Retailers today collect an unprecedented amount of information about their customers. Names, addresses, and browsing habits – these intimate details are a powerful tool for driving sales. But retailers are failing to use them effectively, launching ineffective marketing initiatives that deliver limited returns and even drive customers away.
Where did it all go wrong?
The answer is partly to do with infrastructure. Businesses today process so much information and it is often siloed across different channels – web, mobile, contact centre, in-store, as well as different parts of the business – sales, marketing, customer service, and billing. This is particularly true in retail where increasingly siloed business models are negatively impacting businesses ability to actually use information to sell more goods and services.
Consider the clumsy attempts at using this information that we see from retailers every day. An email drops into your inbox - ‘Hi John’ - but then fails to offer anything that is actually tailored to you specifically. It’s hardly real personalisation. Marketers bombard customers with this type of email constantly– is it any wonder a recent AIMA study shows 69 per cent of consumers are actively unsubscribing from most marketing communications?
Similarly, we’ve all complained about a jumper or pair of shoes chasing us around the internet, banner advert after banner advert, for months after we’ve decided not to buy them. Browsing data is certainly useful, but on its own, it’s an imperfect mechanism for identifying consumer intent and converting it into sales.
The reason many retailers fall short is that while it is simple to collect data from customers, it’s incredibly difficult to bring together enough of the right kind of information, in a short enough space of time to use while it’s still relevant. Understanding the context behind a customer’s visit to your website is challenging enough, but context decays so quickly that if you can’t instantly make use of the data, the opportunity can be lost.
One of the smarter ways to collect and process customer data is through contextual marketing technology, which can ‘listen’ to the signals a consumer generates while browsing across different channels – from click-throughs to purchases - in real time. With this technology retailers can see context in its purest form, and act on it instantly.
Let’s take an example. A customer is browsing a retailer’s website just two months after buying a new pair of Italian black leather shoes. Traditionally, the retailer’s marketing technology might re-target adverts for shoes at the customer across the web, or, alternatively, send him an email or text message offering 25 per cent off a new pair of black shoes. However, contextual marketing figures out on the spot that he’s probably shopping for shoe-care products – perhaps polish, laces, protective spray, even socks – not a second pair of shoes, and reacts accordingly.
There’s no doubt about it - today’s marketing technology is broken. Digital advertisements can only manage a 0.1 per cent click-through rate, which cannot be viewed as anything but an abject failure.
But in order to take a step forward, it’s helpful to first look back. Retailers are still settling for less with their marketing efforts, and failing to consider the context that surrounds each customer and purchase. By weaving together what the customer has done, what they may do, and what they are doing right now, context has the power to drive more sales for retailers everywhere.
By Charles Nicholls, Senior Vice President of Product Strategy at hybris and SAP CEC.
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