We’re only a month into what is not only a new year but a new decade, and my prediction that customer data will be the definitive strategic asset among retail’s future winners is already coming true.
Last month, the US National Retail Federation asked Microsoft’s CEO Satya Nadella to give the opening keynote of its annual ‘Big Show,’ which took place in New York, attracting 40,000 attendees.
Nadella shared a staggering statistic, stating that the retail industry generated a massive 40 terabytes of data per hour. This is all well and good but, he went on to ask, “what will we do with all that data?”.
I agree with his urging of retailers to “build and importantly trust their own digital capability. As retailers, you have the most valuable assets, which is commercial consumer behavioural intent data”.
“The question is, how can you convert your marketing efforts effectively into new online advertising channels?” he asked. “This, to me, is how you can reshape retail and retail business models.”
I think it’s right for Nadella to call for a change in the dynamics of online advertising and digital marketing. Venture capitalist Mary Meeker confirms 62% of ad spend is now digital, while customer acquisition costs are rising.
Last month I suggested that using the data that comes from digital connections with your customer has become a strategic necessity. Data-driven insight is vital.
But, as Nadella implies, knowing your customer to serve them better is just one way this decade will be data-driven. The shift to digital and mobile means ads and promotions must also be more targeted and adaptive.
New media for a new decade needs a new marketing approach, beyond clunky above and below-the-line execution. Using data to inform awareness-grabbing content with a targeted call to action increases returns.
But such targeting can only be effective if it is based on digitally enabled and data-driven customer insight. Nadella knows this and understands not only knowing your customer, but owning their engagement, is crucial.
He took aim at data-aggregating disintermediaries, including Google, Facebook, Amazon and Deliveroo, where better retail co-operation can create more slick and personalised direct-to-consumer marketing journeys.
“If all you’re doing is allocating online advertising elsewhere and not creating a new revenue stream, you will not have the gross margin to meet the needs of your customers,” he advised. Ignore this at your peril.
Maximising the advantages of knowing the customer and owning the relationship with them creates a win-win for the brand/retailer and customer. The customer’s data helps to shape more personalised engagement.
Co-operating retailers and brands can amplify their points of differentiation and attraction to compete with limited range discounters and digital pureplays. They can put their customer data to work both off and online.
The right tools, data and analytics to manage customer engagement through a better understanding of their habits and preferences can help marketers serve and engage their customers in powerful new ways.