E-Commerce Marketing in 2020
Five years ago mobile commerce was something that only venture capital firms were talking about. Big brands and big platforms hadn't made their move. Similarly, Facebook targeting didn't even creep onto the marketing agenda until three years to four years ago. Now Facebook is one of the most sophisticated channels for brands, with Instagram, Twitter, Snapchat and Tinder (swipe right for new shoes?) stepping up their own advertising offerings.
At the same time, e-commerce has seen tremendous growth over the past four years, with the share of U.S. retail sales occurring online growing by 50 percent (from 4 percent to 6 percent). That growth rate is likely to accelerate as mobile device usage grows and consumers across the world gain comfort with e-commerce.
Given this rapid expansion, predicting specifics of how people will shop in the 2020s is difficult. What channels will rise and flourish? Will retailers move to more of a subscription model? Will the world run on magic?
We don't have any great answers for those questions, but we do have ideas about the tools that marketers will need to confront whatever new challenges arise. Together they will make up the "marketing brain."
Preparing for What's Next
We're approaching a golden age for marketers. Every day, consumers provide clues about what interests them and how they want to hear from their favorite companies. For retailers, however, effective marketing is still as hard as ever. Data is fragmented across dozens of marketing tools and channels, and sifting through it is a manual and time-consuming process.
Some retailers are already relying on advanced techniques that incorporate predictive analytics to learn more about their customers. For example:
- Customer lifetime value: How much will a customer spend over time?
- Predictive shopping affinity: What's a customer likely to buy?
- Lifecycle marketing: When and how often is a customer likely to make purchases?
- Contact frequency and channel affinity modeling: How often and by what method do customers like to be contacted?
For marketing to truly take a leap ahead, brands first must be able to organize and draw meaning from the wealth of data in front of them. These data sources will only become larger and more complex as time passes. To prepare, companies are investing in three missions:
1. Eliminating data silos. Databases need to be flexible and able to organize, cleanse and store huge amounts of data centered around individuals rather than channels.
"The goal is to have a single definition of the customer and a 360-degree view of all of our interactions with her," said a vice president of customer marketing systems for a major omnichannel retail brand. "This includes her responses to our marketing efforts across the entire company, whether it's direct mail, email, telemarketing, clienteling, customer surveys, loyalty offers or through any of our other customer communication points and media channels."
2. Connecting tools. Centralized data hubs are emerging that connect databases and marketing tools together so teams can power consistent campaigns that reflect a broader range of data.
"I have all these fancy tools to personalize email, personalize on-site, but I'm not doing anything smart with any of them," said the vice president of customer retention for a major omnichannel retail brand. "I need my tools to talk to each other and actually get smart."
3. Finding meaningful customer insights. The best companies are pushing past historical, rule-based decision making, instead turning to machine learning that can instantaneously analyze data to surface the most meaningful insights.
"We spent millions in our customer data warehouse to store customer data, but weren't extracting value from that data," said the senior vice president of CRM for a major omnichannel retail brand. "The database became a prison for the huge amount of information we were collecting."
The Marketing Brain
McKinsey & Company reports that in the world of big data, the key to success is simplicity and speed. Companies need to aggregate their data from across marketing touchpoints, find insights, and enable teams to quickly test, measure, coordinate and automate campaigns.
This new generation of e-commerce marketing tools — we call them "marketing brain" tools — will help retailers do just that. Rather than adding extensions to existing systems, this type of tool is engineered to process billions of data points in real time and surface insights that are statistically accurate, actionable and accessible to every team, tool and channel. Marketing will no longer refer to a few major campaigns, but rather a continuous process of customer engagement.
Brett Robbins is the head of business development at Custora, a predictive analytics platform.
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