By Retail Doctor Group, in association with Ebeltoft Group
Like them or hate them, Amazon has always known what it was doing when it came to personalised shopping experiences. 35% of Amazon’s revenue is generated by sales that originated from personalised offerings and adverts.
Personalised interactions are a consumer demand that’s fueling the trend for individualised attention. Driven by the spending power of Gen Zs and Millennials, personalisation is an expected part of any consumer journey nowadays.
Personalisation enhances customer experiences, increases retailers’ conversion rates, and builds loyalty. It also has the potential to increase brand and retail revenue nearly threefold.
The Why Behind the Buy: Rise of the Neuromarketing Trend in 2024
95% of consumer decisions are emotionally driven. Understanding your consumers’ emotional behaviour-based purchasing choices can increase sales conversions by up to 71%, yet only about 2 in every 5 Australian retailers (39%) are making personalised consumer targeting a business priority for 2024.
Australian retailers remain hesitant to embrace neuromarketing tactics fully, despite its potential benefits for their businesses. This cautious approach is rooted in a number of concerns and challenges.
A Cautionary Tale: Challenges and Limitations to Implementing Neuromarketing Tactics
Data drives insight, which in turn, drives knowledge and understanding. If 3 in 5 Australian retailers are not using their readily-available data to make informed decisions about their consumers, do they even have loyal customers that help them pay the bills each month?
What gives? And what should retailers know about the neuromarketing trend to make smarter business decisions in 2024 and beyond?
1. Ethical Concerns and Criticisms
Privacy and data security issues have always been of particular concern to savvy Australians. As a result of the anticipated backlash over privacy and intrusion on consumers’ subconscious thoughts and motivations, Australian retailers are understandably hesitant to proceed.
For retailers who want to maintain a responsible and trustworthy public image, the compounded criticisms around manipulating or exploiting consumers’ subconscious vulnerabilities may also create an ethical dilemma.
2. Lack of Clear Regulatory Guidelines
Unlike some other countries around the world, Australia lacks specific regulations around neuromarketing practices. And according to a 2021 study by students from the University of Technology (Malaysia), Australia is not even one of the top 10 countries doing research on neuromarketing and its benefits!
One therefore begins to understand why there are no clear regulatory guidelines surrounding its ethical use in marketing. This uncertainty also adds to retailers’ hesitation, leaving them unsure of any potential legal ramifications or the ethical boundaries they may need to operate in.
This lack of clear regulatory guidelines hinders wider technological and concept adoption in Australian retail.
3. Costly Implementations and Resource Gaps
The perceived high investment costs to effectively implement the advanced neuromarketing technology – together with a distinct lack of “how to” information out there – creates a significant barrier for many Australian retailers. Smaller businesses are especially vulnerable, unable to justify the expense against the limited footfalls that cross their doorways.
The lack of readily-available neuromarketing expertise in Australia further adds to the implementation challenges. The growing expertise gap makes it difficult to find the right partner to help retailers design and execute effective neuromarketing campaigns.
4. Cultural and Diversity Considerations
Australian culture is a rich and vibrant kaleidoscope of influences, tradition, immigration, and unique spirit. The diversity in its landscapes, ethnicities, and perspectives generally emphasises individual autonomy and privacy. Simply put, Australians value transparency. Retailers are concerned that perceptions of “shady” neuromarketing practices may damage brand and retail trust and reputation.
5. Limited Proven Effectiveness
As an emerging trend, neuromarketing lacks long-term data on its effectiveness in the Australian retail context. It’s difficult to directly measure neuromarketing’s uncertain impact on either sales or customer satisfaction, leading to a risk-averse approach to the trend for many retailers.
However, the potential benefits of neuromarketing cannot be ignored, despite all these perceived roadblocks and challenges. Keep reading to grab your copy of RDG’s neuromarketing action plan for retailers in 2024 and beyond.
Irresistible Retail: The Benefits of Neuromarketing for Brands and Retailers
Retailers need to not only understand the technology that drives neuromarketing, but also the massive benefits it offers their businesses. Chief amongst these are the cost-saving implications for ad spend, and the wise interior design, placement, and layout options available to them.
Personalisation relates to persona management, just as customisation relates to individualism. Smart retailers understand that today’s consumer wants to be recognised as an individual with discerning tastes and styles. The mass-marketing “snake oil” tactics of pre-pandemic days are just not going to cut it for these consumers.
Targeted neuromarketing campaigns intuitively understand what triggers emotional responses in consumers so they buy a product. These businesses create advertising campaigns that resonate deeply with their audiences and drive conversions.
As the physical store makes a welcome comeback in the customer journey, engaging store layouts are not just a “nice to have” anymore. Neuromarketing understands that shoppers’ eyes:
- naturally go to certain shelf levels for specific brands
- actively search out signboards displaying specials and
- intentionally search for related products when shopping in-store.
