In the age of Amazon, traditional retailers need to leverage actionable customer insights to personalize their marketing campaigns and drive growth — or risk the fate of Toys “R” Us.
“I don’t wanna grow up….” That’s how Toys “R” Us’ infamous jingle started. The reality, though, is that this ubiquitous toy store chain’s failure to embrace and innovate on customer insights has landed a piece of our childhoods in the ever-growing retail graveyard.
Industry experts have long forecasted the death of traditional brick-and-mortar retail — and while the in-store experience remains the lifeblood of the modern retail industry, we do acknowledge that online retailers have emerged as fierce competition in recent years. Threats to traditional retail have taken many forms — e-commerce, fast fashion, tax policy — but each points to the same Achilles’ heel: an inability to adapt.
E-commerce giants like Amazon are founded on a customer-first ethos. Nearly everything in Amazon’s business model — its return policy, its streamlined logistics, its commitment to personalized shopping experiences — revolves around the customer. And while many traditional retailers recognize Amazon’s areas of competitive advantage, few have been able to dismantle their own deeply-entrenched organizational silos that are preventing them from uniting a view of their customer and evening the playing field — even just a little.
There is, however, a road to redemption for brick-and-mortar retailers. By restructuring their businesses not around new (or even existing) products but around data-driven customer insights, traditional retailers stand to reclaim market share once assumed to be forever lost to Amazon. That road is mapped through a better understanding of the customer journey, putting them at the center of the business model and analyzing their multi-touchpoint insights.
What is a (Relevant) “Customer Insight?”
Generally speaking, a “customer insight” is any observed, deduced, or forecasted metric that describes a customer’s behavior. However, what makes an insight relevant — and, by extension, valuable — is the degree to which it can be used to inform a brand’s real-world marketing decisions.
Consider the case of high-growth internet retailer ELOQUII. Upon noticing that an unexpectedly high proportion of customers were returning white dresses, the brand’s marketing team made the entirely reasonable assumption that the fit and/or design of the dresses was not quite right.
After digging a bit deeper into their data, however, the team discovered that a majority of the returns were being made by customers who had purchased multiple white dresses, simultaneously. As it turned out, many women were actually shopping for wedding dresses, even though ELOQUII had never conceived of itself as a matrimonial marketplace.
ELOQUII used this discovery as an opportunity to have a series of productive conversations with its customers, gaining a better understanding of what they were looking for and how they perceived the brand. This anecdote demonstrates what can happen when a marketing team seizes on a customer insight (a high return rate for white dresses) and lets it inform a distinct decision (positioning ELOQUII as a purveyor of wedding dresses).
Setting Retail Marketers Up for Success
Customer insights can be derived from a variety of sources — CRM data, merchandise data, customer loyalty program data, etc. — but the processes through which brands leverage insights are just as important as where the insights come from.
The impactfulness of customer insights depends first and foremost on their timeliness. Insights can lose their value in a matter of weeks — or, in the case of breaking fashion trends, within days — making it difficult for retail marketers to drive results unless they’re given direct, uninterrupted access to their brand’s data. And while a fast, insight-driven decision will not always be effective, a slow one will almost never be.
Marketing leaders must make a concerted effort to put real-time data directly into their marketers’ hands. Only then will the brand be able to operate with the lightning-quick reactivity necessary to compete with the likes of Amazon. Once they have access to data, marketers must remain mindful of their ultimate goal — gaining actionable insights from that data. While it’s easy to get caught up in dissecting endless flows of customer data, remaining steadfast and singular in pursuit is a must: any customer insight is only useful if it informs a decision or spurs an action.
In truth, getting a feel for what kinds of insights are actionable takes practice, and it’s a marketing leader’s responsibility to foster an environment in which marketers have the freedom to fail along the way. Trial and error — or ‘test-and-learn’ — is a critical step in crafting a customer-centric approach to retail marketing. Marketers need to figure out what works and what doesn’t for each customer segment, and that means giving the marketing team license to experiment. Failures are bound to occur, but it’s all about ‘failing fast.’
Driving Results Across the Board
These successes can take any number of shapes — including a brand repositioning like ELOQUII’s. For example, a deep understanding of customers’ purchase cycles can be used as the basis of a highly-tailored churn prevention program.
Typically, retailers rely on one-size-fits-all promotional programs that automatically send reminders to all of a brand’s customers every thirty days. Conversely, properly deployed customer insights can help a brand pinpoint which of its customers shop more frequently, which shop less frequently, and which are “one-and-doners.” This enables the implementation of a far more precise — and thus effective — churn prevention program based on customers’ real-world purchasing behaviors.
Customer insights also open the door to analyses that can predict Customers’ Lifetime Value (CLV), enabling a brand to strategically invest in targeting high-value customers across numerous marketing channels.
However you put your customer insights to use, the important thing is that you take action. Basing some decisions on data-driven insights is always better than basing no decisions on data-driven insights. The biggest mistake retail marketers make is letting the perfect be the enemy of the good.
Ready for the Big Leagues
Ultimately, brand repositioning, churn prevention, and precise audience targeting are just three of the many ways in which customer insights facilitate increased personalization in the retail space. When marketers are given license to experiment with robust data that can be used to generate actionable customer insights, they are well on their way to navigating their brand back to the right side of the Styx.
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