Why Cisco Thinks CPG Reviews Are The Next Big Thing

If you pick up the March 2012 issue of Fortune magazine, you’ll see a full page advertisement from Cisco. Their ads tend to be well thought out, tied to research they’ve completed, and discuss the technology they ultimately intend to power.

It caught my attention that Cisco was touting user reviews as the emerging influencer in the consumer packaged good purchase funnel…


To break down the premise — Cisco believes CPG packaging will no longer be the most significant factor in the “First Moment of Truth” decision process. Google’s Zero Moment of Truth backs this up already. In the Cisco ad, you used to buy chutney because of the jar. But moving forward, you’ll make this type of purchase because of the 5-star user reviews for chutney. And yes, that is a doctored Yelp review in the person’s hand. Instead of a local restaurant, the review is for mango chutney.

How did they come to this conclusion? Cisco’s IBSG group has spent the last two years studying shopper habits. They commissioned a study and produced a whitepaper analyzing shopper habits, their interests, and broke this down into segments like grocery, apparel, and electronics. They also researched the role the retailer plays in all of this. For retailers, reviews in general are beneficial because they keep the consumer shopping in their store. A highly reviewed product increases shopper confidence and it also reduces price sensitivity. That means higher profits for the retailer. If you look at how groceries fit in, the study found that respondents felt grocery shopping benefited the most from these types of digital enhancements in 4 out of the 5 segments!

It turns out shoppers prefer digital sources instead of real people when making purchase decisions. And it’s happening already in a fragmented form. 45 percent of respondents reported current activity or interest in using a smartphone for in-store research. Again, grocery was cited as one of the top segments.

Ultimately, Cisco produced this ad based on an study of all retail segments, but highlighted the area (grocery) that showed the most promise in this space. Of course, there is one fundamental gap the ad highlights. Cisco shows an amalgam of reviews floating in the air. Why? Because there is no magic app for grocery product peer reviews. Thanks to the power of Photoshop and analysis from Cisco, we get a glimpse of what’s emerging in the retail shopping experience.

Yes, People Are Searching For Gum

"Shoppers will go through the online research process for gum. It’s a process they’ve learned from researching the $40,000 SUV."
– Jim Lecinski, Google’s Managing Director of US Sales & Service

The online habits of consumers have changed in the last few years. The same methodologies that consumers are using to research a TV or even a car are the same methods that users are employing at an increasing rate for everyday products like grocery items. You can see how conscious people are with review research over small decisions like a 99 cent iPhone app or even a free app (!!!). I saw the power of reviews when I managed a 10 dollar app I used to run.

Sources like the Wall Street Journal and agencies like G2 are publishing supporting stats. But one of the most compelling studies about this movement was just published by Google in their June 2011 book Winning The Zero Moment of Truth or ZMOT

There are numerous compelling quotes and stats from Google in ZMOT but I’ll take a select few:

CPG is not too small
 

"No MOT (Moment of Truth) is too small. If consumers will do research online for houses and health care, they’ll also do it for Band-Aids and ballpoint pens."

Shoppers are researching grocery products online in high numbers

What would you guess the percentage of users researching CPG products online in 2011? Your guess is probably wrong! Here’s what Google had to say in ZMOT:

Percentage of shoppers influenced by digital source prior to purchase (ZMOT)

Grocery Products: 61%
Health/Beauty/Personal Care: 63%
Over-the-Counter Health: 78%

Those are astounding numbers. It’s safe to say from this that the majority of consumers are now researching grocery, health, beauty and personal care products online, whether before going to the store or once in the store. I’m impressed because those consumers have dealt with what I’ve dealt with; fragmented sources of information.

Number of sources used by the typical shopper

Grocery Products:  7.3
Health/Beauty/Personal Care: 7
Over-the-Counter Health: 9.8

Sounds pretty fragmented to me.

Making Smart Choices Fast

One of the prototypical Zero Moments referenced is not surprisingly a “minivan mom” (their words not mine). Her son is sick, so she uses her smartphone to research a decongestant.  She’s about to make the decision to buy it and where to buy it. What influences her? Seeing it has positive ratings and that her local store has a discount. It’s a slam dunk that the sale is going be made.

The Average Household spends $312 a month on groceries in 2010

That’s according to the U.S. Department of Labor. Simply put, the average family can’t afford to make the wrong decisions with groceries. Every so often someone will say something based on perception rather than fact like “Social is for high engagement products/services, not a $3.99 cereal,” I think two things. One, they haven’t bought a box of cereal in 10 years because I wish cereal was still $3.99. Two, they aren’t in the real world with the majority of the population who does have to consider that replacing a product means you have to spend over your budget. Here’s a pertinent example from ZMOT:

"I’ve got four boys and I’m at the grocery store five days a week and it’s just killing us. We’ve got college coming in a few years. I’ve got to start looking at how I’m spending my money."

Digital word of mouth

I often talk about the “new word of mouth” opportunity in the age of Twitter and Facebook. I now think this opportunity is better referred to as digital word of mouth. I love this quote from Wharton Professor Dave Reibstein:

"Digital word of mouth is one-to-millions. If you have a good experience, it’s shared and re-shared with millions. You post it and suddenly, it’s flying."


The Fear…

I talk to agencies and brands regularly and the savviest ones actually embrace the good and the bad reviews. That’s for a good reason. Bad reviews can actually legitimize and add authenticity to a conversation (just like nobody is perfect, no product is perfect). And if your product is good, it’s going to stand on its own. 


"Negative reviews increase conversion rates… because people know they’re shopping in a truthful environment."

-Brett Hurt, CEO Baazarvoice

How this affects women

In my experience I get two types of reactions that split down gender lines when I explain what our long term goal is for Consmr. Men say “I could definitely use that” and women says “that’s GREAT! I REALLY need that!” Why the discrepancy? I have theories around the different types of fast moving consumer goods we buy, but ZMOT points to the idea that the way in which women share online is very different than men.

"Women have deep, deep sharing habits: product reviews, articles they’re forwarding, conversations, discussion boards…"
 

Along those lines, the Chief Marketing Officer for General Mills (Mark Addicks) spoke about the research his team has done in grocery stores. They’ve watched moms go into the grocery store and “pull out their phone and start looking online.” What are they doing? Things like looking for recipes and comparison shopping for cheaper brands. 

The choice of a new generation 

Ultimately, the recurring theme and central emphasis in ZMOT is that research habits around consumer packaged goods are now significant. No one is saying that people are searching more for cars. That’s pretty much at the saturation point. It’s that a new category has emerged. And if there is anyone who knows people’s evolving search intents, it’s Google.



Try the gray stuff. It’s delicious! Don’t believe me? Ask the dishes!