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Discussing SLD’s DeepReal Study With Jean-Pierre Lacroix

The rising concern about misinformation and fake news is a top concern of people around the world, whether we’re talking about Russian interference with foreign elections or an organic seal on a carton of milk. Skepticism is high and consumers expect it to become even harder to figure out what’s true in the future.

Today, we’re talking to SLD’s president Jean-Pierre Lacroix about a recent study we conducted on the subject of why brands should be thinking about this and how they can become ambassadors of DeepReal in a DeepFake world.

Transcript

Melinda: Hi, I’m Melinda, and you’re listening to Think Retail.

The rising concern about misinformation and fake news is a top concern of people around the world, whether we’re talking about Russian interference with foreign elections or an organic seal on a carton of milk. Skepticism is high and consumers expect it to become even harder to figure out what’s true in the future.

Today, we’re talking to SLD’s president Jean-Pierre Lacroix about a recent study we conducted on the subject of why brands should be thinking about this and how they can become ambassadors of DeepReal in a DeepFake world. JP, welcome back. It’s always nice to have you.

Jean-Pierre: Well, thank you very much, Melinda.

Melinda: Can you start us off by just laying the foundation for why you wanted to conduct this study?

Jean-Pierre: Well, we noticed in the marketplace that fake news was having an impact on the elections and in how people saw companies and individuals. We wondered if that kind of behavior was going to impact how consumers perceive brands. And if so, what are the things brands need to do to ensure that they maintain that level of trust and authenticity with their customers. And that was really the impetus for the study, more curiosity on “how is this impacting consumer behaviors?”

Melinda: So could you tell us about that? What are some of the factors – I mean, it could be fake news and misinformation, but are there others as well that are having a negative impact on consumer trust?

Jean-Pierre: Yeah, well, obviously COVID has had a huge impact on the level of anxiety that consumers have. You know, pessimism is very strong in the marketplace, although we’ve seen a decline of that, you know, with the rise of the vaccine and people seeing a light at the end of the tunnel, but COVID definitely has had an impact. The other is obviously the rise of social media and the pervasiveness of social media in our lives and in how actors, non-real people can actually influence elections in how we think and perceive candidates, and that’s concerning. And then what you also have supporting all of this is on a positive side the movements of Me Too, and Black Lives Matter, who are bringing to the forefront social issues that have been ignored for many, many years, and now are the forefront and they’re shaping the agenda, thought leadership and also a level of trust in organizations and institutions. And I think those are the three major events that are shaping how we perceive real and fake.

Melinda: So, can you tell us what the study found in terms of consumer skepticism? Like how skeptical are consumers and what are they most skeptical of?

Jean-Pierre: Well, when we did the study we wanted to find out what are the triggers for skepticism? You know, what are the things that consumers are looking for in information that brands and organizations are providing? And what we found was that, you know, influencers, paid influencers and celebrity endorsements, and salespeople had a very low trust factor in the marketplace. It was actually astounding knowing how many organizations are spending enormous amounts of money, you know, getting sports endorsements, player endorsements, and actor endorsements that they actually scored very low on the trust meter, if you like. People perceive those as being fake.

Melinda: Right. Is there a difference between a paid endorsement versus a social media influencer or earned media?

Jean-Pierre: Oh, there definitely is. I mean, obviously earned media represents an influencer or a brand ambassador who legitimately is excited about the product features and benefits and is promoting it within their social network. They’re not being paid to do that. So obviously their opinion is seen as unbiased, which is one of the key factors that differentiates truth from fiction, you know, is this unbiased filter towards what is being communicated by the individuals.

Obviously, when you’re a paid influencer, you are paid to promote a product that you may not personally endorse. And consumers now are very skeptical of any kind of endorsement because they’ve been overused, and often they’ve been endorsed by people that have been, for example, some of the beer brands were pedophiles, you know, that have had a negative impact in the marketplace. And so consumers now are much more skeptical of paid influencers as opposed to earned media, which are basically influencers that are legitimately excited about the product or the service and therefore seen as legitimate by consumers.

