Understanding the customer is increasingly difficult as new regulation and platform restrictions bite, but marketers are rising to the challenge
A dramatic uptick in the use of digital may have been a boon to brands seeking to understand more about their customers, but with that comes an increase in the hurdles marketers need to overcome to garner insights about their customers’ journeys. The impacts of GDPR – and the resulting fines – are being felt across marketing departments, Apple’s iOS14 update allowing customers to remove tracking and the imminent deprecation of cookies on Google’s Chrome are just three challenges executives face.
It’s more imperative than ever to find creative ways to engage, communicate and nurture those customers.
During a lively roundtable discussion, senior marketers and business leaders came together to discuss how the landscape is changing, their frustrations and insights into how best to get to the heart of the customer.
“We have really struggled since iOS14,” admits Astley Clarke’s CEO, Scott Thomson. “The lack of visibility and targeting has seen digital ROAS [return on ad spend] reduced from fives, sixes and sevens to ones, twos and threes. It’s a really important channel for a digitally native brand.”
Digital data has become something of a comfort blanket for marketers. New restrictions combined with a general lack of trust in some platforms’ output is causing marketers to look again at how they build and measure their activity. Former Birds Eye Igloo Ltd marketer and now CEO at Eve Sleep, Cheryl Calverley is ready to deliver the medicine.
“FMCG trains marketers to understand the effectiveness of spend without being able to attribute it directly on a one-to-one basis. Digital brands are saying, now we have to understand how econometrics work, how do I get to know my customer base through research and insight? It will allow brands to learn in a much more truthful way. But it’s really hard work.”
Myles Ejegi-Memeh, head of ecommerce at bespoke tailor Richard James and Harrys of London is blunt: “We still have a lot to learn in ecommerce. We’ve learned how to use other applications to work out how many touchpoints the customer has to navigate throughout the purchase process and how much the sale has cost us with regards to marketing and customer aquisition.”
Cost is certainly a focusing factor. With so many now questioning exactly what their ad dollars are getting them, nervousness is creeping in. “On the brink of a recession a lot of brands, particularly in ecommerce have had enough of being held to ransom and are fundamentally looking at attribution in a different way. The customer is costing way more than it did nine to 18 months ago, but few brands are doing much about it,” warns performance marketing company Wunderkind’s regional vice-president, Jon Halley.
It’s interesting to find that, despite their much-vaunted ability to reach consumers, executives round the table are increasingly sceptical about social media’s power. “The downward trend for us using Meta as a performance marketing channel started in 2018. It was just diminishing returns,” reveals Sandrine Zhang Ferron, CEO of vintage furniture marketplace, Vinterior. “Regarding Google Shopping, moving everything to P-Max (performance) is making this channel become like a black box. Plus, they’re also bidding on your brand. I was beginning to wonder how much it’s actually cannibalising organic demand.”
Trying to navigate digital platforms to find out where customers are is difficult for companies for whom it’s business as usual. For those who are in the middle of radical transformation – and it might be argued that post-pandemic, many are – it’s a herculean task to work out what’s going on.
Belstaff went through large scale transformation in 2021, replatforming its website, changing ERP, evolving its brand direction, and “everything you could possibly do in one year,” reveals head of ecommerce, Samantha Davis. Not only this but the company saw a shift in its demographics, and so was forced to learn about and find new customer cohorts. For a younger age group “we’re looking at out of home and more innovative marketing to acquire these new customers, while the core customer demographic shifted from 45+ to 35 years old. We’re looking at how to engage those people who already know about the product.”
Digital is seen as a boon but there’s a sense around the table that the loss of physical contact is a missing link. Tim Cooper, managing director of Oliver Sweeney, revealed that all of the company’s outlets closed as a result of the pandemic. Now fully online, the lack of physical contact can be a challenge. He says: “One of the main benefits of a mixture of retail and online was meeting people and understanding from store staff who they were and what they wanted.”
Jeremy Kanzen, CEO at The Diamond Store agrees: “There are lots of wonderful things you can do to connect with your customer to bring them into the magic of the moment. The answer is to use technology intelligently to communicate with your customer to be more relevant.”
While the flight to digital was a boon for business continuity in lockdown, for Travis Perkins it had almost the opposite effect, with such an explosion in demand meaning the site effectively shut down to give the company time to serve customers properly. But it also gave the business breathing space to evolve its digital offering in a way that could target its some 17 different customer segments more effectively.
One key difference is that the company had garnered insights about customers from the deeply personal relationships each branch manager has with their clients. This is now significantly digitised. Even with the restrictions from iOS14, John Godwin, Travis Perkins’ digital and marketing director suggests the rich data the company is getting from a new app that was launched post-pandemic is helping to inform how it responds to trends. He adds: “We’re trying to segment our customers in a way that we’ve never done before.”
