The National Retail Federation recently hosted its first virtual conference, and though speakers were remote, the annual conference continues to keep its finger on the pulse of digital marketing in retail.
The Csuite podcast recorded a session (Episode 123 — “unPredictions 2021: Retail Marketing Priorities”) at the conference, gathering veterans from the field who not only survived 2020 but learned invaluable lessons from the pandemic-induced shift to digital. Now they’re looking ahead to the coming year and what retail brands should focus on next.
Guest-hosted by Sucharita Kodali, VP Principal Analyst Serving eBusiness and Channel Strategy Professionals at Forrester, the Csuite podcast welcomed these voices to share trends about shifting customer behavior:
Kristin Smith, SVP Digital at the children’s clothing brand Hanna Andersson
Gavin Wheeldon, CEO of technology provider Purple
Payal Hindocha, Vertical Product Marketing Manager at marketing automation provider Emarsys
John Starke, VP Business Development at online retailer Zulily
Ratul Shah, Head of Product Marketing at SAP Customer Data Solutions
1. The Shift to Digital = More Data Collected
Throughout the pandemic, brands have collected more data than ever before on both existing and new customers, and despite the ensuing permissions changes which may drive down opt-ins initially, the value of data has never been more obvious – it’s actually been central to how fast brands have been able to move to e-commerce.
Digital marketing expert Payal Hindocha points to Emarsys research where 79% of the businesses surveyed collected more data on new customers in 2020.
“During the holiday season, we surveyed about 355 US businesses who have a turnover of $20 million and over, and we found that one in five of these businesses fundamentally changed how they do business. And 2020’s tough environment, it was really a catalyst, but it was a catalyst for positive change and adaptation, and the investment in more online and mobile channels that these businesses made… the increase in digital channel engagement from 2020 also meant that brands collected a lot more data on their customers than they otherwise would have. And the challenge there was that they didn’t quite have the right expertise or the technology ecosystem to really understand who their customers were, what their preferences were, and what to really do with that data, [or] how to store it and how to process it, and really, how to use it to keep the customers engaged.”
Some brands have been working on their data value exchange even before the pandemic and the upcoming privacy changes in iOS 14 and Google. Brands like Purple (who help customers maximize and digitize business space with Wi-Fi analytics, marketing automation, and wayfinding) were able to shift more smoothly into online and leverage their data to provide better experiences for customers.
“First of all, we collect first-party data through Wi-Fi login. So, we have 166 million users of the Wi-Fi in various places via our customers all over the world. And we’ve been through this many years ago with GDPR, which I think was the first really heavy hitting legislation and helping our customers in Europe. And it’s safe to say that when that first happened, there were digital bonfires all over, because there were piles of data with unknown or shaky rights attached to them. And one of the things we were able to do is work with customers and say, well, look, if you know that you’ve not got the rights, it needs to go. And if there’s some uncertainty, let’s try and refresh those rights via the Wi-Fi login.”
Wheeldon gets at the challenge brands face heading into 2021. A retailer must make it clear what the value exchange (a superior customer experience) is for customers who give them permission to use their data. The best way to do that is with a repermissioning campaign where the brand refreshes the profile for each customer. This allows you to start over, make sure old data is removed, display only relevant preferences, and prove that your brand recognizes how valuable data is.
Wheeldon offers up a Pizza Express example: “We went live, we increased their CRM database by 600% in under three months and refreshed… I think it was 60% of all of their existing data with new rights so that they could be confident in using that. So, having gone through that, you know, we saw CCPA come in and obviously work with customers on that… But yeah, we’ve seen that sort of come from Europe and go around the world and [we are] very familiar with it and deal with it very much firsthand, because we’re collecting that data on behalf of our customers and at considerable volumes.”
2. Earn the Right to Customer Data by Providing a Value Exchange
With GDPR, CCPA, and the cookie-killing changes on the way from Apple and Google, having permission to use customer data is the central personalization challenge going forward. Now with mandatory opt-ins, brands like Hanna Andersson and Zulily face uncertainty.