Neuromarketing tactics can help retailers understand how to place products, displays, and signage in a way that maximises consumer engagement with these placements, while also driving sales. Better still, neuromarketing can help retailers develop irresistible brand packaging and product features in such a way that it truly appeals to and influences consumers’ needs and their subconscious product choices.
Relevant Retail: The Benefits of Neuromarketing Campaigns for Consumers
While some may argue that neuromarketing uses manipulative marketing tactics, it can also expose those tactics for what they are, allowing for greater transparency that empowers consumers to make more informed product choices. Imagine for a moment that every purchase made was done with the same attention to detail, care and consideration, and price comparisons that gifts for a loved one are done with.
Neuromarketing makes this scenario entirely possible by analysing each consumer’s history of likes and dislikes, average spend limit, shelf choices and bundled deals, and more, to fully personalise the shopping experience. Recommendations, offers, and even store discounts are aligned to individual preferences, creating a personalised, enjoyable, and more-satisfying shopping experience for everyone.
This is relevant retail, and it’s the future of shopping. It’s designed to limit the junk traditional marketing shoves in a consumer’s face and replace it with items they’re genuinely likely to buy for their meaning and value, saving them time, money, and frustration.
What does this mean for retailers in 2024 and beyond, and how can neuromarketing strategies be implemented without breaking the bank?
Top Priorities for Retailers in 2024 and Beyond
We now know that data and insights into the subconscious drivers of consumer behaviour can be used to craft truly unique and memorable retail shopping experiences. Neuromarketing simply resonates deeper than traditional marketing does. It nudges consumers towards the products they feel they truly need or deserve, while also boosting brand and retail loyalty.
By using RDG’s Limbic Insights™ personality profiling retailers can create core customer personality segments to personalise the branded experience, creating emotional customer engagement and increasing customer loyalty. Here’s what that looks like in a retail setting.
1. The Visual Landscape of Retail
Consumers want to see what they need, readily available and within reach. Retailers can subconsciously draw attention to these items by placing high-demand products in high-traffic areas (like the end of an aisle or close to checkout points) or at eye level in high-demand product clusters.
By using certain colours, shapes, and fonts to display products in their best light or in interesting packaging, retailers can trigger specific emotions (feelings of need or want) to influence purchase decisions.
Also, when products are artfully arranged, they tell a story that guides customers down a purchasing path. Retailers must create a sense of discovery. Heat maps from foot traffic analysis will help optimise aisle flow and clearly indicate the best product placement options available.
2. Sensory Elements in Retail
Upbeat, energetic music can encourage shoppers with feelings of positivity – just be sure to keep it age-related! Soothing, calming melodies (without lyrics) can encourage browsing because the white noise stimulates feelings of being at ease. Retailers can subtly influence behaviour by choosing the music that best aligns with their brand and target audience.
Aromatherapy and alluring scents (like the smell of a steak sizzling in a food court) can evoke powerful emotions of hunger and stir up memories. For fitting rooms, lavender creates a sense of unhurriedness, while citrus placed near the entrance to a store is an invigorating scent that can influence moods and behaviours.
Lighting is perhaps the most important sensory element of them all. Always adjust the lighting strategically throughout your store. A consumer who can’t see price tags or product features is unlikely to buy anything. Create a welcoming ambiance with warm white in grocery, clothing, and home decor aisles, and use cooler tones in technological departments and stores to promote focus and decision-making.
3. Tailor-Made Recommendations
Retailers and brands automatically collect customer data and purchase history, so why not use it? It’s already cost you money to install and implement, and can now be used to suggest relevant products and curate a personalised selection of goods on display.
Touchscreen technology and AR/VR displays encourage engagement in-store. Personalised quizzes and polls placed on social media further taps into the consumers’ need to be involved and have a say that matters. In this way, retailers can engage their consumers while also gathering data on preferences and needs.
This win-win approach can help foster a loyalty-driven competitive edge in the retail landscape of the future.
Future-Focused Action Plan for Retailers
At its core, neuromarketing must be an ethical, transparent process that aims to satisfy the consumers’ needs by providing an individualised shopping experience. However, neuromarketing in retail demands a strategic approach for retailers, one that balances potential gains against the ethical considerations and resource limitations discussed above.
The 10-step action plan outlined below will help retailers implement neuromarketing strategies, while also keeping to the “straight and narrow” ethical path Australian consumers expect from their brands and retailers.
1. Focus on Specific Goals
This one is a no-brainer; What are your objectives?
- Do you want to increase sales of specific products or brands?
- Do you need to enhance your brand’s customer engagement?
- Or perhaps you feel that you must improve brand perception?
