‘Retail is detail’ is the famous quote by James Gulliver, the late British retail entrepreneur behind the Fine Fare and Safeway brands. For retailers, being on top of the detail requires them to exploit the complex first party data they have on all parts of their customers’ purchase paths. From what products they’ve previously purchased and when, which retail stores they tend to make those purchases within, to what they’re currently looking at and may want to buy next. This can be used to help drive them to make one more purchase or visit a store.
But the reality is far too few of them are realising the power of this data. Like an amateur cryptologist, they have the code but haven’t been able to decipher it. As we look ahead to a more privacy-first internet and a world without cookies, this must be fully explored so that retailers can remain relevant in a world of increasing online retail and personalisation.
A failure to develop a new digital strategy
Retailers were in many ways the original data pioneers. They showed huge innovation 30 years ago with the development of loyalty cards. However, since this era, time and technology has somewhat overtaken the legacy retailers. With the development of ecommerce, newer and more sophisticated insights are now available as to what drives customer behaviour. Yet many legacy retailers are now becoming increasingly reactive in this space rather than leading the way as they did in the pre-internet era.
Email for example is now treated as a mass marketing tool like direct mail, where generic emails are sent to customers regardless of what retailers already know about them or where they currently are in their customer journey. Meanwhile social media marketing has been too reliant on buying third party Facebook audiences rather than focusing on leveraging their existing first party datasets.
At a higher level, digital marketing as a whole is frequently disconnected from offline in-store sales data – meaning that retailers only see half the picture when it comes to the measuring the true effectiveness of their digital campaigns.
Retail marketers not preparing for the end of the cookie
We recently commissioned some research in partnership with YouGov looking at marketers’ preparedness for increased restrictions around cookie tracking. This is the primary component that digital platforms use to track user behaviour and target them within marketing campaigns. It underscored that marketers in retail were unprepared for the future digital data-driven world. Only 19% stated their company had a fully formed strategy or were in the process of developing one.
With the gradual phasing out of the third party cookie it is imperative that retailers develop new strategies to ensure they can stay ahead of the competition. Here are three innovative ways retailers could act on their own first party data to deliver far more profitable and sustainable strategies.
1) Linking instore transaction data with your online marketing platforms
Many retailers such as supermarkets will have most of their sales take place in-store rather than online – with their digital marketing activity generally driving users to their online assets rather than physical stores. Yet despite having the ability to do so via loyalty card data, very few brands have effectively linked the online and offline worlds together to enable greatly enhanced capabilities within their digital strategy.
This can be hugely valuable in determining the true effectiveness of online campaigns, and also opens the door to many additional personalisation use cases. This includes directing users to their nearest retail store through paid search marketing based on their current location, or directing customers to physical stores if the item they’re after is out of stock online. In my experience only 10-15% of brands are leveraging this despite having the required data signals to do so, and represents a significant opportunity to be leveraged.
2) Building dynamic customer profiles based on people’s buying behaviour
Whilst many retailers run panel-based customer segmentation studies, in our experience very few actually base their customer segmentation on user-level digital signals. This is despite having a huge amount of user data that many other brands would love to be able to leverage. The result of this is a digital approach that is often fairly generic.
Yet retailers’ first party data gives them an almost unique opportunity to do this accurately in real time. This is due to their customer’s engagement with their websites and digital assets. If you have a robust first party data tracking setup, you will know a shopper always goes on a site at a certain time or is more likely to purchase when they perform a certain three actions on the site. The better the tracking, the richer the profile. You can use 3rd party segments from the likes of Google or Facebook to guess who they are – are they families, young couples, in-market for a certain product or simply researching pricings? But without that actual first party data you are just guessing.
3) Utilising online data to provide a tailored instore experience
As we have seen, transaction data from an instore environment can help drive better digital marketing. By the same token, capturing information in an online world can have implications instore, offering opportunities for a more joined up customer experience. Some retailers already have the potential to do this within their brick and mortar stores. If customers login to the retailer’s app as they go in-store, they can be immediately identified and matched back to any customer profiling/ segmentation.
Not only can you engage your customers via the same app through push notifications and tailored offers, but you can also pass this information directly to your in-store team who will be able to provide a far more personalised experience rather than simply treating everyone like a brand new customer. This is particularly relevant for those in the ‘considered purchase space’, where for an expensive piece of jewellery hours of research online may have already been done, providing a rich source of data on the specific needs of that customer.
As we face a future where the end of the cookie is in sight, retailers have a chance to once again be a pioneering force in offering a truly personalised shopping experience. Utilising and combining their vast first party data sets both online and instore, they can develop truly customer focused data strategies as relevant for the 2020s as loyalty cards were to the 1990s.
By Nick Yang, Senior Expertise and Innovation manager at data company fifty-five