Enterprise Marketing & Promotions Management

Data and Personalization – the Recipe for a Stronger Customer Experience & Competitive Advantage

By / December 2017

Insights

*This article originally appeared on dunnhumby.com

It’s a challenging time to be in retail. Heavy discounting and price pressure from a very competitive marketplace is putting significant strain on margins for traditional grocers. FMCG brands are increasingly seeking to bypass retailers through direct-to-consumer propositions, like Dollar Shave Club in the US. e-commerce players are also increasingly competing with bricks and mortar retailers at very low margins in a bid to gain scale. For example, Amazon has made no secret of its strategy to build its customer base with minimal margin retailing and its Prime offering (currently an estimated 85 million subscribers[1]) in order to then monetize its audience to generate new media revenues.

As if this isn’t enough, it won’t be long before the likes of Facebook, Google and WeChat become prominent players in retail too, maximizing their deep user engagement to put themselves firmly between consumers and traditional retailers. It’s no surprise that many retailers are looking at new ways to streamline their overheads and diversify their offer to maintain their market share and margins.

In all this noise, the positive news for retailers is that many are in fact still sitting on enormous assets which are largely unrealized. Across stores, websites, mobile apps and loyalty programs, retailers have their own rich media inventory with data assets telling us where, when, what and how customers shop. Complement this with research data, online browsing/purchasing behavior, geo-location data and demographic data and retailers have a very attractive media proposition for brands. There are huge opportunities to leverage these data assets in external media channels – helping retailers get a better ROI for their own advertising investment.

The opportunity to also monetize these audiences and channels is no doubt very attractive to many retailers right now. But it’s not as simple as flogging all and sundry to the highest bidder – there are some key issues to consider if you want it to become a sustainable source of revenue.

The guiding star needs to be your customers. These media channels and data assets should deliver coherent, consistent and relevant communications, with the aim of enhancing the customer experience. Better experiences lead to stronger customer loyalty, which in turn generates more sales data and potential customer “eyeballs”. This is true whether communications are run by the retailer or for brands.

There are 3 fundamental pre-requisites:

  1. Having significant and connected data which can be linked across media channels, enabling identification of valuable audiences for planning, targeting and measurement purposes.
  2. Effective ad products which allow the retailer and 3rd parties to plan campaigns around their different objectives, reach the best audience and use the customer as the success metric.
  3. Having clear relationship models and governance with advertisers – particularly for communications executed through the retailer’s media channels or where the retailer’s brand appears in the communications. A joined-up planning process and creative templates are two examples of this.

If done right, this enriched “owned” media inventory enables retailers to better talk to their customers and ensures that more 3rd party brand media spend is pointed towards their customers and stores. All of this allows retailers to build competitive advantage which cannot be easily replicated.

However, building a scalable media business is challenging – even with strong data and media assets in place there are a number of watch-outs:

  • Ensure that your channels and data are used for 3rd party communications which are aligned to your core marketing and trade objectives, or at the very least not in opposition to them.
  • Manage communications across channels to ensure effective planning and ‘air traffic control’, because a customer is the same irrespective of whether they are in your store, on your website, on your app or on Facebook. Maintaining consistent communications across all channels is vital.
  • Maintain control of your data, especially in external channels. Avoid the temptation of selling your data in an open model as this could undermine the value of your data assets. This is a fine balance as the data needs to be connected to different channels but shared in such a way that it remains permissioned by you or a trusted 3rd party.
  • Ensure compliant and transparent execution of media to make sure that in-store media is installed effectively or digital media is bought for the correct audiences. It’s also important that the right commercial models are in place to incentivize 3rd parties to deliver it effectively.

With new technologies, there is now opportunity to create impact across the entire customer journey, from their sofa watching TV all the way to buying products at the till or online check-out.

With the right data and store assets you can create new owned media channels, and power external media which will impact shoppers when they are online, on social networks or watching their favorite TV program. Connecting rich customer data along the entire path to purchase can deliver a stronger customer experience and more effective marketing plan. It can be used for both rewarding existing customers and driving acquisition for the retailer and brands.  And importantly, it opens up a new revenue stream for retailers which is a welcoming light in these stormy times.


Contributed by Luc Osborne, Head of Customer Engagement, International Markets dunnhumby

Executive in data analytics, marketing and strategy. Successfully set up and led innovative businesses in multiple international markets. Experience advising leading clients in retail, FMCG, media, utilities and telecoms sectors.

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