Bezos, CEO of Amazon, bought Whole Foods his largest acquisition to date. Why? Most likely to add to a huge distribution channel and jump into the grocery sector with both feet. It that is the case, in a short period of time, he will change the face of retail grocery making easier and friendlier to the consumers while lowering costs.
The marketing model for the supermarket sector has remained the same for decades. The margin on food is low. Supermarkets charge consumer good companies for shelf placement and end caps. Near the register, near the deli, eye level, etc. That’s where they make their money. This is why in recent years, the size of the supermarkets has increased. The larger the space the more marketing money they get.
This is also why all the new stores look the same as the old stores. It’s the Olive Garden effect.
What’s wrong with this model? It doesn’t take into account the customer experience and it’s incredibly inefficient. If you’re under some illusion that Bezos isn’t aware of this limitation, you’re vastly underestimating the man who built Amazon.
“Sectors need to rethink how they interact with the consumer. Mobile marketing is only one of the many changes coming. Change now or you can be next Blockbuster.” Stated John Flynn, CEO of Copley Advertising.
What to do? At all costs, you must protect your 15-mile radius, where 90% of your customers live. First, stop mailing coupons and putting them in newspapers. Please. Second, create a geofence around each of your locations AND your competitor’s locations. Tag all smartphones. Put video ads in the tagged phones. “Hi, I’m Sam from Star Market. We have a new Coupon Club! Pay $5 a month and get $10 worth of coupons!” Device IDs will be captured from all devices that saw the ad (impressions). Users that clicked on the ad will have their IDs collected in our retargeting folder. The user will then be taken to a landing page where we place a Facebook pixel that will capture their Facebook ID. They will see the thirty-second commercial. “Hi, Sam again. Join our Coupon Army for $10 a month and we will send $25 worth of coupons each month! In fact, you can indicate which types of products you want and we will make sure that you receive coupons for those products if available!” There is an email capture for additional information, but by this point, we already have the impressions, retargeting and Facebook IDs.
We drive customers to sign-up for the one-month program. The supermarkets charge the consumer good company for the extra coupons, with $5 a month as profit. After one month the shopper must sign up for an additional six months or $60 up front because they are guaranteed $120 worth of coupons. You can now upsell them to the Gold Club, where they receive special offers only for Gold Club members (for only $10 per month extra, which is guaranteed in coupons with a one-year sign-up payment in advance). The Platinium Club is where they will have a chance to win tickets to a Patriots game and a FREE Thanksgiving dinner (for another $10 per month paid in advance). And the Super Platinium level gets all the benefits of the previous package and a chance to go to the Super Bowl and meet Tom Brady!! The price is only an extra $75 per month or $900 up front.
So there you have it. Up the ladder to $75 per month or $900 per customer per year paid up front. Oh by the way since you are giving them in-store coupons the amount they spend in your stores will be much greater. You are creating in-store promotions, engaging the consumer and receiving a tremendous amount of data. All because you used mobile marketing and a $5 coupon.
With the impression folder, you take the IDs and run them through the Facebook converter. The IDs run at a 30% conversion rate. Now you have converted the impression mobile IDs to Facebook IDs. With the Facebook ID’s you can make a look-alike model using 1% of the US population. This should give you about 2 million IDs. When you run a campaign you can drill down to your demographic even further.
Now you have a smart, almost zero cost way to engage your shopper and protect your 15-mile radius. Jeff Bezos may be riding into town, but you will be reading to protect your base.