A change in paradigms
Shopping malls have traditionally had a hard time measuring the effects of digital marketing. That's why most of the marketing budget has been spent on awareness medias with high reach, that unfortunately is also impossible to measure.
Why shopping malls spend their budget inefficiently
Today most shopping malls spend the majority of their marketing budget on:
- local TV commercials
- local radio, bus commercials and
- a self produced magazine.
This media mix was necessary (and efficient) ten years ago, but today it's ineffective if it's not used alongside online media to lead the customer through the buying journey.
The reason? Because the typical shopping mall marketing is created only to make the customer aware of a new offer or event, it creates a customer journey that looks like this.
With the above-mentioned media mix only the awareness stage is touched.
The media-mix makes the customer aware of the existence of the mall, but shortly after exposure of the ad, the message will be out-dated and customers will have no knowledge of why they should visit the mall.
Therefore the mall needs to spend more money on new commercials in order to get the attention of the customer once again.
This creates a never-ending hunt for customer attention, which is the reason why shopping malls waste a lot of money on marketing.
Why a shopping mall app will improve budget performance multiple times
Let's take a look at online retailers; they spend very little on traditional media like TV commercials and magazines compared to spendings on digital media.
Why is that?
You could argue that it is because they sell their products online. However, the truth is that they combine the media to adapt to all stages of the customer journey.
They also try to convert customers to an owned media.
This is usually:
- A mobile app
- An e-mail list or
- A re-marketing list for paid social media ads
The beauty of converting customers to an owned media is that it is possible to send offers to the customer without spending ressources on ads.
This increases customers returnrate, which again increases the customer lifetime value.
Because shopping malls haven’t had a platform on which customers would turn to for inspiration these tree channels haven't been possible to establish before.
However the revolution in mobile applications has now made it possible for shopping malls to create customer experiences through an app; Experiences that customers highly value, and therefore return to the app for.
In that way apps become an owned media channel for shopping malls. Here is how the new customer journey works.
How Zalando uses multiple channels to create app downloads
Zalando is an excellent example of why an app is an important earned media in order to achieve a profitable return on marketing investment.
At Zalando they use every possibility to convert customers into their app. If the customer uses the app they don’t need to pay Facebook or Google for showing commercials to their customers, and they can remind customers about coming back for free.
This approach have resulted in a big jump in revenue, but only a slight increase in marketing spend.
The development of Zalandos revenue and AD spend (Marketing ratio)
Here is how it looks if you google Zalando the first time:
As you see does the Google Ad not send customers to the website.
It prompts customers to download the app instead of visiting the website
The same goes for Facebook ads
And if you enter the website from a mobile device it looks like this:
As you see, does Zalando uses a lot of money and energy on converting customers into app user as part of the buying process. Simply because it is cheaper to present their offers to customers in the app than to use paid marketing channels to get the same results.
Therefore a large amount of their budget is spend on converting customers to app users.
Shopping malls can do the same
The good thing is that exactly the same thing is possible for shopping malls that have an app.
Here we have an example from Storcenter Nord. A Danish shopping mall with 65 stores.
They have included a download bar when a customer enters the website. With the bar Stocenter Nord offers the customer to become app users and they can thereby keep in contact. A possibility Storcenter Nord wouldn't have if the customer leaves the website without converting to an app user.
The great advantage is that the customer now will use the app as part of the research process - making it free for Storcenter Nord to show new products and events to the customer.
Storcenter Nord can also send push notifications to the customers, when there it's relevant for the customers.
Thereby Storcenter Nord will use less money on marketing, and each customer that are converted via marketing will have a higher life time value for the mall.
Why a digital loyalty program heavily makes customers return
After you have worked so heavily on converting customers into app users. How do you then ensure that they will use your app again and again?
According to our data, across all the shopping malls we provide solutions for, does a loyalty program that reward customers for visiting the mall appear to be an important factor.
Why is that?
From talking to customers who received loyalty points for visiting the mall we found that they like free gifts, and they like the gamification of saving points to get the bigger prize.
Customers feel like they have won something when they enter the mall, and receive 10 points. They are now one step closer to receiving their goal of getting the present that they want.
The average customer who uses our shopping mall solutions visits the mall way more often when customers who dont.
Simon Staack, Co-founder at Emplate
By using this approach to loyalty programs, instead of rewarding customers for the amount of products they buy, you will inevitably give small gifts away to the customers because they get the points by entering the store.
However we see that customers who uses our app enters the mall more frequently others.
In fact from 1. Jan 2018 to 1. Aug 2018 the average app user have visited the shopping malls 10 times. A number significantly higher than those concluded in surveys conducted before the the malls invested in the Emplate loyalty program.
Final give away
Exciting times are ahead of shopping malls. Times where shopping malls will get the same marketing possibilities as e-commerce shops have had for years.
Now you know how Storcenter Nord use the benefits of an owned media. We have also implemented the strategy at herningCentret a danish 80 shops mall. The results where just as impressive, and you can read the whole case study by subscribing below.