The supply chain challenges couldn't come at a worse time for businesses. After a slower-than-average holiday season last year due to the pandemic, suddenly businesses are faced with supply chain slowdowns that make it difficult for them to deliver their products to customers in a timely fashion. These challenges are particularly salient for the medium-sized businesses that sit in between the Amazons of the world and the boutique shops that communities gather around. For retail businesses in this category, the holiday season can make or break their whole year.
The situation is further complicated with the recent privacy changes such as the iOS updates, which make advertising on Facebook significantly more expensive. Trying to overcome a strained supply chain and rising advertising costs in what might be a make-or-break holiday season can feel more than a little overwhelming as a marketer. Ultimately, we can’t get products in stock faster, but we do have a few cards to play that can help your business navigate the current market and survive another challenging year.
Make the Most Out of Your Data
The key for many businesses this year will be in their utilization of first-party data supported by third-party data. The difference in first-party vs. third-party data lies in the source. First-party data refers to information that you and your organization collect about your customers through their engagements with your brand. Things like transaction data about previous purchases with your brand; whether they have subscribed to your newsletter; and user-inputted personal information like name, email address and birthday all fall into the bucket of first-party data. Traditionally, marketers have utilized first-party data to enroll existing customers into retargeting campaigns such as offering discount codes or rewards to loyal customers for making repeat purchases or reconnecting with customers who haven’t made a purchase in a while.
In contrast, third-party data comes from outside sources such as external focus groups, surveys, census data, or even data purchased from other companies. Using third-party data is attractive because it's much easier and faster to acquire large volumes of third-party data. However, I would caution against using it on its own to build persona-based advertising campaigns because it's less specifically related to your business and your individual customers.
The combination of first- and third-party data is where some of the magic starts to happen. Third-party data is able to add context and color to the patterns you observe from your more reliable first-party data. Persona-based advertising campaigns created with both data sets help to create powerful buyer personas and help your brand identify the customers who have the highest customer lifetime value (CLV) for your brand.
Prioritizing Customers With a High Lifetime Value
Once you've identified which customers offer your brand the highest CLV, you're then able to begin making strategic decisions. Ideally, every customer who orders from your store will get their item in a matter of days or at worst a week. With supply chain issues as they currently sit, however, this simply may not be possible. As we get closer and closer to the major gift-giving holidays, ensuring that items will arrive before the holidays becomes increasingly challenging if not impossible. Nobody wants to be empty-handed at the family gift exchange and no business wants to disappoint a customer with a late-arriving product — but if somebody has to have their product arrive late; you should ensure that it isn’t the customer with the highest value to your brand long term.
Data acquisition and usage will be one of the biggest separators of successful and unsuccessful businesses this holiday season. Once businesses begin leveraging first-party data with third-party data as a supplement, they have the base for establishing CLV and are future-proofing themselves as privacy laws continue to become more stringent. Brands must prioritize making a personal connection with customers and building out a customer base that's sustainable.
Emad Hasan is the CEO of Retina AI, a customer intelligence solution that empowers businesses to maximize customer-level profitability by focusing on early customer lifetime value.