Source: Amazon.com
What should retailers do with the holiday gift of customer data?
Through a special arrangement, presented here for discussion is a summary of a current article from the rDialogue blog.
Each January, every brand has a fresh chance to decide how to use its new gift of holiday data.
Will the new names simply be added to an e-mail list for continued mass discounting? Or will the insights fuel a long-term customer strategy to drive business more broadly?
Clearly, the best answer is to use holiday data aggressively to create a different kind of customer dialogue.
For us, the process starts with considering customers as an investment portfolio. Some have more long-term value and warrant more investment. How we act on that customer opportunity should similarly be differentiated by the customer’s individual value, opportunity and needs (and not just the brand’s need to sell).
Interestingly, while Amazon does a better job using data in communications than most, they miss the mark with their product-centric vs. customer-centric approach. Will 2016 be the year when Amazon considers me as a customer? Will they reduce the many follow-up e-mails for a product I happened to flag as a gift even though it doesn’t fit my profile?
Consider all the conversations you can have that aren’t about mass discounting but instead help customers navigate your brand to discover what’s most relevant to them:
- Provide tips on how your customers can enjoy their holiday purchases;
- Direct them toward brand experiences that don’t require spending, to keep them engaged between buying cycles;
- Focus on gift card redemption as a way to get consumers back in your store or to your site. Use the data to guide them toward gift card use that fits their profile, making it more than a transaction;
- Give your customers a preview of what the brand has planned for them in the upcoming year, giving them reasons to read your emails in the months to come;
- When you do sell, make it relevant. Recognize gifts differently than purchases. Use holiday purchases (channel, product, payment type) to personalize your message. And say “Thank you.”
Holiday data is a gift — a means to connect with your customers in a meaningful way beyond typical transactional initiatives. Use your data as a start to your customer dialogue 2016, well beyond the window of holiday 2015.
Discussion Questions
What are the challenges for retailers in following up on holiday customer data? What type of follow-up makes sense? Which retailers are doing the best job of personalizing Q1 communications based on customer data and lifecycle?
Poll
BrainTrust
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
Peter Fader
Professor of Marketing, The Wharton School of the Univ. of Pennsylvania
I think the chief opportunity for merchants to leverage holiday data is to optimize assortment. Too many items still become out-of-stocks while others languish in overstock. Basic, perennial problems, however they still plague the industry across store formats, both online and offline. Analyze the data, derive meaningful insights from multiple internal and external sources (e.g., POS, social, weather, events, etc.) and define assortment tactics to once and for all create the optimized product assortment.
The challenge is to use this data wisely and turn it into information that creates an intimate relationship with the brand. The days of mass email blasts and SMS text messages are over. Just because you can do it doesn’t mean you should!
Savvy retailers have treated their customer databases as an investment portfolio for many years applying LTV and more advanced analytics to segment the base into deciles by leveraging value dynamics and lifestyle dynamics to focus on those customers that will help you grow and expand the brand.
Retailers need to leverage human emotions by transforming transactional interactions and building emotional relationships with their customers. They need content, relevancy, personalization and customization to establish this bond and use insight to talk, engage and interact more often and more meaningfully. The winners will effectively target and delight each individual throughout their path to purchase journey.
Most retailers are lousy at “gift giving” selling seasons. Most think of gift giving at holiday and miss out the balance of the calendar opportunities to surprise and delight. How about a box and tissue at Mother or Father’s Day, graduation, Valentine’s, birthdays or even Sweetest Day?
If a store establishes itself as a great gift store on those days, then when holiday comes around they are best positioned in the minds of consumers. Build your brand through the power of relevant experience.
So flip the telescope around and look at holiday for insight on how to do gifts the rest of the year. There is all sorts of data, both macro and micro, to inform. Holiday is not made in December with a coupon; it is made the rest of the year through superior customer care. Reduce the reliance upon off-price promotion. The cost of markdowns will pay for the cardboard and tissue.
Few do it.
Or as we like to say, “retail ain’t for sissies!”
I wish this article would have addressed the major problem/opportunity with holiday customer data: Disappointed customers who encountered out-of-stocks. While most retailers do nothing with the data captured on OOS page views, some continue to actually retarget these customers with display ads picturing the products they couldn’t buy hours ago. 2016 will be the year when the most innovative retailers will simply ask disappointed customers to leave an email address for 1:1 personalized alerts on back in stock. And that’s critical, because in research we conducted, 96 percent of consumers encountering OOS products go immediately to a competitor.
Retailers have a golden opportunity to analyze their data from the holiday season and use the insights to impact every area of their business. The rDialog article does a great job of suggesting relationship-building activities with customers that go beyond overt selling.
Kroger talked a lot about relationship-building in their recent NRF presentation. They equated shopper loyalty with providing meaning to shoppers’ lives and discussed their aspiration to build relationships with their shoppers akin to the prototypical 1960’s homemaker’s trust in her local butcher.
The holidays give us a lot of information — and hopefully a lot of revenue. The above article makes good points. I’d take a look at merchandise that is complementary to what customers have been buying. Amazon gets it with their recommendations and their message that says to the customer, “People who bought this also bought ___.” Sometimes the popular merchandise for the holidays can give us a clue as to what’s next on the popularity list.
I know I am a broken record here, but many customers simply do not want retailers to “begin a conversation” based on data they’ve gathered that is so very often misinterpreted or misunderstood. For example, when I purchase a pair of rain boots in size 8 as a gift for my mother who is going on a trip, do NOT assume that I am eternally in the market for rain boots or that I am the one who wears a size 8. Do not bombard me for six months with “you might like” suggestions about rain boots.
Yes, using aggregated data to help internal retail buyers with future assortment, location and sizing decisions is a wonderful thing. But trying to personalize and exploit every search and purchase data point is folly and really annoying to paying customers.
Top of the list should be customer valuation. Are those holiday shoppers valuable customers throughout the year, or do they tend to be short-term cherry-pickers? I suspect it’s the latter, which would have tremendous implications for (or against) much of the prescriptive advice offered by others here.
Until retailers can really do customer valuation in a robust, valid manner, many of the other tactics expressed here are may be more like rearranging the deck chairs on the Titanic….
I think this article does a good job of differentiating between nurturing customers vs launching them onto a discount email list. From the retailer emails I’ve gotten, it’s much more of the latter and rarely the former. Amazon is a customer-centric company, but they aren’t especially content oriented. Retailers that are able to provide more than just sales and product launches via email will be able to create the best relationships.
Instead of just emailing to introduce a spring collection, maybe include a style guide that brings together trusted names in fashion. If customers just get sale emails, they will be conditioned to only return when products are discounted, instead of seeing retailer email content as useful.