The first time a shopper encounters a product on a grocer’s shelf is a make-or-break moment for its brand. Either she will reach out, pick it up and buy it, or move along to purchase a rival brand. So critical is this decision point, which lasts just a few seconds, to marketers that in 2005, consumer products giant Procter & Gamble coined the term “first moment of truth” (FMOT) to describe it. (A corollary event occurs when the buyer uses the product and it either lives up the brand’s promise or fails to do so; that is the brand’s “second moment of truth.”)
Today, as web browsing has become more and more pervasive, the way people shop has changed. Long before shoppers find products on a store shelf, they search for the best options online. By the time they make a purchase, they have read reviews, compared prices and fully evaluated their options, whether they are buying a pillow or a Porsche. What, then, happens to the “first moment of truth?”
Online marketers have coined the term “zero moment of truth” (ZMOT) to describe this new reality — where marketers have to compete for shoppers’ attention online long before a purchase decision is made. Jim Lecinski, Google’s managing director of U.S. sales and service and chief ZMOT evangelist, has written an e-book, Winning the Zero Moment of Truth, about what he calls a “new mental model for modern marketing.” Knowledge@Wharton and Wharton marketing professor Jerry (Yoram) Wind spoke with Lecinski about the explosion of choice, today’s highly informed consumer and what this new decision-making moment means to marketers.
The following is an edited version of the conversation.
Knowledge@Wharton: Jim and Jerry, thank you very much for joining us today. Jim, what is the Zero Moment of Truth, or ZMOT, and how did you come up with the concept?
Lecinski: The Zero Moment of Truth is an idea that we are putting out to the marketing community as a hypothesis for a new mental model for modern marketing. It is a new moment that marketers need to take into account when building their marketing plans. It reflects a very important change in how consumers, buyers and decision-makers are making their purchase decisions.
Knowledge@Wharton: Jerry, consumers have long used the Internet to search for information about products and services. In your view, how does ZMOT change the buying decision for consumers?
Wind: The ZMOT concept is not a change for consumers. The changes are with respect to corporations, as Jim mentioned, in terms of the need for marketers to try to [understand] the changes in consumer behavior.
Knowledge@Wharton: Jim, do you think ZMOT changes the buying decision?
Lecinski: No, ZMOT was an attempt to catalogue, characterize and give a sticky name to the behaviors that we are seeing from consumers. What is new on a consumer-behavior front is that consumers who used to use this Zero Moment research model to inform their buying decisions only around high-ticket or so-called high-involvement products — white goods, cars or travel — are now so comfortable with and reliant on that behavior that they are now applying it to what you would call everyday items.
Knowledge@Wharton: I think that is a very accurate description of what goes on. Jerry, let’s take an example of what Jim was talking about. Let’s say a consumer enters a bookstore to buy a book. She will be faced with a multitude of choices on the shelves, but when she searches for books online, the number of options increases manifold. How do consumers deal with this explosion of choice?
Wind: That is a great question, especially in light of what is known today as the paradox of choice. When consumers are confronted with too many choices, they freeze. They cannot make a decision. The reason consumers are increasingly using smart phones in the store or doing a repurchase search at home is that it helps them organize [their options]. When I am doing a search on the Internet, I can go by categories. I can do a much smarter search; I can look for specific items. It is much more efficient than just browsing the shelves in a bookstore. These search activities [create] order out of chaos, out of the complexity and enormous set of options confronting the consumer.
Lecinski: I totally agree. As we mentioned in the book, there are three motivations as to why consumers would be [engaging in ZMOT behavior], as Jerry touched on. The first is to save money. It involves looking for the best price for a certain SKU or product. In other cases, I may have a budget in mind. What I’m looking for is not actually to save money, although I always want the best price. I may be looking for the best alternative at my given budget. The third motivation is, as Jerry mentioned, saving time. You have a busy mom with a sick toddler, and it’s much more efficient for her to do a quick Zero Moment search online at home to figure out what is the best medicine than it is to stand in front of 32 feet of cough medicine at the local drugstore and start turning bottles and reading labels.
