Is retail finally getting serious about customer data? Are businesses growing impatient with getting only vague ideas about who their customers are, and how to maximize the chances they’ll buy, or buy again? And are they serious about using data throughout their organization as a strategic weapon in the fight for profitability?
A new retail report from eTail, WBR Insights, and Arm Treasure Data reveals an industry that’s betting big on leveraging data-driven technologies to drive more tailored and personalized customer experiences (CX). In doing so, retailers aim to better engage with their customers throughout the purchasing lifecycle. The responses suggest that for some retail marketers, using customer data to create customized customer journeys and experiences is not only a big part of their strategy, it’s the whole game. And to do all that, they’re increasingly turning to customer data platforms.
Customer Data Is Transforming Retail Operations
The report, “Retail CX and Data Management Strategies in 2020,” is based on a roughly even mix of department heads and senior executives at VP level or higher, all at retail companies with more than $1 billion in revenue.
Most of the surveyed executives believe better customer data, smartly applied, is critical to crafting customer experiences that lead to greater sales — and they plan to go all-in on data-driven customer experience (CX) in 2020. As one department-store VP emphasizes, his company’s investments are largely oriented toward personalized omnichannel CX, and “are mostly made to provide customers a more localized, personalized, and smarter shopping experience.”
When asked about their most important strategy for retail success, 29 percent of respondents said that empowering CX teams to build better relationships with customers was their highest priority. Over a fourth of respondents (26 percent) are prioritizing creating a single view of their customers across all their touchpoints, including physical and digital. Another 26 percent of respondents are prioritizing improving their analytics to unlock the full potential of their customer data.
Majority of Retailers to Implement a Customer Data Platform (CDP) in 2020
But making the right decisions about how to appeal to each individual customer is tough, especially when retail databases can include thousands or even millions of customer touchpoints. Data silos across businesses add to that challenge, creating an environment where retailers may unknowingly have multiple interactions with the same customer (for example, via an email campaign, social media reply, customer service engagement, etc.).
Perhaps that’s why more than three out of four retailers surveyed either already have a Customer Data Platform (CDP) or plan to invest in one in 2020 to help unify all of their customer data and build a single, holistic view of each customer. This is critical in enabling retailers to provide more personalized experiences, offers, and service to their loyal customers regardless of whether they shop on mobile, in-store, or online. But this trend is new, evidenced by the fact that so many respondents — nearly half — are apparently just starting to invest in CDPs, compared to only 31 percent of respondents that already have one.
Early Adopters Realize That All CDPs Are Not Created Equal
Advanced retailers are beginning to understand the benefits of implementing a CDP for delivering better customer insights, and they are prioritizing tailored solutions that address specific business needs. According to the study, more than half (51 percent) of retailers mentioned they look for a CDP solution that will accommodate the specific needs of their organization, compared to 31 percent who want an off-the-shelf solution.
CDPs and Customer Data Are a Critical Retail Link to Customers, Profitability
Retailers realize that creative use of customer data — particularly to drive customer experience — is their best chance for retail growth, and they see CDPs as increasingly central to their operations. The head of a large department store sums up the critical connection: “A Customer Data Platform is the most important link between digital tools and the customers themselves.”
Once retailers have unified their customer data, they can use it for better experiences such as clienteling, delivering more targeted and engaging experiences (for example, augmented reality) and providing choice of checkout methods (whether that’s human interaction or automated quick-checkout through use of mobile phones.)
With all of the potential of a single, unified customer profile, it’s no surprise that 64 percent of respondents with centralized systems were satisfied with the quality of their data, compared to only 52 percent of those that had decentralized systems. This speaks to the importance of choosing a flexible CDP, for easy integration with other existing martech solutions already in use.
Expect More Customer Data Collection in 2020 — Especially from Mobile Devices and Sensors
The trend toward collecting ever more data for tailored user experiences is accelerating, as retailers try to supplement the online shopping, loyalty, and demographic data they already have with more mobile phone and sensor data from IoT devices.
As one C-level executive at a specialty retailer puts it, “Our stores and examining devices will carry more sensors to help us provide the best possible product suggestions to our customers.”
Retail Moves Toward Data-Driven CX
It’s an approach that’s changing both customer experiences and all of the back-end operations needed to increase profitability. “Customer data forms the base of transforming retail operations,” wrote a C-level executive in specialty retail.
A different respondent wrote, “effective use of customer data does help in increasing store profitability.” And perhaps the best survey explanation of the trend toward data-driven CX is a C-suite responder’s comment that, “the goal is to connect customer data across our operational platform so that our people in operations can make quicker decisions.”
Another C-suiter from a specialty retailer has a much broader strategic goal: “Aggregating data from multiple channels and creating a single fabric of customer data is what we’re focusing on with our Customer Data Platform.”
That’s a sentiment that’s becoming increasingly common for companies undertaking major personalization initiatives. For example, a recent Forbes study on personalization found that retailers who are ahead of the curve in implementing successful personalization initiatives — people Forbes calls “leaders” — value both CDPs and personalization as important parts of their strategies. In addition, 76 percent of leaders believe a customer data platform is critical to their personalization initiatives.
Could a CDP Be a Part of Your Success This Year?
So as you plan your strategy for making your numbers in 2020 and beyond, consider the findings of this complimentary eTail report. The findings are clear: retailers are going big on customer data, and CDPs are central to the customer-experience strategies of the future. Are you ready too?