An Accenture report on the state of retail highlights the gap between how consumers derive value from brands and where brands are in their ability to meet elevated consumer expectations for digital-first experiences. Drawing on previous research findings that showed a 169 percent increase in ecommerce purchases from new or low-frequency online shoppers since the pandemic – with nearly all of them expected to continue digital usage in a variety of channels – the report stressed why it’s important for brands to close the pronounced gap to “maintain brand relevance and cultivate stronger loyalty.”
Traditional value drivers such as store proximity and competitive pricing have given way to a desire for a personal connection between a consumer and a retailer or brand. That connection is reflected by a personalized customer experience that demonstrates a deep understanding of the customer. The challenge for many traditional retailers is that digitally native brands are chasing after those same customers – and have quite the head start with providing personalized content that gives consumers an incentive to continue a relationship with a brand.
To help close the gap, Accenture details a retailer maturity curve as part of a roadmap for becoming customer-centric. At the Wave 1 starting point (where it claims most retailers are today), retailers are simply trying to understand a customer. At the Wave 3 end point, retailers provide one-to-one personalization at scale, creating long-time loyalty and persistent customer value.
Using the maturity curve as context, this blog will focus on the underlying purpose behind refocusing on the customer over price and product; i.e., is revenue growth, cost savings – or both – the intended value driver in delivering omnichannel personalization? We will first look at the cost side of the value drivers, and detail how Redpoint helps break down some of the common barriers standing in the way of achieving an organization’s customer-centric objectives.
The Retail Maturity Curve
Before examining cost-cutting measures, some additional detail on the maturity curve stages. Most retailers will likely recognize Wave 1, identified as a recognition that a personalized CX must start with understanding the customer. As a workaround for not having a personal understanding, many Wave 1 retailers utilize basic segmentation with minimal customization of content. In the meantime, progress is marked by identifying the current gaps, setting a customer strategy and at least starting to apply analytics to customer data. In short, these retailers are getting their house in order. Not yet customer-centric, they’re still assessing the people, process or technology limitations to omnichannel personalization at scale.
Wave 2 retailers are getting their data in order, summarizing insights and key themes, and are generally at a point where they’re using multidimensional segmentation. Their limits are mostly operational; even with structured data, clear governance and ownership across the business, they have yet to break down people, process or data siloes necessary to evolve from channel-centric to customer-centric.
A progression to Wave 3 and one-to-one personalization starts to take shape when retailers, by pairing analytics and augmented third-party data with advanced technologies, begin to orchestrate customer journeys for individual customers. Having made significant investments in their business model, technology and workforce, these retailers are aligned around an enterprise approach in which customer strategy has become the core priority for the business.
An individual understanding is more than segmenting an audience by demographic and behavioral characteristics, it’s taking predictive action at the individual customer level, at exactly the right moment during a digital engagement. Cutting edge personalization consisting of unique content, messages and treatment is a core part of a customer engagement strategy.
Retail Cost Savings
At each stage of the retail maturity curve, digitally mature retailers can achieve cost savings, either through cost-cutting or cost avoidance, using the Redpoint CDP. In a time of economic uncertainty marked by rising interest rates, inflation and fears of a recession, cost-cutting often takes priority over revenue growth, which we will address in a follow-up blog. To be sure, the two are not mutually exclusive, with a lot of potential for synergies.
Retail cost levers impacted by customer data and personalization are primarily in three categories: data operations, technology operations and marketing operations:
Data Operations
Precise customer data is a key element that allows digitally mature retailers to achieve “cutting edge” one-to-one personalization at scale. To deliver a next-best action for an individual customer in the context and cadence of a unique customer journey, retailers must trust that a single view of the customer is a comprehensive, accurate and real-time representation of a customer (or household). Data ingestion, data quality and identity resolution are the core operational components for creating a Golden Record, a unified and persistently updated single customer view. The Redpoint Golden Record helps reduce cost, first and foremost, by improving match rates and eliminating wasteful spending. Hyper-relevant campaigns deliver next-best actions to the intended customer or household on the optimal channel (inbound or outbound) and, importantly, optimally aligned with the cadence of the customer. Blast email, batch uploads, mis-targeted promotions and surface-level segmentation become a thing of the past.
Technology Operations
Fixed infrastructure is a big sunken cost for retailers who often must pay for processing power they’re not using, such as preparing for daily, monthly or seasonal variations. There is another cost for software components of a MarTech stack that are either redundant or ineffective, particularly when functionality is replicated across channels without planning for an omnichannel experience. Elastic scaling and an open garden infrastructure in rg1 solve for both of these issues, the former by automatically scaling technology and adjusting real-time controls to account for workload variations, and the latter by allowing retailers to drive digital transformation by leveraging all of their existing stack without an expensive rip-and-replace.
Marketing Operations
Finally, digitally mature retailers achieve cost reduction/avoidance by not only having a single customer view, but by being able to leverage the Golden Record to orchestrate omnichannel customer journeys and execute real-time interactions. A single point of operational control empowers marketers and business users to design and deliver simple or complex multitouch campaigns, executing true omnichannel customer experiences across all touchpoints. Hyper-relevant offers also reduce the number of interactions required to achieve marketing objectives. In essence, marketing is able to drive personalization at a much more granular level without the need to add any staff.
Our next blog in this series will explore how the Redpoint CDP helps retailers on the farther end of the maturity curve increase revenue.
