Effective use of store sampling turned KIND from an underfunded startup to a multibillion-dollar empire, helped sell Topo Chico to Coca-Cola, and elevated Costco to the top of sales per square foot among all other retailers. These are just a few examples. When you consider the spectacular financial impact of in-store demo marketing on the business success of product manufacturers and retailers, it is hard to understand why more companies do not take advantage of this strategy.
More companies do not use store sampling, and other experiential in-store marketing methods, because this strategy is quite difficult to execute effectively, which may sound counter-intuitive. The apparent simplicity of an actual in-store interaction between a brand ambassador and a shopper at a store conceals the logistical challenges of herding multiple "cats" to deliver this interaction in such a way that the desired financial results are realized.
You might be surprised to learn that these desired financial results are rarely articulated clearly or measured correctly. Too often, CPG brands fund in store demonstrations of their products to:
Communicating your goals in such terms to middle-level marketing managers or outsourcing partners is an invitation to waste money. If there are any realized business benefits, they are more like gambling gains than the result of a well-executed business strategy.
If the in-store promotion events do not extend your existing customers' lifetime value (LTV) by X%, why do you want to fund them?
If the store sampling of your products does not convert shoppers into paying customers at a lower cost than your digital marketing cost of customer acquisition (CAC), why not use the money there?
On the other hand, why waste money on digital marketing if your experiential marketing delivers new customers at half the cost?
Experiential marketing is very effective because it helps potential customers experience merchandise before buying it. So, a good experience takes away or at least reduces the doubt that keeps many people from trying new products. The critical keys to creating a good experience are:
Some brands fund passive sampling events, expecting the benefits of a proper product demonstration. These events are a decidedly poor choice that does not qualify as experiential marketing, as products without human engagement do not generate an experience by themselves. The idea that there is no such thing as bad publicity does not translate well into experiential marketing, as there is definitely such a thing as a bad experience that can repel potential customers and create a negative word-of-mouth marketing impact.
Most retailers are even worse at experiential marketing than CPG brands; many know that store demos increase their sales without costing them much but are "too busy" to cooperate with the vendors, ready to invest in the retailer's success. Most independent brick-and-mortar retailers have teams of marketing managers responsible for print, broadcast, and community advertising, but only a few employ a demo coordinator to facilitate vendor-sponsored events. It would be interesting to learn how they measure the direct impact of this advertising on store traffic, average sales per visit, or sales per square foot of real store space.
The impact of in store experiential marketing events on retail KPIs is relatively easy to measure. For example:
If the retailer has three to five CPG brands using their trained brand ambassadors to promote their products for at least four hours each during this day, you will detect at least a 5% increase in average sales per receipt. This increase translates into a sizable boost in revenue that day. All that is left to do is divide this revenue increase by the cost the retailer had to incur for hosting these events to compute the return on their investment. Since the vendors pay for the cost of samples, the wages of brand ambassadors, and all the other expenses for shopper engagement marketing, retailers are left with an astronomical rate of ROI. The only cost a retailer pays out is for a few hours of store personnel to coordinate these events, i.e., ensuring adequate inventory of the promoted products is on hand to meet increased demand. That coordination cost can be easily slashed by 90% using Demo Wizard's retail marketing solution.
Not every consumer product is best suited for retail promotion or even being sold in a physical store. The low-priced products sold for single-time consumption are not economically fitting for in-store demo marketing. Even if the total cost of production is higher than the sales made during the event, the value of future purchases by the new customer gives the manufacturer a good return on this marketing investment.
While there may be logic for a CPG brand or FMCG vendor to select a better marketing strategy based on the specifics of their merchandise, there is no rational reason for the retailer to ignore the brand's funding to promote the retailer's fiscal gains.
Customer engagement on the sales floor by a human, a live brand ambassador, is a physical retail store's best competitive weapon against e-commerce retailers.