During the 2018 holiday season, retailers saw stellar e-commerce year-over-year growth of over 15 percent. This upward trend was seen across retail categories, desktop and mobile. Average order values also indicated that even though shoppers took advantage of sale items, they spent their savings and then some on additional items. Of course, some retailers didn't perform as well as others. Those that invested heavily in integrated e-commerce strategies delivered the strongest YoY gains.
In order to be an overachiever, retailers need to create a unified approach that goes beyond their digital strategies and aligns the overall marketing plan with their entire sales funnel. Below are the three priorities for retailers to meet this challenge in 2019:
1. Target high-value customers.
The cost of customer acquisition continues to go up, driven by increasing competition and availability of limited "bottom of the funnel" marketing options. To maximize the return from marketing investments, retailers need to focus on identifying and winning high-value customers. How can this be achieved? By studying high-value customer journeys, understanding the various channel touchpoints, and aligning marketing budgets per channel accordingly.
Data plays a big role in this process, which means that retailers need to invest in advanced analytics tools. The insights gained will allow retailers to effectively and accurately track customer journeys and build customer personas, as well as pay close attention to cross-channel and channel-specific testing to uncover new personas that may be targeted. In fact, testing is a critical component. Marketers should be reserving 5 percent to 7 percent of their total campaign budgets for testing.
2. Close the gap between online and offline.
This was such an important lesson from the holiday season. E-commerce is growing, but consumers are still shopping in stores. Retailers can’t be focused on one or the other; they need to work on aligning both shopping experiences.
What does this mean for digital marketers? For starters, key performance metrics need to evolve — cross-channel and device attribution are a necessity. As customer loyalties continue to diminish, marketers need to move away from treating new customer acquisition and retention separately. Metrics like cost per acquisition should be replaced by customer lifetime value-led marketing efforts.
Other ways to connect the online and offline worlds revolve around having a strategy to support marketing as it relates to product (e.g., private labels, product assortment per season, localization, etc.), merchandising (e.g., pop-up stores, shelf life, voice shopping, etc.) and distribution (e.g., supply chain, inventory, shipping and returns). All of the pieces must be working together to maximize returns for retailers.
3. Have a strategic approach to product promotion.
With increasing fragmentation in "points of purchase," retailers need to have a comprehensive strategy for the products they want to promote on their own website vs. marketplaces vs. stores. The shopping experiences at each of these points should be consistent and lead to an integrated brand experience for the shopper. Nike is a great example of a brand taking a strategic approach to product promotion. The athletic footwear and apparel brand has carefully mapped various points of purchase and identified the most likely customer persona for each. While its sparkling “House of Innovation” builds aspiration in Nike’s New York City store focusing on millennials and Gen Z, the products the brand sells via its Amazon.com partnership are very different.
Search marketing plays a significant role in these integrated strategies. We need to move beyond siloed marketing and sales, and transition from purely intent-led search to discovery-led search, where discovery points can be online or offline, voice-tap or click-activated, and in 100 percent alignment with the brand everywhere. For online retail growth to exceed 15 percent in 2019 YoY, retailers have to make the strategic step of aligning their online/offline sales funnel with their digital strategies.
Udayan Bose is the CEO of NetElixir, a retail search marketing agency.
Related story: What Retailers Can Expect This Holiday Season