Whatever your reasons, you and your team must clearly define your goals and objectives for implementing neuromarketing strategies first to understand and focus on the way forward.
2. Evaluate Your Available Resources
Implementing neuromarketing technologies and strategies can be a costly exercise if you’re not working with the right partner or skilled individuals on your team. Make sure your budget and available resources are feasible enough to implement your new strategy. If not, it’s best to partner with a retail advisory firm and take advantage of their expertise and skill to level up ahead of the competition.
3. Build Ethical Expertise
You can never go wrong by making an investment to upskill and train your people, and learning about ethical neuromarketing principles is the right path to take if you’re going to prioritise consumer privacy and ethical data collection. Training can also help you establish clear protocols for data security and highlight the transparency in your business that sets it apart from others.
4. One Thing at a Time
Trying to get it all done at once will simply create panic amongst your employees who are the people left to deal with the fallout when things go wrong.
- Be subtle.
- Start off small.
- Choose one specific area where neuromarketing will drive the most engagement.
Is that optimising product placement, tailoring in-store messaging and displays, or personalising your online recommendations to browsers? Whichever area you choose to focus on first, it’s best to implement the strategy, give it time to work, record the reaction, and modify or build on that as a next step. As the saying goes… Rome was not built in a day, and neither is a neuromarketing strategy.
5. Collaborate or Partner with Experts
Trial and error that’s not informed by knowledge is just hit-and-miss. Learn how to design effective studies, interpret the data you’re looking at, and implement your findings ethically by partnering or collaborating with a qualified neuromarketing firm that uniquely understands your landscape and environment.
6. Metrics, Measurements, and Adjustments
While neuromarketing is an exact science, it’s not a one-size-fits-all solution. It must be customised according to each retailer’s specific target audience and business objectives. Retailers should be tracking the results of neuromarketing efforts with key metrics like:
- brand sentiment
- customer engagement, and
- sales volumes (of targeted products).
Ongoing data analysis into these metrics and their resulting performance data will help you adjust and adapt your strategies into a winning formula.
7. Transparency and Communication
Neuromarketing tactics should never be implemented on the sly. People – and especially paying consumers – dislike being scrutinised in secret. You can retain your dignity as an ethical brand by:
- being honest and transparent about your use of neuromarketing strategies
- explaining how data is collected and used to personalise your offering, and
- emphasising your commitment to ethical practices.
8. Respecting Consumer Preferences
No matter how loyal and open to the idea you think a consumer may be, some of them will still have reservations about sharing their data. This is to be expected and should not be taken personally. You can lead the way to opening closed doors by showing these consumers that:
- their peers’ individual privacy preferences are respected
- customers are allowed to opt out of data collection, and
- personalised recommendations can be customised to suit individual needs if they wish to narrow it down even more.
By allowing consumers to have full access to their own preferences, you stand the chance of accessing even more personalised data than ever before. This will give you deeper insight into other personas just like these, and help you craft an even more personalised offering to drive loyalty and sales.
9. Value vs Manipulation
The goal of neuromarketing is to enhance the customer experience to a point where they feel they are receiving genuine value from interacting with your brand. Manipulative tactics exploit subconscious biases and belong to an era of so-called “snake oil” marketing – which is where your customers’ distrust originates from to begin with.
10. Learning How to Build Trust for Long-Term Commitment
Building trust with your customers will take time and consistent effort. Recognise that you must be patient and stay the course if you’re going to show your customers you’re committed to a long-term and ethical change.
Conclusion
Retailers can navigate the tricky ethical and legal complexities of neuromarketing by being open about their strategies with their consumers and stakeholders. Shape the future of irresistible and relevant retail by being a responsible brand.
Unlock your brand’s potential to create a more satisfying shopping experience for your consumers by becoming “Business Fit” enough to manage the changes that neuromarketing strategies demand. Contact the Retail Doctor Group now for a customised solution to your needs.
The Retail Doctor Group is a retail advisory and consulting practice that builds retail channels and increases the performance of retail and FMCG businesses through our customised & transformative ‘Business Fitness™’ methodologies.
Since 2005 we have partnered with our clients to build powerful, award-winning, sustainable, and “fit” implemented retail. Ensuring our clients consistently achieve above benchmarks, and build sales and margin results. We stay with our clients to ensure success.
As the Australian elected member of International Retail Experts, Ebeltoft Group, we have more than 20 years of experience as retailers and consultants in all retail channels, segments, and regions. Today, members of the Ebeltoft network advise 80 of the 100 largest retail companies in the world.
Want to know more about the Future of Retail and prepare your retail strategies? Schedule an appointment with our Insights division by e-mailing us at businessfitness@retaildoctor.com.au or calling 02 9460 2882.