view:  Defines the set of strategic, core and support processes that transcend functional and organization boundaries.  The processes also describe which people, resources and controls are involved in the process.

                Business knowledge view:  Establishes shared semantics (e.g. definitions) within an organization and relationship between those semantics.  These semantics form the vocabulary that the organization relies upon to communicate and structure the understanding of the areas they operate within.

                Business organization view:  Captures the relationships among roles, capabilities and business units, the decomposition of those business units into subunits and the internal or external management of those units.

In addition, it is critically important that the interaction between each of these views be defined.  Completely constructed, this forms the foundation of the business architecture for any business process, business function or organization.  It allows the organization to understand goals, assign accountability, define the method of working, articulate success metrics and create measurable shareholder value that is linked to the company’s financial statements.  Lacking this, the discipline can easily spin out of control and drive value out of the enterprise.  The shopper marketing community must form an organization or commission to clearly articulate this to our practitioners.
Let’s get together

Warren Buffet remarked people should “never invest in a business you can’t understand”.  CEOs feel the same way about processes and capabilities.  If they don’t understand it, they won’t invest in it.  Companies like Conagra, Unilever, Coca-Cola, Crayola and Johnson & Johnson are investing heavily in the shopper marketing discipline and shopper marketing has made it onto their CEO’s agendas.  Other companies have taken incremental investments.  Others are still trying to figure out what to do.  This should trouble us.  What company do you know of that is deciding “should we invest in supply chain processes”?

The underlying success requirements are available.  There is a large transfer of knowledge from manufacturer to retailer due to the migration of manufacturing talent to the retail world.  This can only improve the knowledge of how this symbiotic relationship can evolve.  Jesse Spungin, VP of Shopper Marketing at Conagra stated in 2008 PMA Shopper Marketing Study that “the new common ground (for the retailer and manufacturer) is the shopper”.  Case studies are emerging that demonstrate the value of shopper marketing initiatives.  To ensure that Peter Hoyt’s fears are not realized, here are the six items that must be the foundation to “Create a common universally understood definition of shopper marketing.”

1.       Create a common universally understood shopper marketing architecture.

2.       As a subset of item #1, delineation of responsibilities between sales, brand management, category management and research must be clearly articulated.

3.       Establish as a common goal that shopper marketing’s over-arching goal should be to create an environment to bring retailers and manufacturers together using the shopper as the focal lens.

4.       Position Shopper Marketing in the eyes of the CMO and CEO as the single business process that creates an unified perspective of the shopper between retailers and manufacturers

5.       The career ladder for shopper marketing professionals must be created and integrated into corporate Human Resource organizations.

6.       Create a shopper marketing group that is commissioned to articulate items 1 and 2 above (underway through the good auspices of Coca-Cola and the In-Store Marketing Institute).

I challenge C-Level executives, and especially Chief Marketing and Chief Executive Officers to read this article.  Where else in your organization are you going to find a single point of convergence around the shopper that unites retailers and manufacturers?  Anne Chambers notes her firm has found that “the shopper creates a common target across all marketing disciplines from brand through the customer to improve brand equity and sales.  The company has a unified message pre-trip, in-store and consumption across the shopper lifecycle”.   Who in your organization is providing you with this unified view across retailers and manufacturers of what Mr. Walton refers to as the most important person, the customer (shopper)?  There is a reason there is so much energy behind shopper marketing.  Without the shopper, we are irrelevant!  As a community, let’s raise the level of our conversation and engage the corner office.