Constant disruption has become part of the retail industry. How can marketers adapt through the current financial crisis?
Retailers have faced challenge after challenge throughout the past few years. From the pandemic’s acceleration of online shopping to the global supply chain disruption and cost-of-living crisis, brands face an increasingly volatile market.
Behaviors can change by the quarter, and if Deloitte’s “The retail evolution’s great acceleration” report tells us anything, it’s that constant disruption has become part of the industry. “Retail orthodoxies will continue to be challenged,” claims the report, and with fears of a recession increasing exponentially, it looks like things are about to heat up once again for the industry.
Understand Behaviors Your Campaign Drives
As people spend less in the UK, comparing the results of today’s campaigns to previous successes will feel uncomfortable; weaker, at least at a “revenue-generated” level. But that doesn’t mean marketing teams aren’t hitting the right chords, nor that campaigns aren’t driving value.
This isn’t the time to do year-on-year comparisons based on total revenue generated. Instead, it’s an important time to make sure you’re effectively measuring incrementality — and the key to achieve this will be investing in your reporting capability to make sure you clearly understand the incremental behaviors your campaigns are driving, for who, when and where.
This shift in focus will become even more crucial for marketers operating in the retail space. Yes, sales are likely to decrease, but demonstrable effectiveness and progress are still achievable.
In response to the cost-of-living crisis, some might stick to the traditional school of thought, batten down the hatches on marketing and cut costs. On the other hand, businesses can take a chance on enhancing customer relationships, understanding that investments into customer loyalty in times of volatility will benefit their brands in the long run. I believe in the second option, but in order for marketers to drive change during the economic downturn, they need to be smart about how they spend their budgets, focusing on customer-centricity and digital transformation.
Related Article: The Challenges Marketers Face Going Customer-Centric
Data-Driven Perspective Is Everything
If marketers look at the current state of the retail industry from a data-driven perspective rather than focusing on transactional opportunities, they should be fascinated by what’s ahead: an increasingly, technology-literate shopper base that interacts more and more frequently with retailers across multiple channels, creating more customer data for marketers to leverage. This is everything.
By leveraging their first-party data to their advantage, retailers can look in detail at the things that matter, such as the incremental value their programs drive. This is essential for those that see achieving customer intimacy as the solution for adversity in retail. Of course, loyalty has always been necessary, but if we take into account that consumer confidence is at a record low and inflation is at its highest rates in 40 years, it’s never been more vital for retailers to retain it.
Related Article: Getting to the Heart of Data-Driven Experience Optimization
Center on First-Party Customer Data
If contextualized clearly, the results of a marketing campaign during the cost-of-living crisis can still demonstrate value and validate the direction of your programs. But, in order to achieve this level of insight, your reporting must be supported by robust, in-depth analysis, which comes with rigorously harnessing customer data in a de-siloed and agile environment. And this data must go well beyond the transactional, without requiring marketers to be fluent with specific systems or have significant technical knowledge.
Are campaigns driving customers on or offline? Which customers are responding to campaigns, and how can I use these learnings to improve segmentation going forward? Where is incrementality being driven? That’s where the value of marketing sits, and it can be showcased with first-party data.
But in order for marketers to develop these relevant, contextualized reports, they need to revamp their approach to center on first-party data. Teams need new testing and KPIs to give decision-makers a better understanding of which customers are influenced by each program. They’ll also need to focus on identifying the right prospects, tailoring their budget toward those who are most likely to convert, using predictive analytics tools.
Looking Ahead: New Approach on Customer Acquisition
There’s not one secret to commercial success, least of all now that the whole landscape can change so dramatically at any moment. But what certainly won’t lead to sales is replicating previous successes with old tactics and persuading customers to spend at random. That approach to marketing probably won’t reach its goal, nor will it provide valuable insights.
There’s certainly more to campaigns than just revenue — you need a deep understanding of the mid- to long-term impact on changing customer behavior, particularly now as third-party cookies will become a relic of the past. And exploring the incremental value of your marketing efforts — using the right tools to collect and analyze first-party data — can empower marketers to exceed C-Suites’ expectations, even at times of financial hardship for customers.