The retail industry is going through an enormous amount of disruption. The revolution began, and will likely end, with Amazon.com, and has been strengthened by digital-native and direct-to-consumer companies like Bonobos and Dollar Shave Club. The old guard of retail — Sears, Macy’s, and J.C. Penney — have, in turn, gone through a series of bankruptcies and shrinking stores as they struggle to compete with competitors born in the digital age. The reason behind this shift in retail power, however, isn’t the overhead of brick-and-mortar retail space, the dwindling foot traffic at physical locations, or the failure to undergo successful digital transformation. It’s forgetting the key factor of retail — the consumer.
In an increasingly digital-first world, shoppers crave a unique, personalized and relevant experience. According to a recent Salesforce study, 80 percent of customers say the experience a company provides is as important as its products and services. And while this is the sweet spot for companies like Amazon, many retailers haven't fared as well due to their failure to use the customer data available to them. For retailers, there are two options to consider when utilizing and implementing their data to provide customers with hyperpersonalized experiences: building an internal system that can take upwards of five years (the wrong path), or partnering with a data vendor or customer data platform (CDP) to drive revenue and quick wins using the data already at your disposal (the right path).
You’re Already Behind
Why is the first option wrong? Because, as the retail giants of the past have shown, you don’t have five years to build your own internal data structure. Competitors, like Amazon, have been using data for years, and are constantly refining and enhancing the user experience for their customers. Amazon has changed the way consumers shop by building a one-stop shop for practically everything. Consumers are increasingly more inclined to give their business to a retailer that can ship items directly to their doorstep, days ahead of when it’s needed, rather than take the time to visit a store.
Amazon can provide these types of experiences for their customers thanks to its ability to capitalize on the troves of data it's sitting on, particularly product-specific data (e.g., how long a pack of toilet paper should last based on order frequency). For retailers to compete, partnering with a CDP is key. By utilizing the user-specific data already available and pairing that with product-specific data, you too can create experiences for your customers akin to Amazon. Understanding what your customers are truly looking for and retargeting appropriately makes it easier to leverage multiple touchpoints and stay competitive.
At a recent panel discussion, I spoke with a retail executive whose company was struggling to appropriately target its customers. The retailer wanted to improve on its personalization strategy. The specific example was its customers propensity to buy pants. In order to target its customers, the retailer claimed it needed to understand their predictive likelihood to purchase pants, as well as their predictive likelihood to repurchase within the next three months. Additionally, the retailer claimed it needed to understand the customer’s propensity to buy at discount, whether the customer researched the store online, as well as any in-store beacon data to understand which aisle the customer visited.
In reality, a CDP could have performed the exact same functions, without all the complications associated with figuring out a shopper’s next move. By utilizing a CDP, retailers can determine what the customer was searching for — be it a single pair of pants or a more varied order that includes additional accessories. Additionally, by having a fleshed out, 360-degree profile of the shopper, the retailer would be able to understand the customer’s loyalty tier, when their last purchase was, and what incentives drew them down the path of purchase. These are all data points the retailer was already sitting on, but simply didn’t have the tools to utilize. By employing a CDP, the company would have been able to quickly use this data to provide a more personalized experience for its customers in a matter of weeks or months, rather than years. Working with a CDP would also enable the retailer to connect its various marketing channels, including email, advertising, and CRM tools.
With the right tools, you can compete with the Amazons of the world. And for those not born in the digital age, there's an added benefit to having a strong brick-and-mortar presence. Just look at what the aforementioned Bonobos and Dollar Shave Club are doing with their physical presences. By partnering with a CDP, you can use your physical and digital data to generate revenue through quick wins and deliver the personalized experiences your customers crave.
Dylan Flye is head of sales at Simon Data, a performance marketing platform built for today's data-rich, multichannel world.