How retailers can effectively use customer data
According to a 2018 PwC report, customer experience has become the holy grail for retailers. The good news is that today’s buyers are willing to pay up to 16% more for a customized shopping experience. The bad news? Around 17% of them will dump a brand after just one negative experience and 59% won’t return if you disappoint them more than once. Ouch.
Customers expect a seamless, personalized retail experience and a hassle-free shopping journey, which is a tough task for retailers when customer needs and preferences are so individual. As a retailer, how do you know your customers and make them feel seen, heard, and loved? How do you use what you know about them to create personalized shopping experiences (online and instore), that make them love you back and keep buying?
The answers lie in your customer data and how effectively you use it.
The value of customer data
You might already be collecting data about customers and their purchasing decisions, preferences, behaviors, demographics, and experiences. Perhaps you’re tracking website visits and clicks, analyzing social media interactions, monitoring customer reviews, or recording purchase history. Your email campaigns and the way customers respond to them are a virtual treasure trove of information about the styles, promotions, language, or content that make customers come back to your stores (or your website) to browse and buy.
But if that data is fragmented, inaccurate, incomplete, or siloed across channels and systems, it won’t be of much value. A Customer Data and Experience Platform (CDXP) can help reveal the secrets, enabling you to improve customer engagement and drive sales.
How to identify your best customers
You’ve probably heard of the Pareto principle, otherwise known as the 80:20 rule. At Lexer, we often see brands surprised to learn their top 20% of customers drive 70-80% of sales. Focusing on customer loyalty is incredibly important for the long-term success of your brand.
If you’re unable to get a complete and clear picture of who your customers are, you might be spreading yourself thin wooing all your shoppers, when you could be really delighting the most lucrative ones. You may end up spending valuable time, money and resources trying to attract and keep low-value shoppers and miss opportunities to show your ‘big spenders’ some love.
By thinking beyond the demographics of your overall customer base and, instead, optimizing your marketing efforts to focus on only acquiring customers like the top 20%, you can not only reduce acquisition costs, but also gain more valuable customers with longer-term potential for your business.
Here are 4 key steps to help customer acquisition using data analytics.
1. Identify your hero products for customer acquisition.
Some products are better than others for attracting new, long-term customers. By identifying the products that your customers most frequently purchase first, you can gain a better understanding of what attracts your ideal first-time buyers.
2. Select your highest value customer audiences for each hero product.
Now you know the product categories that most commonly acquire high-value customers. You also know that a small number of customers make up a large amount of your revenue. The next step is to analyze the customers who’ve purchased your targeted acquisition products and build lookalike audiences around their profiles. First, build a segmented list of all purchasers of a target category. Then, layer on additional variables to improve the audience’s quality and value.
3. Build high-value lookalike audiences from your high-value customer segments.
Building multiple lookalike audiences at increasing sizes (e.g. 1%, 1-2% and 2-5%) can provide valuable insight into the size of your addressable market and how efficiently you can acquire market share.
4. Target each high-value lookalike audience with ad creative for the product they were built around.
Keep each audience in separate ad sets so you can evaluate each one’s relative performance. Be sure to experiment with different placements and ad units by creating a separate ad set for each variant and audience combination in the campaign. Including multiple ads under each ad set can also provide you with valuable insights.
Closing the gap between data and customer experiences
When fashion retailer THE ICONIC needed a better understanding of its customers, the company turned to Lexer and its partnership with Amazon Redshift. Connecting CRM and ecommerce data from Amazon Redshift to Lexer’s CDXP enabled continuous real-time updates to millions of customer identities in the platform. This data, further enriched with valuable demographic information, quickly generated meaningful and usable customer insights for the retailer.
THE ICONIC’s then Chief Marketing Officer, Alexander Meyer, said the partnership has been a win for customer satisfaction and understanding. “Our customers are at the heart of everything we do and having a more holistic understanding on how, why and when they are shopping with us enables us to not only better serve their needs but increase our customer satisfaction as a whole.”
Similarly, TGV Cinemas, the cinema destination of choice in Malaysia, desired a CDXP solution that utilized enriched, segmented customer insights while enabling the team to quickly and accurately make decisions for furthering their goals, based on their high-volume, fast-paced business model.
The TGV team implemented Lexer, met a three-month live deadline and accomplished key business goals:
● Customer data was housed in one simple, accessible interface for all teams, helping remove the IT bottleneck. Data was enriched with relevant attributes about customers, including days between cinema visits, preferred cinema location, and the language of the last film seen.
● There was increased transparency regarding customer motivations to join member programs and sequential experiences, helping drive visitation for various segments.
● Personalized and automated marketing campaigns were executed within 30 minutes, down from 2-4 days.
● Business strategies enabled by KPIs were built around accessible data points and quality insights, rather than assumptions.
The importance of a single customer view
A single customer view—or unified, cleansed, and standardized customer profiles—are created by aggregating multiple sources of data and reorganizing that data to paint a comprehensive picture of each individual customer within a CDXP. In other words, it acts as a “single source of truth” for all the customer information to which your business has access to, including:
● Demographic information
● Purchase history in all offline and online channels
● Customer service interactions
● Web and mobile browsing activities
● Email engagement
Unlike traditional, channel-focused data management systems, a CDXP reorganizes data to support a customer-centric business model, provides every team with the ability to self-serve customer insights based on that data, and improves the quality of existing data as well as data collection methods for the future.
This information is sourced from direct integrations with ecommerce systems, point-of-sale systems, email marketing and marketing automation platforms, like Dotdigital or other retail systems, and through batch file uploads and flexible APIs.
For example, when leading Australian men’s footwear brand, Aquila needed to determine how paid social ads were impacting in-store purchases, they enlisted the help of Lexer and digital performance agency, DataSauce. By utilizing their enriched single customer view from Lexer’s CDXP and a Facebook Offline Conversions API, Aquila was able to see exactly how and which online social ads were driving purchasing decisions in stores. Armed with these insights the Aquila team was able to confidently double down on their social media marketing strategy.
At Lexer we believe great brands are built on great customer experiences. It’s important for retailers to be able to utilize customer data and work with technologies that help ensure it is available to every team across the organization. Not only will this help inform customer insight and engagement but will also drive incremental sales. Lexer is the leading CDXP for retail tech stacks and a strategic Dotdigital partner. Reach out to see how Lexer can help you utilize your customer data effectively across your organization.