The Retailer Autumn Edition 2022

THE RE TA I L ER

30

LOYALTY BEYOND THE LOYALTY SCHEME

Sophie Birshan Industry Head, Retail Google

Anna Sawbridge Head of UKI Engagement Management Google

H ow to turbo charge your customer ambitions

Building a holistic customer value strategy

Plans to grow customer value often focus on loyalty schemes including special offers or personalised experiences, fuelled by modelling which identifies segments of consumers based on their interests, behaviour and lifetime value. In our experience, there are four additional areas which have significant impact on growing customer value and which form part of a holistic strategy, helping retailers get more value from customer data modelling. 1. Plug customer data gaps When customers buy from you online, you can see their data such as email and delivery address, but as third-party cookies are phasing out, retailers are losing visibility of visitors to their website who don’t check out. This means you can’t track, for example, whether your visitors are new or existing customers - and it’s therefore hard to see whether your marketing is working. However it is possible to plug the gaps of missing data. Google is invest ing in building durable and privacy-safe measurement solutions such as Consent Mode and Enhanced Conversions which retailers can implement on their websites. Improving data visibility online is often relegated to a “technical” implementation backlog, but it can materially change your understanding of how marketing is working and so guide what levers to pull to grow loyalty. Customer segmentations and loyalty scheme data can be deployed across the full range of marketing channels including paid marketing. For example, it is possible to re-engage higher value customers using tools like “CustomerMatch” or avoid the lowest value users (for example those who return a lot of products). You can also enrich digital marketing algorithms with signals on lifetime value, shop purchases and loyalty status etc. Even without sophisticated first party customer data models you can target audience segments such as ‘predicted top spenders’ using your online marketing tools (such as GA360). Marketers that effectively use their first party data to tailor campaigns can generate double the incremental revenue from a single ad placement, and also see 1.5 times the improvement in cost efficiency compared to companies with limited data integration.(2) 2. Use your customer data in your paid marketing

Fall in consumer loyalty One of the features of the past couple of years has been the step change in online shopping. As consumers browse and discover online they have noticeably increased the range of companies they purchase from. At the start of the pandemic for example, 24% of fashion con sumers had tried a new brand or retailer in the previous six months. In August 2022 that had risen to 47% of consumers, andwe’ve seen similar trends in other categories including home furniture, beauty, consumer electronics and luxury.

47%

32%

25% 24%

Home

Fashion

Home

Fashion

2020

2022

(1) Many retailers saw huge gains in new customers during the pandemic but have now been asking themselves how to retain and increase the value of existing consumers through higher frequency purchases and cross shopping, in the face of this fall in loyalty.