3 key trends in retail and brand innovation, Plug and Play
Brands and the retail industry are undergoing a rapid transformation. As technology and customer expectations continue to evolve, businesses must innovate to stay competitive and provide a better consumer and user experience.
From improved analytics and data-driven decision-making to virtual reality experiences, retailers are exploring different ways to engage customers with their products and services. Consumers now expect more than just the traditional experience; they want convenience, personalization, and an engaging environment that provides them with an enjoyable journey from start to finish.
Changes in customer privacy regulations, notably driven by the disappearance of third-party cookies, have pushed brands to reconsider their use of first-party data. This is the information a company owns and collects directly from its customers, prospects, and users through any channel. Contrary to third-party data, first-party data comes from its own channels and provides insights with consent from customers, who seek personalized interactions, but with a certain degree of privacy. This new format allows merchants to build trusted and enduring relationships, which ultimately manifest in a company’s bottom line.
The collection and understanding of customer first-party data is key in delivering these experiences - even more considering the decrease in availability of third-party data. Retail Media Networks, or RMNs, are a rich source of first-party data to supercharge personalization and loyalty campaigns.
The benefits of retail media are two-fold:
- They represent a huge opportunity for retailers and marketplaces to monetize their e-commerce in order to generate additional revenue streams - and very profitable ones. Retail giants such as Amazon and Walmart pioneered this space, with the former receiving 68% of its revenue from its advertising platform
- Advertisers can offer personalized promotions and offers to their clients and keep better track of their ad performance, thanks to closed-loop measuring capabilities. Offering engaging and high-quality content builds credibility with users and increases the likelihood that they proactively share additional data for better experiences (i.e., zero-party data). RMNs are also strong in allowing retailers to offer a seamless omnichannel experience, as retailers can personalize the customer journey, while simultaneously collecting first-party data, in both brick and mortar stores as well as their e-commerce
Hyper personalization allows companies to tailor their marketing to individual customers, delivering highly contextualized communications in the right place at the right time. These targeting experiences are achieved through data, analytics, AI and automation. Traditionally, companies have integrated customer segmentation in their marketing strategy to convey personalized communications and offers. AI-powered hyper personalization goes beyond the classification of customer groups, but rather dives into deeper detail by delivering individually-tailored marketing, going beyond basic customer information, pulling from real-time and behavioral data to deliver highly relevant, individualized messages. The results of this strategy manifest in higher levels of customer satisfaction, customer basket size, return on advertising spend, or ROAS, and brand loyalty.
At the end of the day, hyper personalization is all about turning customers into repeat customers. To fully exploit its potential, companies should be able to link, aggregate and classify customer interaction data from different channels. From an omnichannel perspective, relevant website content can work as an instrument to increase pre-visit awareness and potentially maximize in-store conversions. Through this approach, brands can personalize their cross-channel experience so consumers feel a direct communication along the entire purchase journey. According to McKinsey, omnichannel personalization of the customer experience can generate a 5 to 15% revenue increase across the entire customer base. Some of the most relevant channels are e-commerce recommendation engines, dynamic pricing and offers, real-time product notification, loyalty programs and re- engagement.
Customer Loyalty and Retention
Customer loyalty and retention refer to the ongoing relationship between a business and an individual customer, and are demonstrated by repeat purchases and high engagement through a variety of channels. In an ever more competitive market, it's becoming increasingly difficult for brands and retailers to retain customers. Indeed, the free market economy has created an abundance of choice, making it very straightforward for people to compare brands’ product features, prices, and overall value propositions, and thus switch to the rationally “better” choice. In addition, increased transparency thanks to digitization allows customers to gain information on the brand’s reputation, sustainability and social responsibility strategies, all of which have a tremendous impact on retention.
High retention is directly correlated to revenue growth. Loyalty programs are some of the best ways to reward customers’ purchases and build loyalty. Brands and retailers are in the position of choosing the right program for the right purpose and must equip themselves with the tools to unleash them at a large scale.