Melinda: What other factors are inspiring consumer confidence?

Jean-Pierre: We looked at a wide range of metrics and factors and what we noticed is that third-party validation…so third-party reviews and validation of product performance did extremely well. The consumers look for those in making buying decisions on which brand to purchase. Also, we noted that package flashes, you know, statements on the packaging played a really important role in communicating truthful information and helping the consumer make their buying decision. Obviously, experts in the industry was another factor. Consumers do rely on experts in the industry.

So, if you’re a dermatologist or a doctor or a dietician or someone who has an expertise in a certain sector, consumers do look for their input from them. You know, if you think of buying a car, you’re always going to explore what experts are saying about the performance of the cars. And you’re also looking at third-party endorsement like J.D. Power on the organizations that are selling those cars. So those are really important factors. Those were the top three that really stood out. Obviously, there are other factors like advertising and social media that play a role, but they play a much lower role in helping consumers differentiate what is truthful and factual and what is fake.

Melinda: Okay. So if we talk about retail, the study found that big boxes are ranking low in terms of trust. I’m wondering why you think that might be, and if you have any thoughts on how they could turn it around.

Jean-Pierre: Yeah. That was startling for me. First of all, you know, the supermarkets and drug stores, credit unions and banks did extremely well on the authenticity meter in our study. And what didn’t do well, as you noted, was big boxes and insurance companies. Now, we can understand insurance companies because they’ve been very controversial about coverages of consumers during the pandemic. And they are seen as an organization that tries to save money by not dispersing insurance policies. Could be perception, but perception is always reality in the marketplace when it comes to consumer mindset.

But big box surprised me because big box retailers were instrumental during the pandemic at supporting consumers’ needs. Think of the Home Depot’s and the Home Hardware’s. So that was quite surprising where they had…and it may be more reflective of their pricing strategy because we know that one of the things consumers want when they’re thinking of authenticity and trust is that the pricing should have a comparison so that consumers can make the right buying decision, and maybe that was an area where the big box retailers were not doing a good job. But again, that was based on consumers’ perception.

Melinda: As you mentioned, supermarkets and drug stores and credit unions enjoyed a bump, not just in sales, but in consumer trust. How can they keep this trust that they’ve earned as the pandemic subsides? And I’m thinking, especially of supermarkets, that probably, if we had done this study before, and then after COVID, we probably would have seen a huge increase in supermarkets. How can they keep that as, you know, the concern about having enough food in your cupboard becomes less urgent to consumers?

Jean-Pierre: Yeah. You know, it’s interesting when you start looking at the controversy going on right now with supermarkets and removing what I’ll call “danger pay” for their frontline staff and that is having an impact on the lives of their employees. I think they’re going in the wrong direction. You know, during the pandemic what consumers told us, through our COVID studies, that they support companies and retailers who support their employees, that supporting their employees with PPE, you know, paying for sick leave and paying for them working in dangerous situations was really important to how they perceive their brands. During the COVID pandemic, those retailers did do that. They did support their employees. They did support them with PPE, with sick leave and additional pay. But now they’re pulling back. And I think that’s going to have a really negative impact on that industry.

Now, the other elements that are drivers to being truthful and authentic is the fact that retailers need to really, and brands need to really support the local community. That was number one, and that was consistent with our COVID study, that brands need to support the community through COVID, the community through sponsorships, community through donations. Also supporting social movements was extremely important, but also being transparent about their pricing. Those are some key factors that came out of the study that if brands want to maintain and continue that momentum of trust that they have with consumers, they really have to pay attention to linking their brand to the needs of the community. No longer can they be kind of homogeneous across all of Canada or all of the U.S, they really need to start thinking about diversity, you know, the needs of the community, and being transparent about the pricing.