“The iOS update… it’s slightly terrifying when you think about it. The statistic that I saw is about 70% of iOS users currently share their data. Right? And that’s going to potentially drop to about 10% to 15%. That is a staggering drop that you’re going to see. And so how do we work through that? … Loyalty programs, CDP, how do we get the data, understand it, and make sure it’s easily accessible throughout the organization?”
Although many fear that opt-ins will tank, there’s no reason to believe this is a long-term issue. Customers want personalized shopping experiences, and brands can provide that by respectfully collecting their data and leveraging it to serve up exemplary experiences. The value exchange is the most critical message your brand needs to get out in 2021.
“It’s an area that I think we’d like to continue growing. We want to make sure that when we think about our value proposition, that it’s not just about putting product on our site, but it’s about brands reaching millions of customers. We’re set up, I think, to help our vendor partners not only move excess inventory or launch a new product quickly because of our flexible business model. But also, just to expand their reach. We also provide real-time insights using our vendor portal. So again, data insights, the analytics are very, very important. So real-time sales information for brands about a product, size, location, all important parts of what we’re trying to provide.”
“That’s going to be a really important thing for brands going forward, is what type of data stewardship do you show to your customers and how transparent are you about that data stewardship? Because let’s face it, every day it feels like there’s another story about another hack, another breach, another this. And so, customers are getting, I think, increasingly sensitive and aware here in the United States.”
Data is key to personalization, and something consumers want. But some brands still need to fine-tune their value exchange in order to get that data. Hindocha sees this as the #1 goal for every brand:
“I think a key focus for the retail sector this year should be really putting the customers at the heart of the organization and earning the right to use their data, and use this data as their competitive advantage, and ensuring that there’s value exchange for their customer to be able to, one, provide their consent, and also, come back to a brand. And when a brand can really understand who their customers are and meet them with contextually relevant, in-the-moment, personalized experiences across any touchpoint, digital, physical, online, in-store, they’re really meeting customer expectations.”
3. You Can’t Use Data in a Silo
Data’s useless when it’s cut off from the rest of the company. You can’t predict behavior or polish a profile, and as obvious as accessible data should be, many brands still have silos.
As Hindocha pointed out earlier, 79% of businesses Emarsys surveyed reported collecting more data from new customers this past year, but she adds, “Almost half of them said that they actually couldn’t use that data because it lived in silos, it lived in different systems, and was really difficult to manage because of the fragmented technology ecosystem that they currently have in place.”
Kristin Smith at clothing retailer Hanna Andersson knows how frustrating silos can be:
“That’s been a little bit of where we are, it’s been siloed, it’s been fragmented. So, I’m bringing it all together and really understanding that that data is our most… one of our most valuable resources and one of our most valuable elements to the brand. Of course, we have great product, great design, but for us, it’s: How do we make sure that we are getting that data through a loyalty program? How are we feeding all the various different systems? How are we clear on who’s doing what, when and how with the data as well?”
Many brands talk about putting the customer first, but a strong customer-centric approach will have its roots in how you handle data.
“Customers need to be central to an organization, and their data needs to be accessible across different systems to be able to deliver that in-the-moment, contextually relevant personalized experience for each individual customer, especially when they react with a brand across many different touchpoints, not just one touchpoint, but whether that’s going to be via digital channels or a physical store or even a call center. And when brands prioritize customers, that means they know unique attributes about that customer that no other brand knows.”
4. Double Down on Customer Identification
Customer identification lies at the heart of everything retailers do these days, and allows them to execute faster and more accurately. With the coming permissions changes, customer identification solutions are going to quickly evolve, and the best ones will remove friction across any touchpoint.
