Retailers have enormous amounts of customer data at their collective corporate fingertips. In most cases, and through most channels, they have demonstrated their ability to connect with customers in informed and appropriate ways. There’s one channel where retailers are failing fully to cash in on the value of their data: digital display.
This may seem surprising when one thinks of all the display ads that appear, such as banner ads that show up as consumers surf the web, check their Facebook news feed or browses apps on their mobile devices. But few banner ads are based on a retailer’s deep knowledge about specific customers.
Applying CRM data to the digital channel can result in customer-centric merchandising programs, reflect inventory and supply chain realities, improve commerce conversion, maximize customer lifetime value and provide incremental lift.
Think of all the rich first-party consumer data available: brick and mortar store metrics, loyalty program membership, website activity, email lists and open rates, purchase history – the list goes on and on. Then add to it the lessons learned from years – decades in many cases – of doing business: which products can be priced higher, how to scale discounts and sales according to seasonal demand variation, and so on.
The problem is that all this data has been stored and managed in separate siloes – customer data has been the purview of marketing while inventory and other business data has had its home elsewhere. The result is that most CRM systems push offers and messages built around specific customer “profiles” or audience segments without regard to other data that might be valuable. Tapping into the full pool of first-party data allows retailers to send the optimal offer to each individual – communicating on a one-to-one basis, not just to big buckets of audience segments.
At the same time, revenue management objectives are currently focused purely on maximizing profit based on controlling inventory, adhering to sales and discount best practices (balancing the added purchase motivation of a sale with the profit loss), seasonality and store location. It’s a tried–and-true system that has worked fairly well for years, but it ignores the new possibilities provided by applying deep customer knowledge.
This isn’t to say retailers haven’t been applying customer information and insights effectively in many cases. For years they have used this type of data to craft engaging brick and mortar shopping experiences, promotions, merchandising strategies, websites and targeted email campaigns. But they have yet to fully apply this data in today’s omnichannel marketing world.
Real-time outbound messaging based on website activity and optimized using rich and varied data available to retailers allows them connect with customers on a one-to-one basis. Most retailers know their customers by name, and in many cases they have known them for years. The data that forms the foundation of these relationships needs to be applied online; and technology makes that possible.
By integrating first-party customer data with business systems (inventory information, revenue management systems, etc.) and real-time bidding (RTB) platforms, retailers can deliver customer-specific offers that can also reflect current supply chain and business goals.
For example, by using this approach, a retailer can recognize that a woman buying children’s clothing in August is likely doing back-to-school shopping and so can deliver marketing messages that highlight related products.
This may seem obvious – and perhaps it is; but a fully integrated data approach provides powerful new cross-sell and upsell opportunities. For example, if a retailer knows that the customer mentioned above typically only purchases children’s shoes within a certain price band – say, between $25 and $40 – ads for shoes at the upper end of that band, and slightly higher, can be shown to try to nudge the customer into a wider spend bracket.
For example, online shopping club and outlet BrandAlley integrated CRM data with real-time user profiles. By doing so, its bidding algorithms were enhanced by increasing bids for users in segments that showed a higher performance over time or in segments that BrandAlley identified as being at risk to turn to another merchant based on purchase recency.
This strategy allowed BrandAlley to focus their RTB investments on new users and the most relevant existing customers, taking into account historical CRM data to help predict customer lifetime value and adjust bids accordingly. Additionally, the supplemental CRM data made it possible to more accurately personalize the ad creative for each impression won, thereby significantly increasing overall budget efficiency compared to their original retargeting campaign.
Integrating the full range of first-party data lets retailers design granular “customer-specific” offers that are delivered through dynamic creative in real-time and that are individually built for who they are, what their real intent is and where they are in the purchase funnel. It’s a huge opportunity – and one that is not yet fully being taken advantage of.
Retailers need to use the information and systems they already have in place to connect with customers through one-to-one digital marketing at scale as effectively as they do through brick and mortar stores, email or direct mail. Unlocking the power of first-party data and linking marketing with inventory and revenue management systems provides retailers the opportunity to delight customers and increase profits.
JB Brokaw is president of North American operations at Sociomantic.