Knowledge@Wharton: Right. But coming back to a point you raised earlier, Jim, is the concept of ZMOT more relevant for some products and services than others? For example, if a consumer wants to buy a new house, she may spend hours or even days searching online. But is online search relevant if she wants to buy bread, which she may buy far more frequently than a house?
Lecinski: We examine this in the book. The research that we commissioned in partnership with Shopper Sciences looks at this question across a dozen categories and 33 subcategories. No doubt for some of the higher ticket items, there might be more searching involved. But let’s flip the lens from the consumer’s point of view back to the marketer’s point of view. If you are a marketer of bread, and consumers are doing bread searches, you need to be there because that’s the moment where the bread purchase this afternoon will be won or lost. The point is that you need to be there if you are the bread marketer, and it is less relevant that there are more or less searches for bread than for houses.
Knowledge@Wharton: How does ZMOT change the way companies approach online marketing?
Lecinski: I think it has the potential to deeply change it. As Professor Wind said, it challenges their existing mental models. The existing mental model of marketing is: Build a great product, then build a great ad campaign to tell everybody about it and then win at the shelf or at the point of purchase. We often use the analogy of the guy spinning the plates on top of sticks. The typical marketer had three plates to spin, and that’s a tough job. We are suggesting there is now a fourth plate of equal importance, and that is what happens after the consumer is exposed to your ad and knows where to go to buy [your product]. Before they go there, they’re going to engage in these Zero Moment activities. The challenge for marketers is: Are you prepared on all fronts? Are you staffed for it? Are you budgeted for it? Do you have experts or partners to help you win the Zero Moment of Truth?
Knowledge@Wharton: Jerry, this leads to a related question. As the volume of information available to consumers explodes, how can companies make themselves heard above the noise and attract attention to their offerings?
Wind: Let me go back to an earlier question you asked in terms of type of product and service because I think it relates to what companies can do. The way I look at it, this is not so much a type of product, but rather a type of buying situation. Way, way back, almost 40 years ago, a model was developed that divides consumer’s buying behavior into three categories.
One is a new task. When you are buying something for the first time — whether it is a house or it is a small, frequently purchased product — you are looking for information. There is a lot of uncertainty, and you need the information. The other extreme is the straight rebuy. That’s the situation where you buy the same product routinely. There is no need for you to [do an] elaborate search. The third category is the modified rebuy. That’s the situation where a company convinces the consumer that something has changed that will justify and motivate the consumer to explore other options.
These three types of buying situations have direct implications for the marketer. There is one other complexity, which is that an increasing segment of consumers are becoming more empowered. They want to be in control, as opposed to the manufacturer who typically had the control. The strategy for the marketer is to create platforms to allow the consumer to engage with the company and with others [through] social networking and the like.
Is it a straight rebuy? Is this a modified rebuy? Is this a new task? In any one of these situations, the reality is that the information and the tools make it easier for the consumer to get it. The successful marketer will be the one who employs these tools at the right time, at the right place, with the right information and makes it easy for the consumer to use…. The marketer has to rethink the traditional strategy.
Lecinski: I think that is exactly right. One thing to add is, in those buying situations, there was historically what George Akerlof, an economics professor at the University of California, Berkeley, would have described as “information asymmetry.” In a new situation, the seller knows more than the buyer. What’s new and different in the Zero Moment of Truth is in those buying situations, there is now the ability to have information symmetry. If you are a marketer and you are used to communicating in an information asymmetric situation with your potential buyer, but now there is information symmetry, what does that mean for you in terms of how you communicate?
Wind: Jim, how about challenging it? How about the asymmetry exists, but it is now the consumer who has more information than the seller?
Lecinski: There you go, right? Yep.
Wind: That is very common now in the medical area. A physician tells a patient, “I suspect that you have cancer.” The patient will go do the search, and when he comes back to the next meeting, he knows more than the physician on this specific topic.
