The ultimate goal of any retail marketing platform is positive revenue. Surprisingly, the current landscape is making it unnecessarily difficult for retailers to achieve that goal. Why is that?
In short, it’s because marketing technology is fractured. There are so many best-of-breed solutions and vendors in the retail marketing space that retailers are overwhelmed with choice. Additionally, there’s a problem with bringing together solutions that all work great individually. It’s a problem that not only increases your expenses, it also prevents you from realizing the full revenue opportunity that’s available to you. What is it?
Why retailers need a different class of solution
“When you asked people here who’s our customer,” said Jennifer Bunch, Senior Director, Direct Marketing at Eckler’s, “you got four or five different answers. It was all gut. Nothing was based on data.” This is the problem with best-of-breed solutions. Each solution is providing the best view of the organization it can, but it’s blind to data that exists in other silos. These solutions can’t provide the integrated data marketing needs to make data-driven decisions.
For example, according to the Integrated Marketing Association, the average cost for a retail lead is $34. As a marketer or retail leader, what would you want to know about that lead? You may come up with a list of questions like this:
- I understand the average lead costs $34, but what’s my cost per lead on each individual marketing channel?
- Of these channels, which one results in the highest customer lifetime value?
- When the customer lifetime value is compared with the customer acquisition cost per channel, which channel should I invest in?
- How can I use evidence-based decisions to further hedge my marketing bets and increase my chances of success in the future?
This data-driven line of questioning and a culture of experimentation is why major retailers like Amazon get more than twice the return on ad spend (ROAS) of their competitors. Jeff Bezos is famous for saying “our success at Amazon is a function of how many experiments we do per year, per month, per week, per day…” Just like in the movie Wall Street, “if you’re not inside, then you’re outside.” Brands like Amazon are the insiders of retail marketing because they have access to unified data other companies can only dream of, they take calculated risks and experiment, and they instill a culture of data-driven decision making.
As a retail leader, how can you do the same? How can you ensure that your data can answer the questions that will drive results? To do that, you need a different kind of retail marketing platform. Let’s look at what this should include.
6 elements to look for in your retail marketing platform
There are six pillars that have consistently come into play for our clients over the past 17 years. When these pillars come together, they reduce bottom line costs while enabling leaders to increase topline revenue through data-driven decisions. They make your path to the goal of increasing revenue an easy one.
- Customer data. Customer data is at the core of every marketing decision. For a marketing platform to be effective, it needs to provide a longitudinal view of your customers at every point in their lifecycle. This allows you to adapt your marketing by comparing the traits of customers who engaged in a high-value or high-risk behavior versus those who did not, targeting the right audiences, and personalizing your marketing messages.
- Marketing Attribution. Understanding your customers' path to purchase and which marketing efforts ultimately drove them to purchase is an enormous competitive advantage in today's environment. You can no longer trust independent (silo'd) measurement. Marketers need to leverage machine learning models to accurately measure and optimize your online/offline marketing investments.
- Customer lifetime value (CLTV). Being able to predict what a customer will be worth to you over various time periods empowers you to optimize investment decisions. Without this ability, marketers are chasing customers who will never be profitable and/or deliver an ROI.
- Audience Activation. Recent technology advances have made it possible to quickly identify high value or at-risk customers based on interconnected customer characteristics, observed behaviors, product/service characteristics, financial/promotional characteristics, attributed marketing interactions, and/or CLTV predictions. Leveraging this labeled data you are now able to create machine learning models to predict which customers fall into these at-risk or opportunity segments in the future.
- Testing and measurement. The way for brands to stay in front of competitors or adapt to landscape changes is through testing and measurement. When you integrate a culture of testing and measurement, you will uncover a treasure trove of opportunities and solidify the sustainability of your brand. Without testing and measurement, you are exposing your brand to losing market share to competitors who are evolving faster than you.
- Customer-centric forecasting. Each year, companies set performance goals, typically created from simple YOY factors, which never materialize. By relying on the previous five pillars, you can accurately predict performance and create media, product, growth, etc. plans based on your actual customer trends.
You may already have some of these pillars in place, and I’m sure that individually these pillars have benefited your company. But, the question is now, how much more effectively could you market with all six pillars working in harmony? Let’s see what it would take.
Choosing your next retail marketing solution
The retail marketing platform that you choose is a critical decision and not just because the switch may be costly. The design of the platform itself will heavily affect the results you see, which will affect your growth goals and organizational stability. With this in mind, what questions should you ask when choosing a retail marketing solution?
- Does the solution unify all 6 pillars and integrate all retail marketing data into one platform?
- Will I have a partner to support implementation and help my organization shift its focus to data-driven decision making?
- Are my organization and leadership ready to shift to a data-driven approach to marketing?
- What pain points and benefits will make us push for a change?
Answering these questions will help you identify whether a retail marketing platform can give you a data advantage over the competition. It will also show you what it will take to get your organization ready for a change. But, this analysis is just the tip of the iceberg.
At Clario, we specialize in helping retailers use data to gain marketing advantages and drive results. We provide a fully integrated retail marketing platform and back it with an expert team that partners with your organization to help it become data-driven. If you’d like to learn how we can help your organization implement a data-driven strategy, then contact us today.