Lidl, one of Europe’s leading food retailers, has a reputation for being a disruptor brand. That comes from taking risks and embracing new technologies. Since its first store opened in Germany in 1973, the retailer has grown to 10,000 stores in 28 countries—and it has just entered the U.S. market.
“As we test, learn, and scale up our digital investments over time, our customers will come to know Lidl in the digital space as a brand that makes it easier for them to access the combination of quality and price we are famous for,” said Sam Gaunt, Lidl’s head of media. “And we won’t waste a penny on media, content, tools, or data if we can’t quantify how they are helping us deliver that objective.”
Gaunt came to Lidl in 2015 with 15 years of media and digital agency experience, working with brands including McDonald’s, Kellogg’s, and Heinz. We kicked off our interview by asking how he envisions the customer experience of the future. (Of note, Gaunt will be speaking at Adobe Summit EMEA, in London, 3-4 May.)
Gaunt: In one word: easier. I believe that technology plays a role in making it easier for people to do what they already want to do. For example, voice interfaces will make some Internet shopping tasks easier, and addressable advertising in increasingly varied forms will make it easier for people to make purchase choices that are more relevant to them. But the fundamentals of human behavior will not change, and people will always use and adapt technology to suit them.
There’s a danger for brands that are embracing technology in ways that fail to make life easier for people. I’ve seen brands make that mistake with expensive campaign microsites that people don’t want to visit, apps that people download once and never use again, and content that people don’t want to view.
There is no shortage of new opportunities for us to test and learn from. The important thing is that we keep the customer at the heart of everything we do and have a clear approach to testing and learning about what works. And if it doesn’t work, don’t do it.
CMO.com: How has Lidl brought experience into the business?
Gaunt: We put our customers first. Our customers’ experience of our brand will determine what they are willing to spend with us, now and in the future. Everything starts with bringing our customers the experience of highest quality produce at the lowest possible price.
Meanwhile, we are constantly reviewing what we offer our customers in the store—not just the immediate experience of shopping at Lidl, but also the ongoing experience of consuming the products they’ve purchased there. That’s why we regularly review our product range to ensure that we’re always offering our customers what they want at the quality and price they expect from us.
We continue to innovate in many areas, from artisan gin or designer clothing to solving problems such as kids’ reluctance to eat fruit and vegetables in new ways, with fun-size products like “unicorn carrots” and “radfishes.”
CMO.com: How are you structured internally to execute this mission to be experience-led?
Gaunt: Our organization is focused around cost-efficient optimization of the store experience—from the marketing that helps drive customer visits, to the store environment and service while they shop, to the range, quality, and pricing of the items they walk out with. Effective cross-departmental collaboration is a priority in every area of the business. Every week the teams involved in delivering our customers’ experiences meet to review how well we are achieving this, to resolve any potential problems, and to come up with ideas to make things even better.
CMO.com: You made some changes to your digital marketing strategy over the past year around the use of programmatic software. Why were these decisions made?
Gaunt: We interrogate all media spend to rigorous cost-benefit analysis involving econometric [statistical] modeling to measure its effect on driving our turnover. Through this process, we identified challenges with digital media in driving ROI: The amount of turnover driven by digital was just not significant enough to justify the spend, particularly when we compared it with traditional broadcast media.
And when you compare the cost per thousand [CPM] of many digital activities with an equivalent CPM in broadcast, it’s quite apparent that digital is an expensive way to communicate with as broad an audience as we have—particularly when we’re looking to drive an offline sales effect. But rather than shy away from digital, we decided to dig deeper into understanding how we could make it work better for us.
This meant two things. First, we applied a cost-benefit analysis to every area of our digital investment to identify the value to our business that every digital outlay—inventory, data, tools, and software—delivers.
Second, we decided to appoint a demand-side platform partner directly. We did this to ensure full visibility and control over our digital spend and, just as importantly, to be confident that we are maximizing the opportunities technology offers in delivering our objectives.
CMO.com: What would you like to see change in the digital marketing space to make programmatic trading more effective and efficient?
Gaunt: There is a huge opportunity with programmatic software for advertisers to optimize the overall reach and frequency delivered via every digital channel and publisher. We are halfway there, but Facebook and some other major publishers of premium content, particularly broadcaster video-on-demand, need to allow pass-back of the relevant data so we can target their users based on what they have or haven’t been exposed to elsewhere.
Currently, there isn’t enough of a commercial incentive for them to do so. Data access is a key principle that media owners need to adopt, and advertisers should incentivize those that do. This will become increasingly important as more media inventory becomes programmatic over the longer term.