June 6, 2013
Compete Blog: How Well Do Merchants Understand Consumers’ Digital Paths to Purchase?
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Compete Blog. Compete Inc. is a web analytics company that focuses on understanding how consumers use the internet.
A study from GroupMNext and Compete exploring what role digital media plays in the path to purchase has identified six distinct segments of online consumers.
Ranked by size, the digital shopper segments, as identified by GroupM Next, are:
Basic Digital Consumers: Not highly digital users. They are comfortable with internet shopping and research, but are not mobile or social and have the second-highest likelihood of buying offline.
Retail Scouts: Have short journeys and prefer retail sites to brand sites. They use mobile, but are twice as likely to use it in the home as out. They are comfortable buying online but did not express a preference between online and offline.
Brand Scouts: A spiritual partner to the Retail Scouts except, instead of having a favorite retailer, they have a favorite brand. When asked, 72 percent said they start their journey with a brand in mind.
Digitally Driven Segment: Use every digital tool at their disposal. They use social and mobile more than any other segment, value convenience above all, and do everything in their power to avoid physically going to a store. The Digitally Driven are expected to become the dominant segment of consumers within five years.
Calculated Shoppers: These shoppers seem to know they are going to make a purchase, but they are deciding which brand to choose. They are similar to the Digitally Driven Segment, but have no urgency to their purchase and they’re willing to take the time to get the best deal.
External Shoppers: These are non-mobile shoppers. They want the answers to "Should I buy?," "What do I buy?" and "What brand do I buy?" — all at the same time. They have no urgency to make a purchase and do their research on desktop and laptop computers.
The survey also explored Amazon’s influence on consumers’ digital paths to purchase. Not surprisingly, the e-tail giant was found to exert a significant influence on buying behavior.
- Thirty-seven percent of the time Amazon starts a path that ends somewhere else;
- Thirty-five percent of the time the purchase path ends at Amazon;
- Twenty-two percent of the time the path starts and ends somewhere else, but Amazon is used in the middle;
- Six percent of the time Amazon is the only destination in the path.
What does this all mean for digital marketers?
- Digital consumers can’t all be treated the same. Pathways will change over time and new ones are likely to develop.
- The consumer’s journey itself is the deciding factor in a purchase, as opposed to, for example, the ticket price of the item.
- With the shift to mobile devices and tablets, an emerging power-shopping class is not behaving like anything seen before.
- Purchase pathways differentiate with behavioral factors, not necessarily demographics.
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Recent Discussions
Discussion Questions
Do you agree with the conclusions the study authors drew from their research? How well do merchants understand consumers’ digital paths to purchase? Where do you see the greatest opportunity to use path to purchase data to grow sales and profitability?
Poll
I believe the key conclusion is when the authors talk about the “journey” or customer experience being the key driver of the purchase. Amazon continues to be the leader in improving the on-line experience—finding what you need, peer recommendations, easy checkout, package tracking, etc. I was amazed at the survey findings on Amazon’s influence of online purchases.
More and more consumers will get comfortable with buying without the physical bricks & mortar experience. The e-commerce winners will deliver a superior customer experience. Remember what we said about nobody would buy shoes online…Zappo’s experience proved us wrong.
I found the results of the study and the 6 segments really interesting and useful. I do not agree that demographics do not play a role.
The data related to Amazon and where people start and end their purchase was fascinating and alarming if you are a retailer. In sales, you always want to be the first call from prospects or customers looking for info, products or service. It gives you the first opportunity to make or influence the sale. Amazon has clearly taken that position.
As merchants gain greater experience in the area of digital paths, I can see them modifying their marketing plans dramatically, focusing dollars to the right people with the right tools at the right time. Demographic data will need to be incorporated or I believe a piece of the puzzle will be missing, wasting valuable marketing dollars.
Most retailers have little understanding of digital path behavior beyond the immediate click-through to the site for purchase. The challenge has been the availability of data on customers before they make a purchase. Often customers are perceived to be in a black hole before they suddenly pop up and buy.
However, the increasing sophistication of ad network data is permitting companies to gain a better understanding of customer behavior prior to visiting their site. The challenge is, what to do with that insight. If you cannot figure out how to change the experience for these different segments, then you have insight but no action, which is not helpful in growing a business.
I wish I knew what these consumers are shopping for. I don’t doubt there are paths as described. But I don’t believe they apply equally to all product categories, e.g. automobiles, toys, salad dressing, shirts. Nevertheless, it makes sense for merchants to understand the paths of their prospective buyers. This article makes that need very clear.