Melinda: Right. And I do want give a little shout-out to Costco here because they have replaced their pandemic pay with permanent raise. I think they’re the only ones in Canada that I’ve heard of that have done this so far. I know Sobeys has said they’re going to, but I don’t think it’s actually happened yet. So while generally the pandemic pay has been removed, Costco is the only one that has gone in the other direction.

So, I want to talk about truth in advertising and brand because it’s been a problem since the advent of marketing, but in today’s climate, why should brands seek to be more transparent?

Jean-Pierre: Well, the study clearly identified that advertising is not credible. The consumers don’t see credibility, obviously because brands are promoting their product and the features of the product and those features of the product may not be authentic. So there’s a lot of skepticism by consumers. What brands need to do is they need to really think about how they go to market and how they communicate their benefits. You know, we’ve seen in the UK, a lot of advertising, a lot of marketing, a lot of package design, leveraging statements like “ultra” or “100%” followed by a statement with an asterisk. You know, that is truly sending a red flag to consumers that that statement is not credible.

And so we have to be (as marketers) extremely cautious of the statements we’re making and ensuring that those statements, the consumer benefits that, you know, that brands have spent years developing, that they’re legitimate and that they are supported by fact-based third party endorsed research. And so, you know, from a marketing standpoint, we’re seeing a big shift from mass advertising to what we call social marketing. We see that trend continuing to grow as the cost of marketing increases. The role of the brand to get close to the consumer through social marketing is really important. And with that comes kind of responsibility for brands to ensure that the messaging they’re doing, you know, unpaid or paid influencers is managed properly and is perceived by consumers as honest statements.

Melinda: Yeah. It’s interesting to see…I mean, every year, there are a couple of ads that really stand out and there’s one right now that’s out there, it’s the EXTRA Gum ad where everybody’s reunited after the pandemic and they’re all rushing into each other’s arms and kissing. And there’s so little mention of the product. The product is barely featured in the ad. And I think that’s also an interesting trend where we see that brands are really telling a story that people want to hear. And the product is almost like a secondary aspect to what they’re doing – and the ad has gone viral. I’ll link to it in the podcast transcript. So, I’m wondering what you think about that approach?

Jean-Pierre: Again, that is reflecting the issues facing consumers. Part of the factors that drive authenticity and trust is reflecting the needs of the community. And that is a great reflection of celebrating and somewhat making fun of the whole return to normal. I’d also mention, you know, as we do a lot of the Strategic Foresight, we look at trends that are weak signals that are emerging in the marketplace. And one of those are B Corporations. And B Corporations are corporations that are focused on social responsibility. They’re the triple bottom line focused organizations that are about sustainability and social responsibility. And they’re evaluated by a third-party organization to become accredited to be a B Corp, you have to go through strenuous and rigorous evaluation.

We’re going to see a lot more of these B Corporations. I just noted that one of the banks in the U.S. have become a B Corporation. This trend is very pervasive in Europe and the UK, and we’ll see a lot more of that happening in North America, because consumers, specifically millennials and Gen Zs, they really do care about environment. They do care about organizations giving back. That definitely, you know, was highlighted in our studies on COVID and reiterated again in this Deep Real study that we did. So, expect to see a lot more B Corporations emerging in the future.

Melinda: Another interesting finding from the study is that people trust the information they receive at work less than they trust other sources of information. Can you speculate as to why this is happening?

Jean-Pierre: It’s probably something that’s been accelerated by COVID. You know, when employees are losing their jobs or being laid off, furloughed, you know, obviously, their trust in the organization is undermined. We’ve seen a lot of layoffs, you know, companies going bankrupt due to closures. We’ve seen this, the level of trust, eroded between the consumer and the organization, but it’s also important to understand that organizations have a responsibility to effectively communicate honestly with their employees, and employees are being skeptical much more today than they were before in what kind of information an organization is providing.