Customer Data Solutions expert from SAP, Ratul Shah can already see innovation in identification software:
“A Customer Identity and Access Management Solution, or a CIAM solution, is really designed to help your business understand who your customers are and how they want to be treated. And what does that really mean? So, it provides the technology… that allows brands and retailers to build an easy way to help identify and remove the friction for customers coming into your brand. It also helps you understand how they want to be engaged. So, when you think about knowing who someone is, what kind of devices they use, what channels they want to be communicated on, what their preferences are, and the consent to use that data, to personalize the experience in a digital way consistently, it helps you increase your conversion rates, and more importantly, it helps you drive retention because you’re able to be consistent with the delivery of services to them across the journey.”
The hybridization of in-store and online is driving the need to not only merge these data types but directly leverage identification as a competitive edge in the data value exchange.
“If, say, for example, a brand hasn’t prioritized the identification of their customers across different channels and actually capture that consent, they have no way of using that data to personalize and move away from discounts and offers… In-store customer identification is still an opt-in as something that we see happening more and more, where brands are now starting to prioritize the identification and often capture across every channel, not just the digital channel, but especially in-store, too. Because — let’s face it — the majority of transactions still happen in physical stores. E-commerce is a vitally important channel, but if you look at our industry, having an omnichannel presence is incredibly, incredibly valuable because it gives your customer the option of going anywhere for your brand.”
We’ve seen a few brands use in-store customer identification to enhance the shopping experience during COVID-19.
“If you walk in a Walmart, instead of it being post-purchase where you’ve used loyalty, we know the second somebody gets there because we detect them from the Wi-Fi presence. We’ve seen a shift more towards the safety element, and we integrate with cameras both 3D and 2D, so we can do occupancy management and really understand how many people are in a store or an area of a store at any given time. And clearly the whole social distancing has driven that, and you’ve probably seen it yourself [where] people stood on the front with clipboards of giant calculators trying to work out how many are in a store at any given time. And we can automate all of that.”
Going hand in hand with customer identification and the eradication of data silos, a Customer Data Platform (CDP) — or even better, a Customer Engagement Platform — is the overall solution where all of a customer’s opted-in data is stored and accessible to your organization. This access gives your brand agility to recognize and capitalize on behavior signals in real time.
“Retail businesses are complex because it’s not just completely online. There is an offline component to this in the sense [that] they have physical retail stores. So how do you identify someone when they come into an area? How do you combine that data together, utilize the purpose of that data to engage in both the digital and physical worlds, as well as optimize your business for a customer-centric experience… the need to truly understand who your customer is, how they want to be treated, and use that data in a purpose-built way to design customer experiences that are truly impactful… as you think about what a CDP is really helping a business do, it is that unification of data.”
5. Refocus on Core Customers
We know how much cheaper it is to retarget existing customers than it is to acquire new ones, and as part of the digital shift and the impending data privacy policies going into effect, it’s logical for a brand to focus on their best customers, the ones who shop frequently regardless of cart size or incentive. This is where a repermissioning refresh is a great opportunity to re-engage these customers — building trust with them will be more straightforward than starting from scratch with new customers.
Over the last year, retailer Zulily encountered significant online growth, in part because they refocused on their main customer: moms with kids at home.
“We wanted to lean in and pivot our customer experience to focus on what product and needs are top of mind for her, her family, and her home,” John Starke, VP Business Development at Zulily, said. “We made a number of significant changes to our online merchandising and quickly curated home essentials. For example, focusing on newly trending categories, including home, health, leisure, food and storage, business tools, tech resources, certainly pajamas, and so forth.”
This strategy allows Zulily to pay close attention to shopping behavior, identify customer interest trends, and then go serve up new products and brands to redouble the engagement of their core audience.
“Zulily is unique in that in order for a shopper to access our incredible deals, we currently require an opt-in email address. This, along with thousands of other variables, enable our machine learning and data science teams to personalize that 1:1 shopping experience I was talking about earlier across all of our cohorts, such as new activations, reactivations, and so forth. So, the deep knowledge that we have of our customer, what device she likes to use, what her first purchase was, how she engages with us, with what product events, curated themes, categories, brands, geography, how she found us, etc. — all are inputs into the experience that we’re trying to create uniquely for her.”
