Insight selling: How retailers sell to us by stealth
- 3 March 2013
- From the section Business
Jordan Mittelman is obsessed with cycling - a passion he's harnessed to launch an award-winning business in the heart of Washington DC.
The US capital already has a large number of bike shops, and Mr Mittelman knew his High Street store, Bicycle Space, could only succeed by offering customers more than competitive prices and good service.
"People can find all the products we sell online, and are often so well-read and knowledgeable. They've looked up every detail and come in knowing so much," he says.
"To sell to those people you have to appeal to something greater - we're selling a lifestyle and an experience."
Marketers call this insight selling.
"It's learning about the consumer in order to offer the product in a new way that doesn't rely on hard sell," explains Patrick Spenner, managing director of CEB, a global business advisory company that has its headquarters in Washington DC.
"For example, I'm a cyclist. I cycle to work regularly and I struggle with finding safe paths. Wouldn't it be great if my local bike shop could use digital media to connect me with other consumers to share information about safer routes?
"That's bringing 'insight' to me about something broader than just my bike. And it creates an attachment to the business that enabled me to gain that insight."
Mr Mittelman knows his customers enjoy the sense of community he and his staff help to create by organising bike rides and group maintenance workshops.
"People want to be a part of something and come to a place where they'll be taken care of. We're really a social gathering spot and an essential place to learn about bikes, use them and have a good time," he says.
Garry Cha takes a similar approach to market his grocery chain, Yes! Organic Market, taking time to learn about his customers and understand their lifestyles.
Most people who come through his doors are well-educated and health conscious. They want access to organic produce in a retail space that has the convenience of a corner shop.
Mr Cha opened his first store in 1989 and now operates seven across Washington DC with a $30m (£20m) turnover. But while his products have remained broadly the same, his advertising strategy has changed dramatically.
"Until about two years ago we put inserts into the Washington Post newspaper offering monthly savings by the truck loads. But we weren't sure we were getting good results - so we stopped, and now spend the same amount of money on social media," he says.
That enables him to reach customers directly and adapt quickly to changing trends. He also invests in sales technology that allows him to monitor what customers are buying.
And rather than promote individual products, the company's website takes an elliptical approach, offering information about health issues and special diets that link to items available in the store.
By one estimate, 57% of today's consumers have already made up their mind about what they want to buy before entering a store or engaging with a sales team. And the way they obtain their information has blurred the distinction between marketing and advertising.
Marketers say most consumers are more likely to seek out online reviews or gather expert advice from independent sources rather than listen to a company message.
As a result, the world's multinational companies are joining small businesses in using insight selling.
And where advertising campaigns used to be a single, high-profile event, they now use insight selling to try to establish a continual presence in the consumer's consciousness - which is becoming easier thanks to mobile technology.
In 2010 Volkswagen became the first carmaker to launch a new car in the US entirely on a mobile platform. Research revealed that the target customers - young men - were also avid iPhone users who liked playing games. As a result, Washington-based advertising agency AKQA was commissioned to develop an app for a game featuring the new Golf GTI.
Within five days Real Racing GTI had been downloaded more than 800,000 times and became the number one free app on Apple's iTunes App Store in 36 countries. Downloads have since exceeded 3.7 million.
"It was a minimal investment with a huge impact," says Erik Rogstad, managing director of AKQA.
"It's the ultimate economy - if you have a great viable product. If people like it, it will be found and shared and talked about and the more people will download it. So there's never been a better time from a digital perspective to get new and engaging content out there - especially if you're a small player."
Yet other experts sound a note of caution regarding the benefits of insight selling via the internet and smartphones, especially for small firms.
"Just because it's digital doesn't mean it always works," says Russell Glass, chief executive of San Francisco-based marketing company Bizo.
"It's based on the audience you're trying to reach and the product or service you're delivering.
"If your audience is not digital, if they're not consuming content online, then no, it's not important to be digital."
He says many small businesses could do just as well by putting up a sign on the High Street.
Mr Glass also thinks it will take another year before businesses can take full advantage of the benefits of mobile technology because different systems aren't yet fully compatible.
"The opportunity is out there," he says. "But the delivery mechanism and the format isn't - and that's what needs to shift to really make mobile important. For instance viewing a banner ad on a mobile device today is really not a very good experience. You're squinting and your fat thumb is clicking on an ad by mistake.
"But as we start to see more native formats, paid content that is within non-paid content, and people start to figure out how to more elegantly target adds on mobile devices in a more effective way, that is when I think the year of mobile will finally be here. That to me is 2014."