So there’s an onus and a level of importance because, at the end of the day, the employees do represent the brand. They reflect the brand values. We know that having disengaged employees has a huge impact financially on an organization. So, you know, the skepticism by employees due to anxiety in the marketplace because of COVID and mass layoffs and restructurings if we look at the retail industry, they all lead to skepticism of what companies are saying to their employees.

Melinda: Right. And I think we’re seeing right now as…in the U.S. for sure, and I’ve heard from recruiters here in Canada, that retail brands are having a challenge getting some frontline workers back into stores. And so, I think we might be seeing the results of this mistrust play out right now.

Jean-Pierre: Yeah, absolutely. Well, there’s a huge shortage of employees when you look at frontline and retail. They’ve all moved on. They’ve all either decided to go back to school or started different careers. And that’s going to play havoc on retail moving forward as retailers retool and understanding that, you know, online has taken a fairly large chunk of their sales. It’s still important to create the right retail experience. They know that it still drives growth. It’s the way to grow market share. And also for a lot of retailers, you know, the online platform has not been profitable at this stage. So retail is important, but they’re going to be challenged with, you know, finding the right talent, and consumers now going to stores are much more demanding. So, the quality of staffing required in today’s retail environment has become a lot more elevated and much more sophisticated. So doing it the same old, same old way is not going to work moving forward.

Melinda: Yeah, absolutely. So you mentioned the B Certification. Can we talk about other claims? You mentioned a few things. You mentioned putting a 100% with an asterisk. You mentioned the B-corporation. If we’re talking about claims and certifications, which ones matter, and which ones are maybe something that you would suggest not going ahead with?

Jean-Pierre: Well, I think, first of all, it depends on the category that you’re in. You know, when you look at the coffee category and you look at fair trade, yes, fair trade is really important, but it’s now become a benchmark. Every product in the coffee category, pretty well every product has a fair-trade statement. So, it’s actually no longer a differentiator in the category. It is a benchmark. It’s something that consumers have come to expect from coffee brands. And so when you look at your third party endorsement claims, really need to look at which ones are now relevant to consumers, which ones are clearly differentiating the brand from the competitors, which one elevates the brand from a social responsibility and supports the claims and benefits of the product. Those are the important claims that you need to support. Now, you know, a lot of these claims are becoming organic as another one. You know, they become mainstream, they’ve become accepted benchmarks. Yes, they’re still very important to have on the package. I’m not saying that they should be removed, but brands need to look at what are the other claims that we need to make that align with the needs and aspirations of their customers.

Melinda: So what about a claim that the brand makes themselves that’s not endorsed by a third party? What would you say about that?

Jean-Pierre: It has got to be bulletproof. It really, really needs to be supported. You know, at the end of the day, when we look at all of these concerns about misinformation and level of trust in brands, the principle is very simple, make a great product. Make a great product that has value for consumers and be consistent in delivering that great product with consumers day in and day out. If you do that, consumers are going to promote your brand. They’re the ones who are going to be brand ambassadors, they’re the ones that are going to see the benefits because they’re going to live through the benefits. I think brands need to refocus and get back to basics on ensuring that their product is the best there is in the marketplace. And if they do that, you know, claims are just secondary to how consumers are going to engage with the brand. They’re going to engage with the brand because it delivers on the promise.

Melinda: Great advice. So the word “community,” you mentioned sort of the idea for supermarkets focusing on community, but let’s talk about it in a bit of a broader scope right now. It’s been a buzzword in the brand marketing world for a while. What does it actually mean to be community-focused?

Jean-Pierre: Well, it’s multilevel, right? Community-focused would be to…buy local would be one example. Community focus would be to support events and charity programs within the community. If you’re a bank, for example, it should reflect the exact area. You know, if you’re a bank in a gay community, you should reflect the community’s values and principles. And that should be reflected through the signage, through the customer experience if you have a branch in a significantly South Asian or East Asian market, you need to really reflect the needs of those communities. And it gets pretty basic and it’s just starling. You know, if you’re in a community that is South Asia, you’ve  got to ensure that your employees can speak their language. It’s simple as that, you know. Yes, it’s great to reflect through signage and graphics, but if you have employees on the frontline that cannot speak the language of that community, it’s a big miss. It’s a big mess. So that’s one of the things.