6. Discounts Are Not Engagement
Another big trend in 2020 was that incentives are not playing the promotional role they have in the past. Long-term engagement depends on so much more than 20% off.
“[Retailers] found it challenging to keep their customers engaged outside of what they could offer on discounts and different offers. And we saw this across the industry, that mass discounts were promoted to either clear stocks or keep customers coming back to a brand. But this also opened up opportunity because what it also meant… a lot of these brands, about 38% to 40% of them, [are] moving away from these discounts and using online or digital personalization to grow their online presence. And almost 59% percent of these businesses said that loyal customers contributed to more revenue in 2020 than they did in previous years.”
7. Optimize Loyalty
Speaking of loyalty, some of your best customer data comes from your loyalty program. Loyalty customers already value personalization and friction-free shopping, and will exchange their data for those benefits. But loyalty is also an expanding channel in omnichannel retail where you can really deepen the shopping experience for your best customers.
“Thinking about things like a loyalty program, of course, is critical for us because of that first-party data and really giving a reason for the customer to give us the data that we need to provide that more personalized experience… They understand what we’re doing with their data and how we’re doing it, and we make it worth their while in terms of… it’s not just about coupons and promotions and things like that… you saw a lot of retailers really trying to pull back on the batch-and-blast kind of the same promotion for everyone and get a lot more surgical with that. And that’s certainly something that we’ve been trying to do.’”
“This competitive advantage, together with how brands use loyalty, can be used to win and retain customers in 2021 and offer a value exchange for that customer, for their opt-in, and for them to continue giving that opt-in and also offer that experience that a customer can’t get anywhere else. So, when we advise brands on loyalty, it’s more than just points and prizes — it’s about what you have to offer for your customer that they can’t actually get anywhere else.”
8. Build Trust Through Relevant Content and Communications
As brands develop and execute their data privacy strategies, potentially starting profiles from scratch in many cases, brand trust will be a huge issue. Data collection and analysis produce insight about customer preferences and allow brands to deliver only relevant offers and other content to the shopper who truly wants it. The accuracy of personalization in this regard is a strong way to build trust between retailers and customers.
Smith describes how Hanna Andersson has taken action to do just that:
“When the pandemic hit, like a lot of retailers, it was really difficult, right? … We had a small store base… and so, for us, it was just, I think, a master class in agility and flexibility, quite frankly. And so, there was a lot of strategies, and one of the things that I would say that Hanna is really good at is being nimble and being agile… We had a big business around swim and, of course, spring break, which in the beginning of the pandemic and currently right now, not a lot of people are going on spring break and going on vacations as much. So how do we be a lot more sensitive to our customers where they are in the moment, with home schooling and all of the things that everyone’s facing? … One of the things that we just leaned into was a lot around our customer messaging and our customer communication that was so important for us just to try to provide value-added content, whether it’s blog posts, to keep kids entertained, or to do things around surprise and delight.”
“Authenticity is really important, I think, for brands right now,” Smith went on to say on the podcast. “I think there’s going to be a couple of main trends that come out in ’21, especially in the retail space that we tend to sit in. One of those is around purpose-based content or commerce. You see a lot of companies and brands leaning into this, and I think everyone’s very aware right now of just the chaos that’s going on in the world. And so, having a higher sense of purpose and [knowing how] you incorporate that within the commerce experience is going to be an important component, and that empathy and humanity is also an important element.”
As a partner who helps brands convert excess inventory or rapidly launch a new product, Zulily has trust in its DNA.
“We aim to reach and build an emotional connection with our customers by using data and insights to reach them on the right channel, at the right time, with the right message and most importantly, personalized just for them. We’re also always going to continue on earning her trust… We have an opportunity to do so through technology and innovation, through transparency. We want to build great experiences for our customers’ future… Zulily has an opt in member base. So, for us, it’s about driving engagement via compelling communication. It’s important as we do that that we select the best content, the right events, the contact method, the frequency of communication for each member in order to drive a very personalized experience.”
