Retail media may have dominated the marketing agenda for the last couple of years, but it’s only one specific part of the retail data story. What’s been overlooked are the slightly less sexy, but far more accessible ways retailers are able to leverage data right now. Brands don’t necessarily need masses of data or a sophisticated data team to be able to start laying the foundation for a data-driven media strategy.
The challenge
What we’re hearing from UK retailer marketers is that today they are more or less shooting blind, making a lot of assumptions about who their customer is without any way to test or validate their hypothesis. Most of the data marketers do have access to today is transactional in nature and only tells them a story about what their customers buy, where they buy, and when they buy.
Alongside building a first-party data strategy, the need for marketers to better understand their customers beyond this transactional story is vital. They need to know who their customer truly is, and have data to validate their assumptions. How old are they? Are the purchasers male or female? Do they spend their money on luxurious five star holidays abroad or do they invest in things for their home? Do they shop at Waitrose or Tesco?
Building a comprehensive profile of your customers can help drive a holistic media strategy and ensure marketing investment is targeting the right people; from saving spend by suppressing inefficient audiences for brand campaigns, to using the appropriate personalised messaging depending on the profile (for example, current customer v churned customer v new prospect). It’s also vital for new customer acquisition and lifetime value (LTV) strategy development. Who are our current customers, how do we engage them effectively to earn and grow their loyalty, and how do we efficiently engage new people that are similar?
But how does a marketer accomplish this without ownership of or access to the demographics, psychographics, behavioural data, or interest-level data about their customers?
Another common challenge that UK marketers are experiencing is that, as the industry and technology has evolved, data has been brought into the business at different stages. The result? The systems storing it haven‘t been designed to enable marketers to access and action on it. Instead, the data sits in operational silos, making internal data collaboration virtually impossible, and hampering efforts to create a truly data-driven strategy.
The opportunity
Take a look at some media innovators like Boots and Costa Coffee. They may have sophisticated data-driven media programmes today, but it‘s important to remember their initial customer data applications started small. In each case they started with a low-resource proof of concept, to show what was possible and then helped the organisation build upon each successful outcome, one baby step at a time.
Regardless of size or sophistication, all retailers face similar challenges when it comes to leveraging data. Does any of this sound familiar?
- No single view of customer data, or the perceived customer profile isn’t based on validated data.
- No first-party data, or a lack of access to what there is.
- Inability to visualise, plan, and activate against customer data; even if the data exists, developing any meaningful insights to help build and execute the strategy is painful and time consuming.
- Inability to connect customer data into marketing platforms at scale
All of these pain points can be addressed and eliminated by putting the right foundations in place. That’s not just a matter of technology but rather of designing a data strategy on use cases and outcomes. It also means establishing a first-party data strategy with a strong customer value exchange so you can better understand your customers, with data that has the required permissions to use it. It means establishing a culture of collaboration, both inside the marketing organisation and outside, so that different departments see the value of sharing the data they gather. Lastly, it means democratising data across the business to enable different stakeholders to leverage it to drive smarter decisions.
The good news
There are two silver linings here. The first is that there is no business that can’t make better use of its customer data to increase revenue and improve the efficiency of its marketing. Therefore, you are not on this journey alone. Talk to your colleagues and peers in the industry. Chances are they are facing the exact same struggle. The second is that you don’t need to rebuild your entire data infrastructure in order to see results. Every step of the journey, however small, is a step in the right direction and will deliver incremental benefits.
Boots didn’t build their sophisticated data infrastructure and successful marketing programme overnight. Just a couple of years ago, only about 7% of Boots digital media was targeted using first-party data. It’s now over 40%. And Boots CMO, Pete Markey, “thinks there’s a huge opportunity to go after more because we’re really seeing that work”, citing their summer campaign of 2021 which achieved an incremental £2 revenue against every £1 spent.
But with all these moving pieces, where do you start? We’ll be breaking down the first steps in laying your data foundation in my next post.