COVID-19 forced retailers and restaurants to squeeze years’ worth of digital transformations in the span of a few weeks. As in-store shopping and in-person dining models became untenable in March 2020, retailers and restaurants pivoted to contactless delivery/pickup; buy online, pick up in-store (BOPIS); and mobile and loyalty apps to keep their businesses open. In turn, customer experiences became more and more digitized.
While the shift to digital had long been underway, the pandemic ignited a massive acceleration of digital experiences that created an explosion of customer data from online transactions. We’ve reached a tipping point in digital customer experiences that will define the future of commerce as we know it.
Brands that capitalize on this explosion of customer data will win market share over those that don’t. Looking ahead to what’s in store for the years to come, there are three tenets that forward-looking retailers and restaurants are adopting to shift from survive to thrive.
1. Drive customer retention with personalization.
It's five times more expensive to attract a new customer than to keep an existing one, which is why leading brands invest millions in retention marketing. It’s only become more important as COVID-19 shook up customer loyalty, with 73 percent of U.S. consumers saying they actively shop at new stores and try out new brands.
Traditionally, retention marketing amounted to sending the same message to all of your customers at the same time. That changed when leading brands like Netflix, Starbucks, and Amazon.com set the standard with their highly personalized recommendation engines. Today, brands that miss the mark on personalization risk losing their loyal customers, especially among younger consumers who get frustrated when they receive irrelevant promotional materials.
Unfortunately, providing personalized retention marketing at scale is only possible via digital platforms that maintain customer-level record of previous behaviors. This was a non-starter for smaller restaurants and retailers that put off digital transformation in favor of more pressing operational needs, but the pandemic has changed that. Even smaller restaurants and retailers had to rapidly invest in digital infrastructure to stay afloat, better positioning themselves to leverage their newly digitized customer relationships to drive customer lifetime value.
2. Own your data.
From food delivery services to online payment processing apps, the pandemic drove rapid adoption of third-party services that helped brands get their bearings in these uncertain times. However, when evaluating these partnerships, brands should pay close attention to the question of data ownership. This is especially pertinent in the long run because the value of data will continue to grow as technological advancements allow for better data utilization.
Successful third-party partnerships typically begin with a clear objective. They can be extremely valuable and necessary for customer acquisition, especially in the short term. However, for a lot of brands it makes sense to have a plan for how to transition newly acquired customers onto their own digital platforms, if possible. Businesses that invest the time in building the right partnerships and ensure they have a grasp of their customer data will be better positioned to thrive as the market continues to embrace personalized services and offers.
3. Start now, start small.
Marketers have long been enamored by the promise of a “golden customer record,” often falling prey to the misconception that more customer data always leads to better results. This forced many brands into a state of analysis paralysis, spinning wheels to get to the most accurate and comprehensive data and stalling on making actual progress.
The truth is, attaining a perfect 360-degree view of existing customers is an extremely long and capital-intensive process, but it’s even more difficult to operationalize it in a way that serves the business.
To ensure that perfect doesn't become the enemy of the good, winning businesses prioritize incremental digital improvements that can be leveraged in the short term. For instance, businesses that are completely analog might add a digital platform like a mobile app or a website to give customers more payment options, while more advanced businesses can start making sophisticated changes like connecting point-of-sale systems to those digital platforms to scan personalized offers at the register. What’s important is that these improvements are providing immediate tangible benefits all while helping businesses move closer to their North Star.
Shifting From Survive to Thrive
The pandemic delivered a tremendous blow to retail and restaurants sectors this past year, but it also accelerated necessary technological changes that will help the industry make a leap forward in offering connected digital experiences.
My hope is that small and midsize businesses will emulate industry leaders and lean into their newly digitized customer relationships to come out of the pandemic stronger than ever before.
Adam Brotman is the CEO of Brightloom, a customer growth platform that focuses on making personalization and convenience the new standard for all customer experiences.