“I think that the biggest challenge that retailers have got is building trust again and again, trust from the consumer to feel safe and come back to store. And as I said earlier, to then give them a feeling of safety when they’re there, that they’ll come back again and again. But the second thing I’d say is around the experience because people have got so used to shopping online. If you’ve got a store that doesn’t give some sort of experience, then you’ve just got a very expensive distribution channel. So, thinking about how those consumers interact when they’re at that store will be important in winning mindshare. And I guess it’s going to be about understanding that there will be a new normal, people’s behaviors will have changed. Maybe there’ll be more local shopping, and maybe there won’t, who knows? And I think it’s important that retailers are in a position to be able to get the data to understand that because whatever they were used to, it will be different. And if you don’t have ways of collecting that data and understanding it, then you’re working in the dark.”
9. Innovate Like Mad
Innovation is already happening in the areas discussed by the panel. We expect to see a flurry of new tech solutions pop up around identity management and data privacy. For example, Hanna Andersson is leaning into optimizing their tech stack.
“So, there were some technology investments that we made, really trying to evolve and modernize our technology stack, especially around communication, that was helpful. So, one of the things that we actually just accomplished, probably about middle of the year was transitioning to Emarsys, standing up a lot of other different technologies. And so, we’ve had some great success there. But it’s really been an important thing to try to say ‘How do we maintain and stay nimble and stay agile for 2021?’”
Hindocha has seen the same level of tech investment across the board as retailers put all the data they collected in 2020 to work.
“Those brands who had all of this data, they also invested in more customer-centric technology to store and process that data and then use that data to personalize the digital channels that customers were engaging in 2020. And because of that, they also invested in different online marketplaces, so being present in marketplaces like eBay and Amazon to ensure that relevancy and availability for their customers if they didn’t quite have that direct link to their customers.”
Hindocha points out that many brands have realized how game-changing a customer data platform or a customer engagement platform can be, and there exists must-have components that really help scale operations and legally use customer data in the right way.
“As a business we don’t hold very much inventory, which means the priorities from a product strategy standpoint are about driving fresh new product for our moms or for our customer experience, which means innovating on our platform through technology and leveraging the agility in our business model. I’ll give you a few examples. We launched a marketplace model a few months ago with a test of the wine category. This was designed as a way to lean into product categories that are highly relevant to our customers and develop a different way for brands to connect with the Zulily customer automatically by using a marketplace approach. We also started to unlock and act as a fulfilment service for brands who previously may not have worked with Zulily. We can start to leverage our millions of customers to benefit brick and mortar brands, maintaining their brand equity while using the scale of an online retailer to reach those customers who are likely to shop their brands through our personalized shopping experience.”
There’s still growth to be gained, Hindocha says. “One of the biggest investments would be to connect the online, offline, and mobile datasets with a technology ecosystem that really allows a brand to be customer-centric. So, their data is not siloed; it’s made available to many different teams in the organizations… and then use that data to create meaningful experiences with a customer any way they choose to actually interact with the brand. And we also found that online retailers intended to focus on selling through marketplaces, such as Amazon and eBay, as a route to customers. But about 37% to 40% actually intended to invest in their own branded channels.”
Digital marketing stands on the edge of another burst of innovation, driven perhaps by far-reaching changes in the way brands can collect and use customer data. While this will be challenging in the short run, the innovation in the next few years will bring us closer to 1:1 marketing than ever before.
In a Daily Flash segment, Alex Timlin, SVP Verticals at Emarsys, commented on what retailers need to do moving forward.
“My advice to retailers is to really look at how to be relevant in 2021. It’s what do you know about this customer and how can you use new tools and new techniques to make sure that you’re very personalized because they do have more options and more choices than ever before, so you’ve got to work a little bit harder to win their business and treat them as an individual and treat them as a valued customer.”
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