Why Identity Resolution is Critical to Retailer Survival

The US retail industry is facing headwinds, due in part to consumers’ growing preference for shopping online. Department store sales in May fell 1% from April, Kiplinger projects only 2% in-store sales growth for the rest of 2017, and a number of retailers are now at risk for bankruptcy.

Meanwhile, the online retail environment is growing and is more competitive than ever, as Amazon and Walmart look to grow their ecommerce businesses through acquisitions and marketplace recruitment. In order to survive and grow, omnichannel and online retailers must derive the maximum value from each customer relationship. To do that, they must be able to accurately identify each customer, regardless of channel, platform, or device. Identity resolution technology is the key to accomplishing this fundamental retail marketing task.

Seeing customers clearly is key

In their spring 2017 global luxury retail update, Bain and Altagamma wrote that the current climate requires “an impeccable recipe for outperformance” among retailers who wish to stay competitive. No retailer at any price point can afford to lose track of customers as they move between channels. That’s in part because modern consumers expect a seamless experience across channels and also because retailers can’t market to customers who “disappear” by using a new device to shop or by buying in-store after researching online.

The challenge is that consumers now interact with retailers in so many different ways that it can be difficult to identify them accurately in each context. Not only are customers shopping in multiple channels where their information may be stored separately, but according to Adobe they’re also using an average of six devices each day. A customer who shops for a pair of shoes online and then buys them in store may continue to receive targeted messages online about those shoes if the retailer’s marketing technology doesn’t recognize that the in-store and online shoe buyers are the same person. A customer who researches a chain store’s laptop offerings on an Android phone may go online later to use social media on an iPad—but they’ll only get targeted offers from the laptop retailer if it’s clear that it’s the same customer using different devices.

How identity resolution helps retailers see customers

Identity resolution lets retailers know who they’re marketing to when they’re marketing to them by collecting, analyzing and scoring data that’s scattered across devices, point of sale terminals, offline databases and third-party databases to identify customers wherever they are. The more data sources are available and the more reliable the data is, the more comprehensive and effective the identity resolution program will be.

A typical identity resolution program starts by collecting the retailer’s in-store, online, and mobile customer and transaction data.  This program is driven by a series of algorithms, whereby probability and scoring are applied to find and determine any associated records. This data often exists in separate, incompatible formats. After that data is cleaned and standardized, its customer-identification value increases. Next, the program pulls in third-party consumer data to develop a fuller understanding of the customers’ identifying markers across channels. Analytics can score the data to spot the most likely identity matches even in seemingly disparate data.

With this data analysis, the retailer’s marketing program can activate customers across channels, based on their individual preferences and purchasing habits rather than on more general demographic data or incomplete customer data. By delivering individualized offers and content across channels, the retailer can now provide the seamless omnichannel experience that modern customers expect. In addition, these customers are less likely to vanish from the retailer’s view when they switch to a different device, move to another social media platform, or make an in-store purchase after browsing online. That means the customer’s dataset can grow more robust and detailed over time, leading to more accurate targeting and with each new datapoint.

The retail market in the US is challenging now, and retailers who want to grow must develop strong individual relationships with their customers and see them for who they are, wherever they are. Identity resolution is the key to retail marketing programs that drive conversions through content and ads served to the right customer at the right time in the right channel.

Dave Cameron is Vice President of Analytics at Target Data

4 responses to “Why Identity Resolution is Critical to Retailer Survival

  1. Dave, thank you for sharing this insight and highlighting the impact on analytics for the retail sector. The upcoming holiday season will show us which retailers have successfully engaged an omni- channel marketing strategy.

    1. Thank you for reading, Mettacite. This upcoming holiday season for retailers will be followed with great interest across all categories.

  2. I appreciate the compliment, Anil. You bring up interesting points of how the consumer dynamic is constantly changing. Curious and excited to see how it develops. There’s a lot more to say on the topic.

  3. Typically these types of columns don’t have any significant takeaways. However, this article was very informative and I definitely learned some new things that may help down the road.

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