The conclusions are correct, but are just a snapshot of today’s path to purchase.
Looking ahead, the two key trends to watch are mobile and the overall transparency of product information. Mobile is becoming the dominant way that most people connect to “online”; in terms of the number of people who have access through a smartphone, the amount of time spent using smartphones and the task/decision-oriented nature of smartphone usage. Combine that with ever-increasing “transparencies” in shopping, such as prices, social posts, product information, etc., we’ll see a very different, more connected shopper (including in-store) in a very short time.
On merchants’ understanding of the digital paths to purchase, it’s true that the pathways will change—again and again. The opportunity for retailers is both efficiently cast a wider net to allow for as many paths as possible and to “skate to where the puck is going to be” and not where it is today (or was yesterday). That’s going to take some changes in how the problem is viewed and the organizational structure required to solve the problem.
Although it is helpful to segment, I believe that what is really at work is a continuum approach, all in-store on one side and all mobile on the other, where it will be very difficult to create hard classifications, regardless of number 3, 6, or 10. As more consumers embrace technology they are replacing some classic in-store activities, but also augmenting those with activities that were impossible only a few short years ago.
It is likely that different markets, demographics, segments, and price points will affect where shoppers are on the continuum and each retailer will need to consider this kind of continuum with their target markets and value proposition.
Always good to find a point in time status. Todd certainly has nailed the crucial point. It is also very true that this profile is very different for books, electronics and music than it is for groceries.
As this study only looked at consumer electronics and only included consumers that utilized digital media in at least one step, the results may not be applicable to softlines, food, etc. But the study results do show that consumers are utilizing digital product education as they move towards a purchase decision and to some extent this is happening across product classifications.
The paths to purchase are evolving and will continue to evolve for the foreseeable future as consumer technology changes and as retailers learn to bob and weave in this dynamic shopping environment. All retailers (pure plays, brick & mortar, blends) need to find ways to influence consumers’ path to purchase by engaging their shoppers early, often, and in ways that deliver value to their customers. Digital isn’t going away which means that retailers must find ways to utilize digital/mobile to improve the shopping experience no matter where the shopping experience occurs.
The study clearly shows that there are many individual digital paths taken and they can change based on the particular product or service ‘destination’! In general, merchants do not understand this digital reality much less understand the nature of paths taken by their core customers. Merchants are still thinking serially in that they recognize mobile, social media, in-store, word-of-mouth, broadcast as necessary paths to address, but do not address the reality that in the digitally empowered shopper landscape, these journeys are happening as parallel processes.
Brands need to grasp the core requirement that ALL of their brand marketing collateral has to be first be contained and managed in a central brand library. From that point, ALL that collateral must be seamlessly and automatically be technically optimized for ALL available shopper channels—mobile, social media, web, broadcast, print, etc., and then published to all relevant channels to provide a personal and consistent brand experience and message. Additionally, ALL these delivers need to be measured to ensure compliance and efficacy. This workflow will save millions of marketing dollars in production and handling costs alone! More importantly the shopper and the brand will be able to begin the all important ‘customer-for-life’ dialog.
The research is useful mostly through its illustration of the complexity of understanding the digital path to purchase.
I found it most interesting that neither demographics nor price were decisive factors in arriving at a purchase. We have seen the influence of Millennials on their neighboring generations, so the demographic comment makes intuitive sense.
The fact that the choice of “consumer journey” is the more influential factor than price is a head scratcher and deserves more study. Without a doubt, we can probably all agree that “an emerging power-shopping class is not behaving like anything seen before.”
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I believe the key conclusion is when the authors talk about the “journey” or customer experience being the key driver of the purchase. Amazon continues to be the leader in improving the on-line experience—finding what you need, peer recommendations, easy checkout, package tracking, etc. I was amazed at the survey findings on Amazon’s influence of online purchases.
More and more consumers will get comfortable with buying without the physical bricks & mortar experience. The e-commerce winners will deliver a superior customer experience. Remember what we said about nobody would buy shoes online…Zappo’s experience proved us wrong.
I found the results of the study and the 6 segments really interesting and useful. I do not agree that demographics do not play a role.
The data related to Amazon and where people start and end their purchase was fascinating and alarming if you are a retailer. In sales, you always want to be the first call from prospects or customers looking for info, products or service. It gives you the first opportunity to make or influence the sale. Amazon has clearly taken that position.
