In this article, I’m looking at the red-hot topic of data-driven marketing. The previous post in the series from my colleague Christine Connor described what data-driven marketing is: a new approach to marketing that uses data analytics and marketing automation to create an integrated, customer-centric operation capable of building customer insights into both above- and below-the-line activities. Today, I want to get more specific and discuss what this new normal for marketing means for brands in the retail sector.
Marketing automation in retail
What drives consumers in the retail space? We never randomly get up and think today I shall buy a box of nappies. Purchase behaviour is always driven by moments. These moments are typically due to a change in lifestyle or micro events that drive a certain need. I am hungry, I have a headache, I am going on holiday, I would look great in that, etc. At that moment, we then have a want to buy products that best meet those specific needs. We then go through behaviours searching for those specific products to best match things like quality, price points, convenience. How many have you have used trip advisor online to find a vacation, or bounced between different retail shops looking for the perfect look of an item of clothing? Product parity is critical for retailers to be able to be in the consideration set. It must first be the right product to solve that key consumer need.
Next is speed: Retailers must ensure they can put their products into the hands of consumers at least as fast as the competition. After that, convenience and price are the key drivers for consumers.
When retail brands use data analytics and marketing automation well, they can better meet each of these key drivers. This is because marketing automation in retail speeds up customer interactions, while data analytics ensures the experience is more directly relevant to each individual customer. When this is connected to predictive analytics that can anticipate life stage moments then brands can actively plan ahead. Data-driven marketing thereby enables a retail experience that is magnitudes better than anything offered in the past.
Making moments that count
The future for retailers that embrace data and marketing automation is to build more intimate relationships with their customers. They can take the vast amounts of data they have on their customers, their supply chains and their businesses to ensure that every piece of the customer journey is optimised; whether that is through delivering a service faster, by doing so in a more targeted and relevant way, or by helping to enhance the process and reduce costs.
We’re already seeing this model play out in the many new ways our clients are starting to take advantage of the Internet of Things (IoT). For example, we’re currently doing some work with a large fashion brand to use IoT devices and the related data analytics to accelerate processing interactions and queries. We’re also doing some work with several retail clients who are looking to connect consumer and retail data to differentiate local store offerings to local tastes and needs.
However, as retailers embrace data-driven marketing, they must also recognise that they have a significant responsibility to ensure customer data is treated with respect. If this new normal for marketing is to truly work for customers as well as brands, then the latter must take seriously their role as custodians of their customers’ data. After all, this data is effectively only being lent to brands.
What’s more, this moral obligation is increasingly being backed by a regulatory stick. Under new data legislation (GDPR) coming into play in 2018, individuals will be given powerful, new rights over their data, and companies will have much stricter responsibilities about how they collect and use it. As a result, organisations are going to have to start thinking very differently about how they collect and use data; taking more steps to protect it, while ensuring consumers can access, delete and port their data with ease.
A new world for data
The digital era to date has been one of unbounded experimentation and opportunities for retail brands. This is about to change. We’re on the cusp of a brand-new age, where power is being placed back in the hands of the individuals. As this happens, data—and marketing—will be reinvented again and we will undoubtedly see new retail business models and cultural impacts we could never have dreamed of.