Customer traffic – both physical and digital – fuels the retail engine. In the post-pandemic world, the priority for retailers is to turn that traffic into sales. Store revenues fell by almost 25% among those selling non-food products. Now, as we look to a post-pandemic future with changing customer requirements, retailers need to consider how to effectively bring shoppers back to stores, maintain online traffic, and unleash the demand that was held back during pandemic.

Marketing Mix Modelling – new perspectives in retail

A study conducted by Google examined for 5 years how advertisers can most effectively drive traffic to their online and offline properties. It has been found that the key factor driving traffic to online stores is very different from the one driving traffic to physical stores:

  • Online: Marketing is the key factor driving traffic to online stores.
  • Offline: The physical location of the store plays a key role in terms of in-store traffic.

This study considered 20 top retailers in Europe, the Middle East and Africa, operating in various categories, including electronics, clothing and food.

The psychology leading online retail

Customers say that a crucial issue when deciding whether to buy online or in-store is convenience.

The meaning of convenience is different depending on the individual and situation. In the physical world, convenience could mean a location in a nearby store. In the digital world, convenience could mean that a consumer can easily remember a brand that will satisfy their needs and can navigate the site smoothly.

Those who choose digital channels say that it is easier to find products online and enjoy the convenience of home delivery. Unfortunately, consumers have limited mental bandwidth to process seemingly endless online options, which means they tend to stick to buying from just a few top retailers. Consumers typically use only three online stores, despite being aware of 13.

Marketing for the mental space: How to stick in customers’ mind

Online retailers keep the leading places in the market using advertising in order to be noticed and within reach.

The “Marketing Mix Modelling” study shows the importance of marketing investments for online success among omnichannel retailers. It has been found that site traffic and sales depend 1,5-3,5 times more on marketing investments than on their physical locations.

For example, when examining a well-known retailer in the electronics sector, it was found that advertising generated 60% of online traffic and 27% of in-store traffic. Other retailers are in a similar situation. On average, 51% of online traffic and digital sales are driven by marketing investments.

A key aspect of driving traffic to your website is being consistent in terms of advertising. The average consumer can easily see thousands of ads in one day; one sponsored ad may not be enough. However, a constant presence can keep the brand in the mind of the consumer.

Moreover, ads placed at the right time, when a customer is considering a purchase, are crucial. Recent research conducted by Google shows that the mere presence in the attention of the consumer who is about to make a purchase may convince between 18% and 44% of consumers to switch from the chosen brand to the recently viewed one. This is when automated advertising solutions are especially valuable, by delivering the right ad to the right person at the right time.

Advertising does not have to be exclusively online to generate digital sales; offline media also generates digital traffic, and online ads can draw attention to the physical store. However, online channels rely more on advertising to drive traffic than physical stores.

The psychology driving traffic in the physical store

As we know, comfort is crucial in retail. In the post-pandemic future, with customers returning to stores, retailers will need convenient locations to have in-store traffic. Location is key. However, research shows that marketing may continue to play an important role in attracting people to these stores.

Marketing to generate traffic in physical stores

Traditionally, catalogues and leaflets are used to encourage local traffic. Although they can be effective, research shows that these options offer a lower ROI compared to digital alternatives.

Following the studies, it was noticed that “Search engine marketing” is very effective for increasing traffic in the store, along with social. At least 50% of the revenue generated from online and social media searches is recorded in the store. Online search and social marketing can attract customers from specific neighbourhoods and regions. In addition, both channels can show consumers personalized results, based on their personal interests and what they are looking for.

Research conducted on tens of retailers found that they invest an average of 14% of marketing expenses in paid search, which brings a return of 24% of total average revenue from media. This shows the effectiveness of this way of advertising and highlights the fact that many businesses may not invest in this area.

A note for small businesses: search engines have been shown to bring 17% more traffic to small and medium-sized retailers than larger competitors. In fact, about 4 out of 10 visits to small and medium retailers can be attributed to online search.

Building a traffic generation strategy

There is no magic wand to drive traffic to the online and physical store. Every retailer is different and every situation is unique. However, this research offers some principles that can guide us in a post-pandemic world.

  1. Looking at advertising channels in an integrated way: offline media brings digital traffic and online media brings traffic to the physical store;
  2. Investing in marketing consistently, so that you stay in the mind of the consumer. Brands should consider doubling their advertising to guarantee a steady flow of online traffic;
  3. Using automated solutions to reach your target audience;
  4. Rethinking old advertising methods: research has shown that leaflets and brochures offer low ROI, while digital channels, such as search and social marketing, provide an effective way to get consumer attention and drive in-store traffic.

The pandemic is not over yet but there is a light at the end of the tunnel. The so-called “new normal” will bring many changes, including new consumer preferences, new shopping habits and new opportunities for retailers to advertise themselves and attract buyers. Now may be the time to rethink and refine our approach to ensure we generate effective traffic – both online and offline.

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