Brad Gleeson, TargetPath
Digital Signage magazine often explores the issue of metrics– usually with a focus on the TV or web-style viewer metrics for in-store screens. But when you go to sell a retail-based digital signage system, you need to qualify your customer and direct the discussion. A lot of the focus on metrics for in-store screens really is about national rollouts– rollouts that involve multiple store locations across many states and many locations. But if your digital signage system is more locally-based, being called on the carpet by the customer to prove a positive, measurable ROI on the basis of “metrics” may difficult to impossible. Smaller scale digital signage projects often need to be sold and justified on the basis of a different set of measurements, some of which that can be tough to measure. Know how to manage the discussion when the customer starts talking “metrics” and ROI to ensure realistic expectations and a positive outcome for the project.
Pre-sale Customer Qualification – The WHY question
The most valuable question you can ask your clients in the pre-sale interview is “Why?” Why do they think they want to consider digital signage for their retail business? Understanding their primary motivation for the signage may seem obvious, but often it is overlooked in the enthusiasm of the sale. Some sales people are afraid to pursue this question because they think it might make the customer question whether they know what they’re doing, or that it might lead to doubts by the customer possibly costing them the sale.
I believe the exact opposite is true. There are lots of reasons for a retailer to consider digital signage – brand perception, product promotion, customer information, wait-time management, etc. How can you possibly deliver a system that hits all the right buttons if you don’t know what they are? Frankly, it’s much easier to impress the customer and ensure you have plenty of ways for them to rationalize the investment if you give them more reasons and ways to justify it.
Show me the ROI/ROO
Clearly there is no “right” answer to the question of why a particular retailer is considering digital signage for their business, but some are easier to measure and justify than others. The first thing you need to do however is to help the retailer generate a list of ALL the reasons and objectives they have for considering digital signage and how they would know if these objectives are being achieved in their store.
If the customer is totally numbers-driven and wants clear, measurable financial ROI to justify their signage investment, you are stuck with having to show direct sales lift attributed to the signage, right? Wrong. There are many other measures that the store could use to generate measurable positive ROI.
The key issues on the minds of all small-to-midsize specialty retailers are pretty similar:
• Foot traffic – attract more shoppers into the store each day and sales will rise
• Basket size – entice to customer to spend $30 per transaction rather than $25
• Merchandise mix – get them to purchase the items you need to sell, either because you have too many or they deliver the best margin
• Frequency – create an environment where the want to come back early and often (and bring their friends and family)
• Foot traffic + basket size + margin x frequency = profitable revenue (AKA “the holy grail”)
These are very real objectives of most customers and so you need to deal with these when they arise. They are clearly measurable and ultimately the digital signage system SHOULD deliver positive influence leading to increased sales and revenues, but how easy is it to create that DIRECT linkage between the digital signage and that increased revenue objective? It’s hard.
Yes, you could convince the retailer to link the signage to the POS system and track item sales against promotional campaigns to measure direct sales lift and brand halo effect. If your client wants to do this for their four-location hardware store chain, be careful. The number of transactions is likely to be too small and spread out over time to draw a direct correlation and the cost to develop and maintain this integration could significantly impact project budgets.
You can do same-store or multi-store A-B tests where you deploy signage in some stores but not others, or measure results before and after the signage install. Seems logical enough, but it is difficult to control for all the influences that can affect sales at one location or time period versus another. Not to mention the logistical complexity. For large store deployments, doing this sort of pilot testing is nearly always a requirement. For small retail projects, it is fraught with risk and often leads to false negative or false positive outcomes, just due to insufficient data and poor controls.
Return on Objectives
So how do we ensure that we can justify smaller retail signage projects and provide measureable evidence of the effect of the project, while managing customer expectations about direct revenue benefits? The best approach would be to ensure the retailer recognizes multiple complementary benefits to the business and their customers and to cost-justify the project on the basis of “Return • On Objectives” as well as Return On Investment. Retailer objectives such as:
• Improved merchandising and more effective promotions – signage can help connect the customer to the exact products being promoted through other promotional media – inserts, ads, emails, commercials – to ensure they actually find and purchase the items the retailer spent money on to get them into the store. These promos tend to be time based and can sometimes result in additional marketing support from the retailer’s vendor brands in order to be featured on the store signage.
• Improved personnel utilization – By using digital signage for way-finding and to answer common customer questions, you can free up sales people and cashiers to more productively engage with customers improving their ability to deliver direct customer service and sales. You may or may not be able to prove actual reduced personnel costs, but you should be able to show increased staff efficiency and customer satisfaction.
• Increased customer engagement – If the customer has a loyalty or rewards program, the digital signage network can be an extremely effective way to drive membership in the program as well as promote benefits and redemptions. This increased membership can easily be translated into increment revenue as a function of lifetime value of loyal customers.
• Enhanced Customer experience and preference – By integrating the digital signage content with other branding elements and customer amenities or benefits the retailer offers – making it an easier and more enjoyable place for customers to shop for the products they sell – customers are likely to spend more time and return more frequently.