Revamping your insights strategy for the rapidly evolving retail ecosystem
by Rob McGovern, CEO of PreciseTarget
The Covid-19 pandemic has acted as an accelerant in the shift to DTC ecommerce. The omni-channel has morphed into the digital uni-channel and it has become urgent for brands to build competence in the customer data and knowledge required to succeed in digital marketing.
What’s the greatest impediment? Sparse customer data. Most brands know little about their customers beyond one or two purchased SKU’s. In comparison, Amazon and Walmart have thousands of columns of data on each customer, a comparative treasure trove for a data science team.
This blog post will delve into the trends transforming retail – increasing marketing velocity, programmatic advertising, and data-driven marketing – as well as the realities of evolving privacy regulations to provide guidance on how soft goods brands and retailers can rapidly and significantly increase their selling success. The solution lies in data science and AI-driven data sets that are leveraged to deepen customer knowledge for individual shoppers, housed and deployed by the sellers themselves rather than third parties like Google and Facebook, and level the competitive playing field so that brands and retailers can survive in a world increasingly controlled by tech giants with increasing monopoly power.
The Three Mega-Trends Transforming Digital Marketing
The first trend changing brand marketing in the soft goods sector is increasing velocity. Brands now look back wistfully at yesterday’s 14-week catalog season. The fastest players are refreshing their assortments every two to four weeks with sophisticated systems and supply chains to support the ever-faster models.
The second critical trend is the acceleration of programmatic marketing, where advertising has been taken over by a fabric of machines. Gone are the days of clever slogans and tag lines. They’ve been replaced by sophisticated algorithms running on a new advertising ecosystem. The goal is to put the right product in front of the customer.
The third mega trend is data-powered marketing. The smartest brands are focused on fortifying their marketers with comprehensive, granular, AI-driven data sets. Our goal is to support brands in their mission to acquire the next generation of insights data.
The Right Balance of Personalization and Privacy
The exploitative behaviors of Facebook and Google have led people, including the regulators, to believe that storing data about consumers is a bad thing. Is it? Virtually everyone agrees that an AI system reading your emails, tracking your clicks, and monitoring your location down to 3-feet of accuracy is a bad thing. But what about data stored to serve you better? Most people love that Spotify creates personalized music recommendations based on their listening data. Similarly, Netflix uses your data to create personalized experiences for you and your family members.
Most agree that going back to the old days of non-personalized content recommendations is not ideal. But we all want a fair deal. We want to be empowered for decisions or enjoyment, but we don’t want to be exploited. We want to be the customer, not the product being sold to others.
Consumers have learned to expect a level of personalization that walks the fine line between empowerment and exploitation. While you like Netflix’s curated TV and movie service, you’d be annoyed if they sold your TV-watching data to others. Brands are faced with the challenge of overcoming their sparse data problem by acquiring meaningful data to improve customer experiences, while always remaining respectful of the empowerment/exploitation line. You’ll earn an A if you send your customers personalized emails with highly relevant offers. Conversely, stalking your customers with retargeting advertisements, a form of punishment for clicking on a product, will be viewed as exploitation.
Solving the Sparse Customer Data Problem
Many brand marketing teams are stepping into the digital marketing war with a BB gun. Amazon and Walmart have troves of data and are able to overpower them with machine guns of sophisticated and increasingly AI-supported data science. What’s new is the ability for all brands, whether big or small, to enrich customer data to overcome their sparse data problem. Most importantly, the new enrichment data is available off-the-shelf, and it’s compliant with the newest regulatory standards including CCPA (California Consumer Privacy Act). Not only is enrichment possible, it might be table stakes for brands wishing to play in the new digital ecosystem.
A common practice in the data industry is to “append” data to a customer record. Let’s say Sally Smith who lives at 123 Elm Street is a client in your customer file or CRM. It would be fairly easy to purchase demographics data, say her gender and age, and append it to your customer record. While demographic data is valuable, it’s not complete. Not all 25-year-old women like the same brands, styles, colors, and price points.
To solve this problem PreciseTarget has created a dense data set that profiles nearly every US adult shopper and provides it as an append file to brands. The goal is to upgrade the BB gun to an advanced weapon, equipping marketers with rich information for personalized emails, digital advertising, personalized offers, and web site experiences.
When we designed our system, CCPA compliance was a core design construct. In fact, PreciseTarget might be the first system designed for CCPA compliance. The CCPA law specifies that consumer identities must be pseudonymized, which means the data providers, like PreciseTarget, have no means of identifying the consumers they’re profiling. Our design accomplishes this by using a trusted intermediary sitting between us and our brand customers. The trusted match intermediary is a safe pathway, acting as an escrow agent who appends our pseudonymized data to the client’s PII or “real” customer identities. If you have 5 million customers in your file, we can use the trusted intermediary to deliver five million profiles to you without knowing the identity of your customers. While it’s tempting to call it data magic, in reality it’s a new system specifically designed for CCPA compliance.
New and Improved Insights Data for Brands
We have aggregated the transaction and product data of over 2,000 brands and transformed it into powerful insights for our brand customers. Currently our coverage is over 220 Million US adults, representing 99% of the US Adult population. Our focus is learning the customer’s tastes in brands, products, and retailers, given that consumer taste is the key driver of soft goods purchase decisions. For example, we rank each of the 100+ jeans brands for each customer, proving a propensity-to-purchase score for each jeans brand. We do this across 36 product categories. Additionally, we provide insights about the consumer’s price preferences, on-sale purchasing, and many other behavioral attributes. We also bundle demographics about the consumer.
What is unique about the PreciseTarget insights service?
First, all consumers are pseudonymized, making it impossible for the consumer to be identified without the help of the trusted match intermediary.
Second, it abstracts knowledge about a person’s tastes in a category, rather than simply capturing a brand purchase. We have learned that consumers have weak loyalties to product brands but are very consistent in remaining loyal to their tastes. Your closet may have many different brands of dresses, but it’s highly likely your dresses share many taste commonalities.
How to acquire the data
We provide Insights data to our customers in the format that is most compatible to their current technology. We are able to use traditional data append methods, or, we can discuss providing you the profile data as an online service.
If a brand doesn’t yet have a CRM, DMP or CDP? We offer a Cloud CIP service for brands with limited IT resources. All of our services include the opportunity to refresh the data each quarter, along with providing data about newly acquired customers on a monthly basis. Interested in an informational meeting or a demo of our products? Contact firstname.lastname@example.org.