This is part 2 of a multi-part blog series on Marketing in the Era of Digital Commerce. If you missed the previous part, here is the link: Part 1 – Marketing in the Era of Digital Commerce.
Consumers are far more likely to make a purchase when they are recognized, remembered, and receive relevant offers and recommendations. However, many consumers feel brands don’t understand them as a person and a consumer, and switched the brands they buy from because of poor personalization. Marketers hoping to create brand advocates will need to rethink personalization and customer experience strategies. According to McKinsey’s research, personalization at scale can drive between 5 and 15 percent revenue growth for companies in the retail industry.
Before retailers can deliver the relevant, personalized experiences customers crave, they have to truly understand their customers – from what customers choose to why customers choose. That means keeping pace with rapidly changing customer behaviors and building an understanding of preferences, interests, and intentions.
Responding to crises and changing consumer shopping behavior
Consumers are changing their shopping behaviors during this uncertain times – what they’re buying, when, and how. As consumers avoid physical stores and non-essential businesses are being ordered to close, online groceries and other essentials have seen significant upward trends in both revenue and conversion. Limiting shopping for all but necessary essentials is becoming a new normal. Brands are having to adapt and be flexible to meet changing needs.
Key consumer behavior thresholds
Customer sentiment and needs are rapidly evolving in this uncertain times. Expectations of brands are constantly changing, becoming more sophisticated and demanding as customers become more digitally connected and highly informed.
To keep up with the change, marketers are shifting to a new approach to develop a better understanding of customer – from what they choose to why they choose – to build an understanding of preferences, interests, and intentions.
To truly understand customers requires three things to work together effectively:
- Build a unified view of customers by bringing together data generated from every touchpoint along the purchase journey to understand individual and contextual customer needs and what motivates their purchase decisions
- Establish trust and relevance with new customers and extend the brand affinity that has been earned with existing customers. In a time of crisis, trust is paramount for both individuals and organizations. Trust = transparency + relationship + experience
- Be current and transparent to in communicating any business or product availability updates to create a strong relationship with customers. Greater transparency is also required as customers now expect to be able to control what data is shared with whom. According to Accenture’s 2019 Consumer Pulse Check, 73% of consumers are willing to share more if brands are transparent
Leverage better data: Sharpen marketing’s focus with the full context of the customer
To create a complete view of every customer and gain deeper customer insights, retailers should take the following four steps.
1. Unify customer data with a balanced data strategy
As digital marketing has evolved from just a few channels to an explosion of devices and touchpoints, reaching audiences across channels has become more complex. The solution to this problem is both the biggest opportunity as well as the toughest challenge marketers face right now: to truly understand the customer across channels.
Marketers must break down the silos across departments, teams, and channels to consolidate data and see a unified view of the customer. By bringing data together, marketers are better able to understand and respond to their customer needs, and in turn drive growth.
There are four types of data marketers can use to create a balanced data strategy and optimize for acquisition, nurturing and conversion, according to Accenture.
- Zero-party data: You make your consumers want to tell you something by giving them value.
- First-party data: You are respectful about what you collect and only gather what you have a right to know and what will help you better tailor the experience to consumers’ needs.
- Second- and third-party data: Using a humane, balanced approach to the data ecosystem (incorporating resources such as platform data and third-party platform matching), you can round out your view of consumers. For instance, the auto industry has embraced the use of third-party data to gain access to audiences based on factors such as car ownership or lease data, which isn’t available otherwise.
At the heart of a balanced data strategy is a unified customer profile across the organization that serve as the centralized customer intelligence to deliver an orchestrated experience across all channels and touchpoints. In addition, marketers can gain deeper customer insights to understand intent and anticipate customer behavior from a richer, more dynamic customer profile by capturing data about people in three different ways: inferred (derived), observed (behavioral) and self-reported (declared).
2. Rightsize data acquisition with a focus on both data unification and activation
With customer experience rising to become the key market differentiator, transparency and customer control of personal data have never been more critical. When it comes to customer privacy, marketers are facing two major challenges:
- The widespread customer mistrust in how companies use, store, and manage their data
- New data privacy and protection regulations that require businesses to give customers more control over their personal data
The good news is that 83 percent of consumers are willing to share their data to enable a personalized experience as long as businesses are transparent about how they are going to use it and that customers have control over it, according to Accenture.
Data unification and activation is a critical component of personalization, but that data must be collected efficiently, stored responsibly and used appropriately, based on a principled approach of rightsizing data acquisition – transparency, control and service.
3. Combine “what” and “why” in audience segmentation
With audience segmentation, the ‘why’ is as important as the ‘who’. Uncovering why people chose versus what they chose builds an understanding of customer preferences, motivations, and passions, which provides breakthrough to help marketers drive decision making across the organization. Understanding the “why” behind consumer decisions to buy from or abandon a brand helps retailers create more relevant products, experiences, offers and recommendations.
A strong audience segmentation strategy can make all the difference in reaching the right customers with the right messaging. Building audience segmentation based on the dynamic profile of customers’ that comprised of descriptive and insightful attributes from interactions across all channels is an essential first step in identifying and understanding the different levels of value that customers can bring to a business, and deciding whom to target with customer experience initiatives. Finally, this helps marketers drive retail growth by centering the business around the most profitable customers.
The audience segmentation is defined by three characteristics that comprised of what people are, do and think.
4. Analyse the best customer to find “lookalike” audiences with the same potential value
CMOs are increasingly activating the growth-driving strategy, moving beyond the traditional role of brand storytellers. Key to this is strategy is precision understanding of high-value customers with a focus on acquiring and retaining customers whose behavior contributes most effectively to greater revenue and profitability. According to Accenture’s research, five percent of customers generate a third of the profit, and 35 percent of the customer base accounts for 80 percent of profit
To deliver on the growth agenda, marketers must prioritize their marketing efforts not only on retaining the highest value customers, but also acquiring new ones like them. These are loyal, profitable customers who have a deeper relationship with the brand and want to stick with the brand for life.
The combined approach of utilizing first-party data with custom audience and lookalike audience enables marketers to reach the high-value and high-potential customers with high accuracy.