You know, in every community, they celebrate what separates them from the next community. It could be through volunteerism. You know, having the retailers’ employees participate in local community volunteer events is really, really important. If it’s tree planting or Habitat for Humanity, these are all events that mean a lot to the community. And since retailers and brands are a fabric of that community, it’s really important to reflect those.

Melinda: So now we have the light at the end of the tunnel of the pandemic. During the pandemic, we know that people were very anxious, and a lot of our choices were being driven by a level of anxiety and concern. As we come out of the pandemic, some consumer attitudes are going to be permanently changed. What do you think are going to be the key drivers of brand loyalty as we emerge from the pandemic?

Jean-Pierre: It really is back to the key drivers that we found in our DeepReal study. It really is focus on the community, support diversity, ensure that your claims are truthful and supported by a third party. You know, really ensure your product is the best product there is in the marketplace. Those are the things that the pandemic has brought into focus, but that focus hasn’t changed now. It’s human behavior. Once you’ve adapted to a certain ritual, adapted to a certain behavior, it becomes ingrained in the way you move forward. So, a lot of these behaviors, like if you go into a store and you’re shopping, you’re always going to be concerned about your proximity to the next person, irrespective if COVID is over or not. You’ve spent two years almost doing it, it’s just going to be natural that you continue doing it.

You know, there’s going to be anxiety about going to concerts. Yeah, people will still go to concerts, but there’s still going to be a level of anxiety in the crowd about being close and being involved in large groups. And so that’s not going away. I think brands need to be cognitive of this and be respectful. If I was Cineplex, I would still continue to think about safe distancing between the seats because we want consumers to have a positive experience. We don’t want them watching a movie with a level of anxiety. I think brands will need to maintain some of these built-in behaviors that was established during COVID.

And then obviously there’s a lot of other behaviors that were accelerated because of pandemic, like the move to digital, mobile apps, you know, online. So I think brands need to also realize that the channel that they probably were ignoring for many years is now a legitimate and growing channel, and that they need to really pivot and look at these channels as a permanent way of getting to the market.

I know a lot of CPG brands are starting to develop their e-commerce platform. That’s a smart move because it’s a reflection of the fact consumers during the pandemic shifted their buying behaviors towards online. And that behavior is now ingrained in their everyday life and it’s going to continue moving outside of and beyond the COVID pandemic.

Melinda: Absolutely. Well, thank you so much for chatting with us today, and we’ll make sure that on our podcast transcript, we’re going to link to the three studies. There’s one for retail banking, one for CPG, and one for retail, where you can really dive into the details about the study and the findings. And there’s quite a lot of strategies that JP has suggested for brands to cope with misinformation, fake news and building brand trust. So thanks so much for being with us today.

Jean-Pierre: Well, thank you, Melinda. Thank you. And thank you everyone for listening to this podcast.

Melinda: The message here is pretty straightforward, come to the market with a great product and stand by it with direct, truthful endorsements. There’s a bit of a moral to the story. If you’re honest and open with both your customers and your employees, you will be able to build trust. And getting caught in a half-truth or losing face with your team and you become part of the problem. Brand trust isn’t about one big message, it’s the sum of all of those little communications, whether through marketing, service, product, or the physical experience. That’s what builds a sense of confidence that you are what you say you are.

To find out more about the studies, go to sld.com. Thanks for keeping it real and thanks for listening.

About

Jean-Pierre Lacroix is the President and Founder of SLD. He is seasoned strategic thinker who has led numerous strategies on personifying brands through immersive design.

Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email info@sld.com.