76%. As in “76% of purchase decisions are made in-store”. We’ve all heard it a thousand times, I’m sure. At first glance it might feel almost comforting, its been around for so long. And we all know that shoppers do make decisions in-store, and we are all busy spending money to influence these shoppers with displays, promotions and other activities. How dangerous could this number possibly be? Well that depends on two questions – what does it actually mean, and if it applies to your situation. Putting aside the question of what ‘purchase decision’ actually means – let’s focus on the latter problem – the assumption that the number applies equally to all situations and purchase decisions.
Why is ‘76% of purchase decisions made in-store’ dangerous?
The quote is dangerous because it is this number that legitimizes (for some) the extravagance of in-store spending. In-store marketing budgets continue to rise both in real terms and as a percentage of total spend, and this is partially legitimized by the belief that this is investment. We’re spending money in-store to influence shoppers and that’s OK, because over three quarters of them can be influenced there, because that is where they make their purchase decisions.
This perhaps is why this number is so pervasive and sticky. People want to believe it.
Marketers faced with fragmented media, finding it harder to connect with a mass market, love the idea of being able to grab that mass market at one spot. Businesses faced with increasingly demanding retailers, feel legitimized. “This isn’t capitulation, this is smart marketing! This is investment”.
And so it would be, if the statistic were true.
What if the number of purchase decisions made in-store, for your business, is much much less?
We’ve studied lots of categories and very few get anywhere close to a 76% in-store decision rate. In one category (kid’s milk), the in-store decision rate was below 5%.
But I’d rather not dispute this number, because actually that misses the main point – the main danger if you will. Even if the number were true, it wouldn’t be true for your brand, your category, all of the time. Making decisions based on an average statistic (whether or not it is true) is dangerous. Most situations are not ‘average’. The challenge of marketing, and of shopper marketing, is to be far more specific.
In-store purchase decisions – rates vary by category
As I’ve stated above, we’ve seen huge variance from category to category. Some categories are clearly more impulsive in nature, some more planned. If you work in snacks, then you may find many more shoppers making decisions in aisles, than if you market toothpaste, perhaps.
In-store purchase decisions – rates vary by channel
Whatever the average for your category, the number will vary wildly by channel. We’ve worked in categories where one channel represented a minority of purchases but a majority of in-store decisions: people actually went to this channel when they went sure what to buy. This often occurs where in-store personnel are important to the decision making process (think pharmacy or drugstore). The biggest influence on this though is…
In-store purchase decisions – rates vary by shopper mission
We’re just concluding a project on a beverage category, where we see massive differences in the in-store purchase decision rates by mission. Even in the same channel, with shoppers of similar demographics, who even buy the same thing. For some missions, the in-store decision rate is over 60%. For others below 10%. We all know from our own experiences as shoppers that there are times when we are highly planned, and times when we are very much in browsing mode. Different missions equals different shopping behavior, which means that the number of decisions made in-store varies.
In-store purchase decisions – rates vary by shopper
Most important is to remember that as marketers we’re not interested in ‘the average shopper’. We’re interested in a specific target shopper, and therefore we must strive to understand how they make decisions, where they make decisions, and how those decisions are influenced. The 76% number is simply an irrelevance. All that matters is how (and where) our target shopper makes choices.
How attractive is the in-store purchase decision maker?
And a last thought – who are these shoppers who switch in-store? In many categories, they are what we call deal seekers: they come to a store with an open mind, and will buy whatever is on deal. They may buy your brand this week, but they’ll switch next time as soon as your competitor is on deal. They may be making decisions in-store, but do we want to spend our marketing money against them?
I’m not trying to pick a fight with POPAI (the organization who created this quote). My problem today doesn’t lie with their report (though I do have my reservations about how they represent their data!). My problem is with the pervasiveness of it: how many ‘experts’ swallow it, and how that leads many marketers astray.
Whether you are a brand manager, shopper marketer, category manager or key account manager – the number is almost certainly wrong for you. Before you spend another dime, go find out where decisions are made by the shoppers you are interested in. If you are looking to better understand shoppers, check out our free e-book – “The Introductory Guide to Conducting Great Shopper Research”