Already, in the acquisition phase, executives round the table discussed the need to provide an authoritative voice to differentiate the brand and attract the customer, but building a joined-up, personalised experience is where this comes into its own.
No matter that retailers may once have been store-based, with knowledgeable staff on the shop floor, or that they have always been ecommerce pure-play. Being readily available with the right information at the right time continues to be a core pillar of building the customer relationship.
Richard James’ physical presence is in only a handful of locations. While the one-to-one tailoring experience delivers great personalisation, it has its limits. “We have to be particularly careful about maintaining our level of service when scaling our operation up. AI is a work in progress, but our business has been built on giving a very personal level of service, and it is imperative that we always communicate on a one-to-one level, whether we’re dealing with a query about bespoke tailoring or ready-to-wear,” Ejegi-Memeh comments.
Personalisation at scale is clearly possible but how companies organise around it is salutary. Farfetch is just one example of a global fashion retailer with multiple segments and brands that still manages to deliver the personal touch. But they have one critical difference. As its CEO is fond of saying, it is a technology company that happens to sell luxury fashion. It enjoys a unique position by having foundations built on best of breed technology in every area.
“To get scale,” Wunderkind’s Halley asks, “where’s the technology coming in?”
Much depends on what personalisation actually means to the customer. Calverley insists that “personalisation is this incredibly fat word,” explaining that, for some, it’s just about rapid delivery and for others it’s high touch, deep understanding of the customer’s needs. ”You’ve got to decide if you’re a scale brand or not,” she says.
Those round the table gave varying examples of what personalisation means to their customers. Belstaff’s Davis, for example, suggested that consumers would flock to a multibrand retailer like Farfetch, for example, because it took the stress out of product search. Customers of Belstaff were more in the mood for an immersive single-brand experience.
The online to offline question persists. For Godwin, it’s about using data garnered to inform the next best actions that drive customer behaviour. He says: “How do I support branch staff with better data and analytics to then go and make that phone call?”
For Kanzen, it’s about taking that in-store, personalised diamond-purchasing experience, with all its product expertise, and scaling it through content. He adds: “When a person engages on a piece of content, we can use tracking links to feed back into the CRM, connecting the dots to build a helpful profile and personalise.”
Given the challenges in acquiring the right data and finding the right platforms to engage with customers at the start of the customer journey, it would be easy to assume that maintaining loyalty and encouraging repeat purchase is the lesser challenge by some significant margin. However, attendees noted that success here is often very far from a given.
Not least, many suggested, because of the limited opportunity for repeat purchasing. “If you’re selling something where the repeat cycle is three and a half years, retention becomes a very different thing to when it’s three-and-a-half weeks. Our own repeat cycle is five months,” Cooper says.
From mattresses (although these are bought more frequently than one might imagine, says Calverley) to diamonds, bespoke suits and wardrobes, how do companies come out on top in the cost of loyalty to revenue ratio?
An added complication can be today’s sentiment towards sustainability. Both individuals and the wider marketplace are looking to brands for action on reducing consumption. Surely this is the enemy of growth? Not necessarily, says Ejegi-Memeh: “The bespoke side of our business is all about one-off garments that are made by hand on the premises, so it has always been highly sustainable. Bespoke is the opposite of fast fashion. All of our customers treasure their garments and want to extend their lifetime. So, far from being the enemy of growth, sustainability is a big plus for us.”
This is still a challenge, however, because it requires customers to buy into the brand difference. Thomson says: “We use great materials, genuine gemstones, no brass, no glass, no glue. And we’re competing with fashion accessory brands at a similar price. It’s about education.”
Kanzen adds that once you become the customer’s trusted partner, it’s not just repurchasing that is key, but advocacy that has the potential to expand the customer base by multiples.
“Loyalty is a word our customers use a lot and 18% of the customers we garnered within our first 10 years are still customers today,” Cooper says. It’s important because, attendees noted, paid social in particular is promoting a kind of impulse-buy promiscuity. Coupled with the heightened expectations of the pandemic, where delivery on time, any time is now a given, there is ample opportunity for otherwise loyal customers to jump ship. Cooper would suggest that his customers’ loyalty buys him a certain amount of forgiveness in the case of stock outages and so on. Although, he admits, it’s not unlimited.
Ultimately, the executives round the table agreed that there are no easy solutions – and with change happening so rapidly in everything from data privacy to performance marketing to platforms, shifting segments and loyalty, it can be hard to know which mast to pin your colours to. In all the noise, it’s difficult to know which instinct to trust. Zhang Ferron sums it up neatly: “If you want to invest in your brand, no one really knows how to measure that with precision. You need to mix data-driven decisions with more conviction-based ones, take a leap of faith.” An educated one, naturally.
To learn more about how Wunderkind helps retailers combat cookie deprecation and build their first-party data, visit wunderkind.co/uk/solutions/multichannel-for-retailers/