Marketing Software Helps Retailers Embrace Significant Market Shifts
This article was featured in the November edition of Retail CIO Outlook.
What major market shifts should retailers expect over the next five years and how can they leverage marketing software to win? We live in a time where it seems like a new technology is changing our lives almost every day. A company can go from inception to becoming a generic name for a product in as little as five years, such as Uber’s disruption of the taxi market. Or consider the scenario where household consumables tell Amazon (not you) that they are about to run out, and before you use that last drop of liquid detergent, there is already a replacement waiting on your doorstep. In this article we will focus on the most significant market shifts and how marketing software can help retailers embrace change.
There are three major trends that are impacting the marketing space. First, is increased digital attention, to the extent that by 2020 more than 80% of media will be consumed digitally (source: MarTech and the Decade of the CMO, Foundation Capital, Feb 2015). For retailers this means that their consumers are rapidly shifting their attention to mobile devices and if they are not already seeing it, they can expect to see dramatic growth in mobile sales. Longer term, it means that traditional media, such as television, will also become digital and often be consumed on mobile devices.
The second, is a shift to performance, which is is highlighted by the explosion in programmatic media spend. eMarketer forecasts that sixty percent of display media will be bought programmatically in 2016. For retailers, this requires the ability to make decisions in real-time regarding the value of a potential customer. Further, based on factors such as time of day, context and anonymous user profile, there is the potential to decision on the best message to deliver to each such user.
The final shift is mass personalization and the replacement of traditional one to many marketing by a two way conversation between brands and consumers. For retailers, in addition to real-time decisioning, this is about using data to customize each engagement with a user. It is becoming critical to understand your customers at an individual level, which means collecting and storing massive amounts of data.
How can marketing software help retailers not only navigate these market shifts, but take full advantage of them? It starts with data, data, data. All marketing and media should be tracked completely by putting in place a solution that provides a 360-degree view of the customer. This means all marketing touchpoints, all brand interactions, all sales interactions, and activity across all devices, paying extra attention to capture mobile activity.
Next is measurement, or analytics. There are three requirements that retailers should consider. First, utilize a methodology that computes the true incremental value of each media element. This is only useful if the incremental value calculation includes both customer and marketing segmentation, since different user populations will respond differently to different forms of media. Second, the solution must be scalable and real-time, which implies a complete software solution. Consulting services are neither timely nor scalable, and additionally are not cost efficient. Finally, the retailer should expect to use an analytics system that is prescriptive. This means the solution should provide actionable recommendations of changes to be made at a granular level; furthermore these changes are to be made continuously and responsively to the measurement feedback generated from recent changes.
Current marketing analytics software helps retailers understand the effectiveness of their marketing across their various customer segments to answer questions like how does the impact of marketing change if someone has visited my website before, are part of my loyalty program, or are an existing customer etc. These are examples of Customer Segmentation. Marketing Segmentation helps retailers understand if they are getting the expected value from their marketing. For example, “is my prospecting or brand activity truly creating upper funnel value and creating new customer demand? And how can I ensure I am getting the value I want?” With a solid foundation of data and measurement, retailers can focus on improving performance as measured by their key business outcomes. Arguably, the most effective way of improving performance, is to use software that leverages all this information and automates media buying in real-time. Finally, with an eye on the future, retailers should assemble a marketing technology stack that is built to last. This means choosing providers that can address offline marketing and have a holistic approach to account for all external factors. And of course, ensure that the software platforms can all talk to each other and integrate into the enterprise software stack.
In summary, here are the checklist items for a retailer to engage with marketing software. Put into place a system that can track all media and marketing activity across all channels, including offline. Next, utilize a modern measurement and analytics platform that can provide real-time actionable results and recommendations that can be integrated with programmatic media execution platforms. Solutions that can generate a holistic view of a user’s marketing and media touch-points across all devices are beginning to emerge and retailers should add this requirement to address the explosion in mobile retail activity that is being anticipated over the next few years. Retailers should expect their media measurement and analytics software to eventually be integrated with their enterprise marketing systems.