To Keep Pace With Rapid Changes, Retailers Need Customer Data Technology Built for Enterprise Scale
The COVID-19 pandemic has accelerated the gradual shift from brick-and-mortar shopping to e-commerce in ways that were previously unimaginable. Seemingly overnight, consumer habits have changed across generations — and for many, there’s no going back. Even for those companies that were well-positioned for this shift, or that quickly pivoted to accommodate new surges in online ordering behavior, there’s still tremendous work to be done when it comes to fixing customer communication and retention strategies for the future.
Retention, more than ever, is a question of ensuring quality experiences as consumers migrate from offline to online. For large retailers, staying ahead of this radical change in behavior will test their customer data infrastructure as never before. They will quickly — and in some cases painfully — come to understand the limits of what that infrastructure can handle. And what they will find, in the end, is that customer data solutions built for marketing alone lack the firepower to guide a pivot at such a broad enterprise scale. When brands turn to customer data for a task of this magnitude, the data can’t be siloed into marketing performance. It needs to be comprehensive, accurate and actionable for stakeholders across the entire enterprise.
Long-Term Shifts Among Long-Time Customers
The pandemic caught businesses in varying degrees of preparedness when it came to the sudden and overwhelming shift from in-person shopping behaviors to demand for seamless e-commerce experiences. As many customers were forced out of stores and into digital channels that had previously not drawn their interest, retailers that had already invested in strengthening their e-commerce presences were able to reap the rewards of a sudden surge in demand.
Even among seasoned e-commerce retailers, surges in online demand caused operational disruptions. Most sought quick-to-implement solutions and workarounds that would accommodate the short-term e-commerce volume increase. But as the weeks and months wear on, one thing is becoming apparent: the surge is here to stay. Brick-and-mortar customers — some of whom count themselves among a retailer’s most committed loyalists — have tasted the convenience of e-commerce, and they’re hooked forever.
Rethinking Loyalty and Retention in a Post-COVID World
For the most part, today’s retailers that operate in both brick-and-mortar and e-commerce spaces maintain those relationships as distinct entities. There’s a historically understandable reason for that: Until now, many customers tended to exist in one channel or the other, and communicating based on their activities either online or offline typically proved sufficient in terms of fostering loyalty. In the post-COVID world, however, this assumption of singular channel preference is much less tenable.
Bringing these channels together all starts with the ability of a retailer to identify its best customers — i.e., that small group of customers that drives the majority of the company’s revenue. Many of these brick-and-mortar individuals have migrated to e-commerce in recent months, and retailers must be prepared to meet them there with tailored offers based on their shopping histories at physical retail. In addition, retailers must identify loyal brick-and-mortar customers who have yet to engage the brand online and seek to migrate their physical retail behaviors into e-commerce channels. This migration requires a deep understanding of those customers’ existing relationships with a brand, as well as the willingness to upend all current understanding of what “success” looks like.
Finding the highest-value customers is also a critical precondition for accurate analytics. The models that help prevent churn, target promotions and offers, and then measure their impact, all of these operations and insights derive from the ability to accurately identify customers across channels.
Enterprise-Grade Customer Data
Operationally, businesses need to be figuring out how to turn their short-term logistics band-aids into long-term structural improvements. From a marketing standpoint, however, the implications go even deeper. Many retailers are learning that the customer data technologies that were put in place for marketing use cases are ill-suited to the scale and intensity of an enterprisewide migration from offline to online.
The point solution that helps send better email or that personalizes a website isn’t going to cut it. Marketer-managed, marketing-optimized tools are just that: tools. They lack the scale, speed, extensibility and interoperability to facilitate an enterprisewide response to changes as deep as those caused by COVID. Marketing needs customer data, there’s no doubt about that, but it’s not marketing’s problem alone to understand customers, transform the business to be more customer-centric, and act systematically to grow revenue and loyalty. These must be goals shared across the entire organization. Retailers need a solution built for enterprise-grade scale, speed, extensibility, flexibility and interoperability.
Before retailers can reach the nirvana of the "right message to the right customer," they need to solve their customer identity and customer 360 problems first — organizing, centralizing, and deploying data that's massive, complex, and often a total, unstructured mess. Retailers need a customer data foundation that's accessible, flexible, reliable and usable across disciplines to help the business know and serve their customers as individuals for the first time. What they need is an enterprise-grade solution for customer data, and, as they're quickly realizing, most of their martech can’t operate at that level.
Brian Goldfarb is the chief marketing officer at Amperity, a customer data platform provider.