An online store that is growing across Europe, more than 24,000 warehouses in bakeries and supermarkets and 900 stores in eight countries – the empire of traditional Hamburg-based Tchibo has grown enormously since its founding in 1949. The coffee and non-food mix business generates a good three billion euros in sales a year, but with a recent return of almost three percent, there is still room for improvement. One Leverage: Improve customer contact and customer satisfaction with data while increasing the effectiveness of your measures.
“Even our longtime customers have generally started their online customer journey since the stores closed in the pandemic,” says Wibke Bachor, head of all Tchibo stores in Germany. Whereas previously impulse shopping was dominant, people now come to the stores in a targeted manner. Hence, the buying process is faster and the conversion rate increases. “As the consumer conducts intensive online research before making an offline purchase, he is informed in detail about the product’s properties, available color variants or current offers as soon as he enters the store,” says Bachor.
Provide encouragement and guidance
As a result, the role of about 10,000, mostly employees, in shops is changing. According to Bachor, the exchange of facts is clearly disappearing. As they often limit their usual social interactions, local customers seek an exchange on general topics and share their needs and feelings. “Our salespeople are increasingly becoming personal advisers,” notes the Tchibo manager. The fact that consumers are doing it online and bringing their emotions as quickly as possible into the world of offline coffee shops is evidence of a great longing and uncertainty to end the pandemic.
“2021 was a year of questions,” confirms Jannika Bock, who is responsible for the retail sector at Google Germany as Managing Director of Retail. “People were looking for clarity: what am I allowed to do? What are the trading rules? How exactly are the access restrictions? ” In the meantime, according to her data analysis, some behaviors have stabilized, including search queries becoming more specific: “People no longer just type ‘fridge’, ‘wine’ or ‘dress’ in Google search, but add details such as performance classes, flavors, or the occasion for which the item is to be worn. “
Such detailed research places high demands on the efficiency of online stores. “Websites must now be much more competent, they can no longer spit content that does not exactly match individual wishes,” emphasizes Bachor. The customer also expects a similarly detailed arrangement in the store. If he stands in front of poorly stocked shelves, he quickly loses interest. In short: online and offline visual merchandising must offer both incentive and orientation as the customer himself does not distinguish between channels, but uses them depending on the situation.
Integrate a push and pull strategy
When it comes to customer orientation, it is therefore of great value not only to know what products are currently in demand, but above all to know where and how customers prefer to shop. Google searches for these “results” for its partner Tchibo on the basis of the queries it receives on google.de. But this is only the first step. The marketing task based on this is: How to make the consumer aware that he can find what he is looking for in Tchibo when he signals interest in a specific product through his search?
Customers looking to buy a product online can be relatively easily reached with product images, called shopping ads at the top of the search engine page. But it takes more than that to create a seamless omnichannel support. At this stage of the customer journey, so-called local availability advertising is used. “They show people who are looking on the Internet if the product they are looking for is currently available in a Tchibo store or warehouse, how far it is from where the search is, and by when it is open,” explains Bock. In addition, consumers can trigger click-and-collect orders directly from the ad based on Tchibo’s inventory lists in real time.
Tchibo supplements these ads with local product availability using the so-called local campaigns. These are advertisements that are played to inspire the user regardless of his search activity as soon as he comes near the branch. “The integration of push and pull strategies in these two advertising formats pays off” – emphasizes Bachor. According to a graduate business analysis, ads with local product availability led to a 35 percent lower cost-per-click (CPC) and a 12 percent higher click-through rate (CTR) compared to Shopping ads without local information. Local campaigns generated 33% more visits to the store at 79% lower cost per visit compared to previous campaigns.
However, the issue of measurability, the return on ad spend (ROAS), becomes more acute, especially when ad formats are built across multiple channels. So how does Google prove to Tchibo that the purchase at the Tchibo branch on Mönckebergstraße was made via online advertising on the customer’s smartphone? “To do this, Tchibo uses our” store visit “feature, which we use to map offline conversions from online advertising,” explains Bock. The prerequisite is that the user is logged in to his Google account and that the location history is shared. If he enters a store, Google associates that visit with interactions in the context of advertising. Bock assures that this practice is in line with data protection: “We only use anonymous aggregated statistics for this function.”
Overcoming Silo Thinking Tchibo uses this data, summarized in reports, to allocate its budgets according to the success of certain forms of advertising. “Thanks to the possibilities of classic marketing tracking, it was much more difficult to answer the question of attribution” – emphasizes Bachor. As part of the integrated omnichannel strategy, Tchibo also uses data from Google to analyze customer activity in the online store, which was launched for the first time in 1997 and which the company from Hamburg – also with the help of an American company – transferred from stationary servers to the Google cloud. Since then, the website’s response time has been cut by more than half, ”informs Bachor. In addition, the new infrastructure cut search times by 75 percent. “Customers now expect high-performance sites,” emphasizes Bock. Response time, accuracy, speed of order fulfillment, everything must work perfectly – otherwise the customer will not be there.
Do you have any concerns about sharing your knowledge and customer information with a large US data company like Google? “In fact, there have been concerns about the disclosure of confidential company data and valuable data. But we openly responded to our concerns about Google and defined the boundaries, ”says Bachor. After all, it was a process, the necessary confidence grew gradually. The openness that prevails now emerged step by step from a partnership that grew stronger over time – and ultimately paid off.
But in order to be able to collaborate successfully, a comprehensive transformation process was first needed. Because in order to be effective with the omnichannel offer, departments must also overcome silo thinking. “It is a difficult process, especially for traditional companies with an established structure,” admits Bachor. However, Tchibo has managed to create a multi-channel management as well as link the incentive to the overall sales performance. Google has also helped with this. “When an employee slows down, worry and anxiety are usually the cause. External people can help overcome such emotional obstacles better than internal workers, ”says Bachor.
Google Director Bock is confident that in the future, all retailers will switch to tech companies that conduct retail. This requires investment in infrastructure and skills development. The first step, which is easy to perform even for small sellers, is first of all to appear on the web using the company’s profile on Google. “About half of all German dealerships still cannot be found on the Internet with their own website,” regrets Bock. That is why Google, together with HDE, has prepared a package of instruments and training as part of the ZukunftHandel initiative, which accompanies participating companies step by step from a classic retail store to a hybrid operation (see box).
But Tchibo manager Bachor is convinced that technology alone is not the solution: “Since we’re data driven now, our DNA remains the vendor’s DNA. And as such, we are primarily characterized by a passion for customers and their needs. “
Future trade initiative
During the Corona crisis, many retailers took a step towards digitization, but there is still much to be done. The German Retail Trade Association (HDE) and Google are joining forces to leverage, extend and disseminate the dynamics of retailers in the joint initiative ZukunftHandel. The approach is simple: partners want to match salespeople and support them with training and products tailored to their needs. The program is intentionally designed to be low-threshold so that participants do not have to make any investments, is open to everyone and easy to use with detailed instructions and training. More information here.