Lecinski: That’s it. Yes, I agree.
Knowledge@Wharton: Clearly, these are very interesting times. Jim, one of the points you make in your book is what was once a message is now a conversation. Could you comment on what that means, especially in terms of the role of social media and word of mouth in shaping ZMOT?
Lecinski: As you have seen from the data in the book, conversations [have] always been important in buying decisions. But as you say, the technologies that are now at everyone’s disposal — whether it’s broadband or mobile phones — accelerate and reduce the friction in historical, over-the-fence conversations. Where before I could only talk to my friends, family and neighbors, now I essentially have the whole world, right? There are billions of people online who I can have that same conversation with. As a brand, what does that mean to you? Before, your job was to put out a message. You would do some message testing [and then] you put your media out in the marketplace and waited to win the shelf battle. What we are saying now is the Zero Moment behaviors have greatly escalated in importance those ongoing conversations.
Knowledge@Wharton: Both of you refer to the fact that more and more searches are now conducted on mobile devices. What implications does this have for the Zero Moment of Truth? Jerry, would you like to start?
Wind: I think that’s a new reality, and we probably will have an increase in the importance of mobile technologies and devices, which means that companies who had a hard time just [maintaining a basic] website have to rethink the message, the approach and the reality of a very small screen. Not everyone is going to run around with an iPad. More than likely, they are going to [rely on] a telephone. Marketers will have to think about this almost as a theater — and create a stage that will allow the consumers to act and allow them to be the stars, as opposed to just a passive audience.
If you are dealing with this new environment, let’s remember that it might move away from just relying on sight and more to listening, which means voice becomes much more important. We’ll see kind of a revival of radio in this context. The other aspect is obviously related to feedback. How does a company find out what’s happening by relying now on listening and analyzing the conversations that Jim was talking about, rather than on text mining.
Knowledge@Wharton: Jim, what do you think?
Lecinski: We mentioned in the book that on Black Friday, that important Thanksgiving week shopping day last year, fully 20% of all the searches conducted on Google were on mobile devices. It is hard to predict the future, but one would reasonably expect that that number will be north of 20% come this holiday season. It is obviously a huge and important part of how consumers are looking for answers at the Zero Moment of Truth.
Knowledge@Wharton: Jerry, which companies have done a good job so far of understanding ZMOT, even if they don’t call it that? And what can other companies learn from their experience?
Wind: It is hard to list companies because it can be the brains within a company. I think Google has done a good job in terms of leading the creation of much of the platform of these areas. Procter & Gamble is moving in this area, and a lot of the communication companies are moving in this area…. We have to keep in mind that, in the mobile area, Asia and Europe are way, way ahead of the United States. We really have to start looking at these new innovative experiments that are happening out there.
Knowledge@Wharton: One final question for both of you: If you had a panel of chief marketing officers standing in front of you right now, what advice would you give them about changing their mental models so that they can win at ZMOT? Jim, do you want to start?
Lecinski: I would start by asking the simple question, who is responsible in your marketing organization or in your company for helping you win the Zero Moment of Truth? We have this phrase at Google, “Focus drives results.” If I were to point to the other moments of your current mental model, who’s in charge of your national advertising? There would be a person. Who’s in charge of shopper marketing or in-store, helping you win the shelf? There’s a person. And certainly, the same would be said for product development. So the first place to start is to have someone as your ZMOT champion.
Knowledge@Wharton: Jerry, any final words on the book and its lessons?
Wind: Well, I think probably the first direction or suggestion to these chief marketing officers would be to read the book. I think that Jim is addressing an important topic. He brings really great insight in terms of data and specific suggestions on what to do. The other suggestion I have for CMOs is open your eyes and ears and listen and see what’s happening in the marketplace because what Jim has done reflects the new reality of the empowered consumer. If you won’t pay attention to them, you won’t be able to succeed.
Knowledge@Wharton: Jim, Jerry, thank you both very much for your time.