Until about 10 years ago, when Search Engine Marketing (SEM) emerged, marketing was considered more art than science, with little to measure in terms of results aside from things like Nielsen reports and POS data. Only the best-funded marketing organizations had the luxury of measurement, and the data they obtained wasn’t ideal.
By contrast, SEM’s impact was easily measured. Suddenly, marketers at all organizations, regardless of resources, were held to new standards.
While the art of marketing still exists, science now prevails within many organizations. Today, it’s expected that every marketing initiative bring measurable impact. Terms such as cost-per-lead are common and marketers can accurately calculate that cost using ubiquitous, off-the-shelf marketing analytics tools.
The last remaining bastion of unmeasurable marketing has been Product Sampling. Brand managers know they lose money on sampling. They just don’t know how much.
But this last frontier is being transformed by an approach called “smart sampling”that helps change sampling from a money loser into a positive ROI exercise.
Dissecting traditional sampling
You’ve probably received a CPG product sample inside a store or on the street. Chances are the vendor passed out samples to any willing recipient. On my way to the office this morning, I passed a marketing rep handing out instant rice samples to subway commuters. Relevancy and context were completely missing. But the rep didn’t care, because he was compensated based on how many samples he gave out. His goal was to get rid of all the samples.
It’s inefficient, yet CPG companies continue to do it. I know because I was a marketing leader at a CPG company for years. We knew we lost money on sampling, but samples could help induce trial, so we kept at it. If we included a coupon we could track redemption – that was how we measured. And this was a very sophisticated marketing organization that had set the bar in other areas of marketing ROI measurement.
Smart sampling changes the game
Smart sampling, by contrast, allows companies to target customers using multiple filters like gender, income and products purchased. It’s done with the cooperation of e-commerce partners, who leverage their data to help companies get samples into the right shipments and the right hands.
For instance, a customer who buys a shirt might receive a laundry detergent sample in their package. One who purchases a bathing suit might receive a sunscreen sample.
Companies benefit from a virtual 100% open rate, since samples are in an anticipated parcel delivered to a customer’s home. This leads to higher trial and conversion, and dramatically reduces wastage. E-commerce companies benefit from fulfillment process monetization, and the opportunity to reward customers with gifts. Customers benefit from the samples themselves.
After receiving the sample, customers receive an email survey asking questions such as, “Did you use it?” and “Do you plan to purchase this product?” The anonymous data is fed back to the CPG company, which can then track how many samples converted to trials and purchases, and assign a real ROI to campaigns. They can also quickly see if something isn’t working and tailor the campaign by experimenting with filters. They can even test before rolling out a larger campaign.
Agencies can sell smart sampling services via rate-card model, just as they sell other media forms. They advise clients on channels, help select filters, and design sample packaging and promotional material. Intermediaries recruit e-commerce partners and handle logistics.
This model is gaining traction in the U.S. and Canada, with companies such as Unilever and Procter & Gamble already on board. ShoeDazzle and Coastal.com are among the e-commerce companies currently offering this model through intermediaries.
In one recent campaign, a CPG company achieved an 81% sample trial rate, and 39% of recipients said they planned to buy the product. Smart sampling can deliver 3:1 payouts or better by significantly driving up conversion to purchase. As a result, companies are moving more of their budgets into smart sampling.
This sampling evolution is good for all market participants – the CPG companies, e-commerce companies and end customers. The only ones who suffer might be the ones standing at street corners handing out rice.