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May 23, 2007
Case Study

How User-Generated Content Drives In-Store Sales for Grocery Chain

SUMMARY: Eretailers' review and feedback sections have grown by nearly 25% since 2004. In fact, according to MarketingSherpa data, 58% of consumers prefer websites with peer-written product reviews.

But wait until you see how a grocery chain adopted Web 2.0 tactics and is getting user-generated content online like gangbusters. Now, ratings and reviews are everywhere: on store shelves, in product displays, on employee T-shirts and in ads in their monthly in-store magazine. Plus, what's "shelf talk"?
CHALLENGE
“We’ve always positioned our company as a consumer advocate by listening to our customers, but we wanted to take it a few steps further,” says Elizabeth Margles, VP Communications, Loblaws Inc., a Canadian grocer. “We wanted to find an innovative way to express that we valued what our customers say to us.”

Outside of innovation, Margles and her team had several goals in mind:
- Find a solution that melds online and offline without busting the budget.
- Since CRM can be hard to quantify with results, find an initiative that her executive leadership would enthusiastically come to believe in.
- Enhance customer loyalty by becoming a more “transparent” part of the communities where their stores are located.
- Leverage their private-label product line -- President’s Choice (known as “PC” in Canada) -- as much as possible.


CAMPAIGN
Highly interested in the idea of doing UGC, Margles wanted to deploy the user content in stores to create a unique brand experience. Here are the five steps they took:

-> Step #1. Membership club

After adding the rating and review applications to the website, they launched the “PC Loyalists” membership club. Consumers were required to join in order to submit reviews and ratings.

Special-offer emails were sent to promote the club. The ratings and reviews offer was also mentioned in President’s Choice ads that ran in the company’s “Insider’s Report” magazine, which gets distributed in their 1,100-plus stores. And, the ratings and reviews were featured on the backs of employee T-shirts (135,000 were printed).

-> Step #2. Copyright & intellectual property concerns

Next, they positioned the registration process so PC Loyalist applicants agreed to let their reviews be used in marketing materials. This freed Margles' team from intellectual property, copyright and other potential legal concerns.

“By taking care of that right at the beginning, we don’t have to try to find out where the person lives, how to contact them, etc., in order to gain their permission as we try to maintain our project deadlines,” she says. “It’s also made very clear that their last name will not be used in the marketing -- they remain anonymous. We didn’t want to scare people off from posting thoughtful and opinionated reviews.”

-> Step. #3. Promote in-store UGC

After the ratings/reviews started appearing, Margles instituted a system in which highly rated products going on sale were promoted with the UGC in the stores. She tabbed the signage “shelf talk,” underscoring the CRM brand her bosses wanted to build. (In another example, the customer service link at Loblaws.com was changed from “Contact us” to “Talk to us.”)

Here’s one example of a positive review being used in shelf talk: “Jason from Regina, Saskatchewan, says, ‘This is the best cookie I’ve ever tasted.’ ”

They included the URL and ratings and review feature on every printed piece of marketing material in the store, including the shelf-talk signage. The collected ratings were also employed in newspaper inserts and weekly store fliers (see creative sample below).

-> Step #4. Product development (and redevelopment)

Margles knew that they had to let positive and negative feedback into the reviews section to gain authenticity. (However, they allowed only President’s Choice products to get rated and reviewed to avoid damaging relationships with manufacturer and distribution partners.) After seeing certain products getting trashed consistently, they decided to use the information proactively.

“We brought those items back to our product team and said, ‘Look, this is what customers are telling us in real-time. This is what people are saying about this product.’ The product team goes back to the kitchen, figures out what is wrong and relaunches.”

Loblaws then put up a sign on the shelf where the pulled product was telling customers that their voices were heard and that the product would be back once it was improved.

-> Step #5. Fix packaging issues, too

Nor did Margles and her team stop with the food. When their “Stampede” line of barbecue sauces was released, people raved about all but one thing: the bottle. It didn’t fit into refrigerators in a functional manner and the top leaked.

“We pulled it off the shelves until we had that problem amended. The goal evolved to become giving our customers a say and a determination for all facets of our product development.”


RESULTS

Leveraging the website, magazine and employee T-shirts definitely got the initiative kick-started. Thousands of PC Loyalist club members have opted to allow their reviews to be used for in-store UGC marketing. Overall, their stores have flourished, Margles says, and their website has never been so busy.

“We’ve seen an increase in traffic consistently for the last year. What we’ve found in the rate and review section is that our customers like to talk to each other. It’s almost become a blog because of the activity. It’s also given us the transparency, the authenticity that we were looking for.”

Although Margles wasn’t allowed to discuss specific results, products that are being rated and reviewed on the website are selling in the stores at a higher pace than products that aren't. “Customers tell our store employees how they appreciate the ability to do ratings and reviews and how neat the crossover from online to offline was in terms of what we have been doing with ‘shelf talk.’ This is a style of multichannel marketing that we believe fits our brand perfectly, and we will no doubt continue to grow the initiative moving forward.”

Here’s an snapshot of how the campaign succeeded almost instantly:

Loblaw’s first promo centered on the President’s Choice frozen entrée called Vegetable Lasagna with Seven Cheeses. It received 4.5 out of 5 stars from 179 customers, and more than 90% said they would recommend it to a friend. Margles and her team immediately featured the lasagna in-store with shelf-talk snippets, including, “Even my vegetable-hating 17-year-old son enjoyed it.”

They also used this style of UGC to increase membership in their PC Insider’s loyalty program. As the overall project has grown, Loblaws executives have fallen in love with the initiative.

“Our VP of Ecommerce [Jim Osborne] stepped up as an advocate early on and really accepted that we were going to have to utilize the criticism of our products seriously, as well as the praise,” Margles says. “What you get by being transparent about the criticism is greater than the ROI you’d get by people seeing just the great things people say about you. People can see us as part of their community rather than this big retailer who stays behind the curtain and doesn’t engage in the conversation.”

One of the more interesting benefits to the initiative is the fact that the President’s Choice product developers now view the ratings and reviews similar to the way a chef looks at restaurant critics. Product managers don’t want to write the recipe that gets sent back to the kitchen.

In short, UGC isn’t just a marketing tool, it has become a product development research medium. “Without a doubt, the development team is more driven to get the recipes right,” Margles says. “What better feedback then when your audience says you hit the nail right on the head?”

An additional benefit: they’re providing excellent content to the marketing department’s creative team.

Interested in trying in-store UGC, Loblaws-style? You should expect to have up to three ecommerce team members work on the effort daily, says Margles, who also warns that what some might dismiss as add-ons (the Insider's Report magazine mentions and employee T-shirts) shouldn’t be taken lightly.

Creating as many offline touch-points to drive the UGC effort online is integral. “It sounds kind of hokey, but the T-shirts really help brand what we are doing in trying to establish a constant dialogue with our customers.”


Useful links related to this story

Creative samples from Loblaws:
http://www.marketingsherpa.com/cs/loblaws/study.html


Bazaarvoice - service provider behind the UGC efforts:
http://www.bazaarvoice.com


President’s Club:
http://pc.ca


Loblaws:
http://loblaws.ca





See Also:

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