As merchants gain greater experience in the area of digital paths, I can see them modifying their marketing plans dramatically, focusing dollars to the right people with the right tools at the right time. Demographic data will need to be incorporated or I believe a piece of the puzzle will be missing, wasting valuable marketing dollars.
Most retailers have little understanding of digital path behavior beyond the immediate click-through to the site for purchase. The challenge has been the availability of data on customers before they make a purchase. Often customers are perceived to be in a black hole before they suddenly pop up and buy.
However, the increasing sophistication of ad network data is permitting companies to gain a better understanding of customer behavior prior to visiting their site. The challenge is, what to do with that insight. If you cannot figure out how to change the experience for these different segments, then you have insight but no action, which is not helpful in growing a business.
I wish I knew what these consumers are shopping for. I don’t doubt there are paths as described. But I don’t believe they apply equally to all product categories, e.g. automobiles, toys, salad dressing, shirts. Nevertheless, it makes sense for merchants to understand the paths of their prospective buyers. This article makes that need very clear.
The conclusions are correct, but are just a snapshot of today’s path to purchase.
Looking ahead, the two key trends to watch are mobile and the overall transparency of product information. Mobile is becoming the dominant way that most people connect to “online”; in terms of the number of people who have access through a smartphone, the amount of time spent using smartphones and the task/decision-oriented nature of smartphone usage. Combine that with ever-increasing “transparencies” in shopping, such as prices, social posts, product information, etc., we’ll see a very different, more connected shopper (including in-store) in a very short time.
On merchants’ understanding of the digital paths to purchase, it’s true that the pathways will change—again and again. The opportunity for retailers is both efficiently cast a wider net to allow for as many paths as possible and to “skate to where the puck is going to be” and not where it is today (or was yesterday). That’s going to take some changes in how the problem is viewed and the organizational structure required to solve the problem.
Although it is helpful to segment, I believe that what is really at work is a continuum approach, all in-store on one side and all mobile on the other, where it will be very difficult to create hard classifications, regardless of number 3, 6, or 10. As more consumers embrace technology they are replacing some classic in-store activities, but also augmenting those with activities that were impossible only a few short years ago.
It is likely that different markets, demographics, segments, and price points will affect where shoppers are on the continuum and each retailer will need to consider this kind of continuum with their target markets and value proposition.
Always good to find a point in time status. Todd certainly has nailed the crucial point. It is also very true that this profile is very different for books, electronics and music than it is for groceries.
As this study only looked at consumer electronics and only included consumers that utilized digital media in at least one step, the results may not be applicable to softlines, food, etc. But the study results do show that consumers are utilizing digital product education as they move towards a purchase decision and to some extent this is happening across product classifications.
The paths to purchase are evolving and will continue to evolve for the foreseeable future as consumer technology changes and as retailers learn to bob and weave in this dynamic shopping environment. All retailers (pure plays, brick & mortar, blends) need to find ways to influence consumers’ path to purchase by engaging their shoppers early, often, and in ways that deliver value to their customers. Digital isn’t going away which means that retailers must find ways to utilize digital/mobile to improve the shopping experience no matter where the shopping experience occurs.
The study clearly shows that there are many individual digital paths taken and they can change based on the particular product or service ‘destination’! In general, merchants do not understand this digital reality much less understand the nature of paths taken by their core customers. Merchants are still thinking serially in that they recognize mobile, social media, in-store, word-of-mouth, broadcast as necessary paths to address, but do not address the reality that in the digitally empowered shopper landscape, these journeys are happening as parallel processes.
Brands need to grasp the core requirement that ALL of their brand marketing collateral has to be first be contained and managed in a central brand library. From that point, ALL that collateral must be seamlessly and automatically be technically optimized for ALL available shopper channels—mobile, social media, web, broadcast, print, etc., and then published to all relevant channels to provide a personal and consistent brand experience and message. Additionally, ALL these delivers need to be measured to ensure compliance and efficacy. This workflow will save millions of marketing dollars in production and handling costs alone! More importantly the shopper and the brand will be able to begin the all important ‘customer-for-life’ dialog.
The research is useful mostly through its illustration of the complexity of understanding the digital path to purchase.
I found it most interesting that neither demographics nor price were decisive factors in arriving at a purchase. We have seen the influence of Millennials on their neighboring generations, so the demographic comment makes intuitive sense.
The fact that the choice of “consumer journey” is the more influential factor than price is a head scratcher and deserves more study. Without a doubt, we can probably all agree that “an emerging power-shopping class is not behaving like anything seen before.”