Dinner-Table Conversation: Grocery customers are talking–but not about what you’d expect

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For evidence of a powerful but overlooked source of opportunity in retail marketing, let’s eavesdrop on a bit of word-of-mouth conversation at a popular social-networking web site. “I don’t shop alone,” notes a forum post. “I go with a friend (no kids or hubby). We each make out our own lists but shop together. We can bounce suggestions off of each other. We can stop each other when the other person is really not making a good deal.”

What’s your guess as to which product category the poster is referring? And by extension, in which retail category customers most often engage in conversations with friends and family? Beauty and makeup? Products for the kids? Cool electronic gadgets?

The answer may surprise you: The Food and Grocery category is the number-one topic of retail Word-of-Mouth (WOM) conversations—as the above quote from the web site CouponMom.com can attest. Surprised? So were we. But COLLOQUY’s recent Word-of-Mouth (WOM) research, as published in our recent white paper The New Champion Customers revealed the number of surprising ways that retail customers are talking to friends and families about the Grocery category.

The insights we uncovered have interesting implications for grocers. Have you given any thought to the design and execution of your WOM cultivation strategy? Have you strategized the role your existing rewards program can play in ensuring those conversations are positive? From what our surveyed consumers told us, maybe it’s time you did. To help guide you through the strategic implications, we decided to dig a little deeper into the category-level data on grocery shoppers to reveal how, when and where they engage in WOM activity about their favorite grocery stores and brands.

COLLOQUY’s WOM research explored the intersection of consumers who participate in reward programs and their word-of-mouth activity. The survey of 3,610 U.S. consumers unearthed self-reported WOM patterns in seven distinct product/service sectors: Automobile, Beauty, Child Care, Clothing/Apparel, Electronics, Grocery/Food, and Pharma/Health Care. For purposes of this article, we’re looking at the behavior of what COLLOQUY calls WOM Champions—those consumers who have expressed both a willingness and a proclivity to engage in WOM conversations about their favorite products and brands. For a complete overview of the definitions and methodology used in our survey, please download our free New Champion Customers white paper.

In our research, we found that reported importance of conversations by WOM Champions with friends and family about Grocery and Food products was surprisingly strong—a full 58 percent labeled the category conversations “Very Important.” The two most important topics of conversation—Health/Pharma and Grocery (tied with Electronics) represent the weight that purchasing decisions in high-frequency retail categories hold with shoppers. The very nature of the category, in which we shop multiple times per month, makes these conversations extremely important to consumers.

What’s more, Champions say they’re talking more often about products and brands in this sector—5.2 conversations within the last month. The next most frequent category, Electronics, trailed at 4.5 coversations per month. In most cases, Champion consumers are having 38 percent more conversations about Grocery-related topics than about the other sectors in our study.

And here’s another surprising tidbit: Contrary to popular belief, Champions consider WOM input on everyday items more important than they do in high-involvement categories such as Child Care products, Apparel or Beauty products. When households with children were isolated, the gap between Child Care category and Grocery was less dramatic, but not by much. Clearly, purchase/visit frequency impacts the role of WOM conversations in this category.

So, are these conversations nothing more than kaffeeklatch recipe-swapping or idle chitchat about favorite meals over an after-dinner dessert? If consumer likelihood to recommend a product/service in the Grocery category is any indication, then they place primary importance on these conversations.

Customers who self-identify as promoters of Grocery products they like are 23 percent more likely to share their finds within their social circle than are promoters in the next-closest category—Electronics. And the percentage of positive word-of-mouth within the Grocery sector is astounding: 80 percent of Food/Grocery customers are WOM promoters versus the 3 percent who self-identify as detractors (6 or less on a 10-point scale). The 77 percentage-point differential eclipses the 53 percentage-point differential of the Electronics sector by a healthy margin.

While it’s clear that Web 2.0 and social networking platforms are increasingly important to WOM Champions, our research found that most Grocery/Food conversations still occur in “old school” environments such as in person (82%), and by landline (43%), cell phone (34%) and email (33%). But they also take place via a variety of “new school” platforms, including instant messaging (18%), product review sites (16%) and social-networking sites (11%). In each channel, conversations occur at rates that outpace Beauty sector rates, which most closely approach Food/Grocery channel numbers (63% in person and 33% by landline, as examples).

When we factor Grocery loyalty programs into the equation, however, all these positive numbers lead to a puzzling disconnect. We would expect that, given the intensity of Food/Grocery WOM conversations in general, loyalty program members would exhibit similar intensity dominance over other categories. Unfortunately, as Exhibit 4 reveals, the opposite is true. The percentage of Grocery club card and rewards program Champions represent 55.7 percent of total membership, dead last among the other reward-program categories both inside and outside Retail. To put it in grocery-stocking lingo, Champion customers view grocer loyalty programs as being buried on the bottom shelf.

Perhaps because of the stubborn reliance on two-tiered pricing programs, U.S. consumers in general, and WOM Champions in particular, are feeling little to no push from Grocers to engage in deeper relationships with their brands. So, while the Grocery category is a hot topic for WOM discussions, consumers are talking to each other while shutting the Grocers out of the conversation.

Since our research shows that WOM activity occurs in the Grocery category organically. with very little industry encouragement, imagine the potential impact of even a little concerted effort and attention by marketers. Both retailers and CPG manufacturers should consider how to leverage WOM activity to deepen customer bonds. With the right loyalty program design, grocers have a great opportunity to inspire positive WOM among current program members and help them feel more connected to the brand. Here are three ways for grocers to join in the dinner conversation.

1. Fold WOM into your existing marketing activities. WOM efforts needn’t be baked from scratch. For example, with some personalization, you can convert program member mailings into pass-along vehicles. When sending coupons targeted to the member, include extras to “share with friends.” Bar-code the coupons to refer back to the referrer’s membership number. When a different customer redeems the coupon, apply a savings credit or a points bonus to the original member’s account. This technique can be leveraged in mailings sponsored by your CPG partners. Test and track to find the most efficient WOM vehicles in your current tool kit.
2. Season your marketing channels to encourage sharing. Do your channels capitalize on the importance customers attach to WOM in this category? For example, many grocer web sites include recipes, menu suggestions, healthy living ideas, and expert columns—but many of these offerings are just flat brochure-ware. Create a platform for WOM dialogue by allowing customers to rate and review recipes and tips instead of just viewing and printing them. Allow them to post their own content, create forums for questions and solutions, and listen and respond online and in-store with solutions. Allow them to post content to their Facebook profiles or send a link through their Twitter feed. Such support will make grocers partners in and facilitators of WOM conversations, instead of just an afterthought.
3. Dine with your best customers. Encourage “dinner conversation” among your most avid supporters.Your rewards program is an underleveraged tool for systematically cultivating word-of-mouth. Combine behavioral and attitudinal measurements of program members to identify the existing Champions in your customer database, and then incent them to engage in facilitated WOM activity. Reward your champions for trying new products early, passing along offers to their networks, and encouraging their friends and family to join your reward program.

In each case, the key is in the passalong offers—coupons, new product information, product recommendations, recipes that leverage product-specificity, and exclusive, targeted coupon offers based on shopper data analysis. By encouraging WOM activity among Champion customers, the Grocery industry can generate new levels of engagement with reward program members, and in doing so move both WOM marketing and reward program initiatives off the bottom shelf.

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