The top strategic action identified by best-in-class retailers is to develop channel integration plans for creating a unified customer experience, according to a report by researchers Chris Cunnane and Sahir Anand at Aberdeen Group.
Too often, the duo found, retailers ignore the connectivity between customer channel preferences and buying behaviour. Customers today are interacting with brands in new ways, from social media networking sites to user-generated content (UGC) and feedback forums and blogs.
But the emergence of so many new marketing channels requires retailers to provide consistent branding across all retail channels, and to engage the customer with marketing messages through their channel of choice. As consumers turn to multiple channels for their media consumption and shopping needs, retailers must ensure disparate channels are working in harmony. As a result, channel integration has become essential for a truly effective multi-channel marketing strategy.
Between February and May 2010, Aberdeen Group surveyed 145 enterprises to determine the current state of multi-channel marketing initiatives. The top pressure dictating multi-channel marketing decisions of retailers is the inability to measure the effectiveness of all marketing activities.
This is due in part to disjointed marketing efforts and difficulty measuring campaign effectiveness within emerging channels. Business-to-consumer enterprises in the service industry do not have the necessary tools in place to effectively track and measure their marketing campaigns. Without these tools, marketing ROI cannot be calculated, nor can additional value be determined and leveraged for future campaigns.
According to the November 2009 Marketing Analytics report, 92% of retailers do not integrate customer data from all marketing channels. However, Aberdeen's research showed that the top strategic action that best-in-class companies are taking is to integrate disparate data into a centralised marketing database.
Clearly, this is an issue that is top-of-mind for retailers. A centralised marketing database allows for a holistic view of the customer, and allows all departments to access information about the customer. Additionally, with one centralised database, marketers are able to develop marketing outreach programmes geared around demographic or psychographic specific characteristics, without having to consult multiple databases that may have conflicting data. This lack of integrated customer data leads to duplicate marketing efforts that can send conflicting messages.
The analysis of best-in-class retailers found that effectively measuring and tracking marketing response rates, campaign performance, and customer preferences have a positive impact on customer retention and frequency rates. Real-time marketing data assists not only the marketing team but also the sales and merchandising teams in delivering the right message coupled with the right products.
Best-in-class retailers are using marketing data to improve their campaign effectiveness in a number of ways:
- Best-in-class retail companies are twice as likely as all others to measure the channel preferences of their customers.
- Fifty-four percent (54%) of best-in-class retailers, compared to only 23% of all others, are tracking multi-channel marketing programme response rates, which needs to be a continuous action at retail headquarters.
- Best-in-class retailers are 1.5 times more likely to possess the ability to track marketing ROI on multi-channel marketing campaigns.
Best-in-class retailers have taken the lead in terms of adapting their marketing programmes to meet the expanding digital preferences of their customers. Best-in-class retailers have seen value justification in the use of email marketing, social media marketing, and mobile marketing, and continue to set the bar for their competitors.
Email marketing is an extremely cost-efficient way for a marketing programme to reach its target audience. Email, as compared to traditional direct mail campaigns, is significantly less expensive and offers the chance to track the campaigns, from click through rates to actual redemption and response rates either in the store or on the web. For example, loyalty programme members receive email coupons redeemable in the store; the discount rate is directly correlated to prior purchasing patterns. This allows the retailer to use different offers and incentives for customer retention and re-activation.
Additionally, email marketing is able to take advantage of event triggering. This occurs when an email campaign is generated due to an event or a missed event, such as a sale. A good example of trigger event emails was seen at bookseller Borders. Borders executes email campaigns for customers that have recently purchased a book or other item with similar products they may be interested in. Also, for those customers who are signed in to their Borders account, when they abandon their shopping cart without finalising their purchase, they will receive an email with additional discounts to re-engage the sale. This is a good example of a missed event triggering an automated marketing action.
The use of social media marketing is another area where best-in-class retailers are head and shoulders above their competition. Best-in-class retailers that have thought out a strategic plan for social media's role are seeing results, especially in the form of increased ROI. Social media and online community outreach activities need to connect with the target audience in order to be of use as part of a marketing programme.
It is critical that by delivering offers through an online community or social media, and measuring the response rate, retailers are able to track sales that are generated through a specific social media campaign. These campaigns allow the retailer to reach a larger and more diverse audience, and increase a retailer's marketing ROI. Aberdeen's report, 'The ROI on Social Media Marketing', revealed that social media marketing has improved return on marketing investment by up to 87%.
An example of successful social media marketing is Home Depot. Home Depot has successfully integrated customer service and promotion delivery through the use of Twitter. With nearly 22,000 followers, Home Depot promotes in-store and Web specials, and responds in real-time to customer complaints or suggestions.
The best-in-class are also six times more likely than the 'laggards' to currently use mobile marketing tools. Mobile marketing includes the use of mobile couponing through Short Message Service (SMS) or Multimedia Messaging Service (MMS), mobile apps, or mobile web marketing. Mobile couponing enables best-in-class retailers to reach a highly targeted customer segment and interact with their customers in real-time in nearly any location, while saving costs associated with direct mail strategies.
Mobile coupons can be delivered in-store using location-based messaging, smart posters, Quick-Response (QR) codes or 2-D bar code scanning. These coupons can then be scanned at the point-of-sale, or applied to a web or mobile order. Retailers such as New York & Company have recently introduced in-store mobile marketing initiatives. The combination of these technologies have demonstrated value justification in the combination of higher marketing ROI, and improved customer retention and frequency rates.
Whether a company is trying to move its performance in retail marketing from laggard to industry average, or industry average to best-in-class, the following actions are suggested by Aberdeen to help spur the necessary performance improvements:
- Deploy a targeted multi-channel database marketing solution. Database marketing uses customer information to generate personalised communications, using direct mail and email campaigns for all channels of sales and service (store, online, catalogue, and mobile). A first step would be to use customer information from the CRM to develop personalised promotions to be delivered through their email marketing solution.
- Measure customer channel preference for developing multi-channel campaigns. Channel preferences can be measured through the use of customer feedback surveys, customer profiles on the retail website, or through the use of customer analytics to measure where and how the customer interacts with the brand. Consider a unified marketing platform that includes all elements of a multi-channel marketing planning, implementation, and analytics.
- Develop a centralised database for 'one view of the customer'. A centralised customer database allows for employees across multiple departments and teams access to a single view of the customer, and enables the marketing team to create a highly personalised, integrated marketing plan. As a first step in the process, best-in-class retailers should purge their CRM systems of duplicate records, and consolidate all brand interactions into a single view.
- Invest in social media monitoring tools to measure ROI. Retailers must ensure they are tracking the brand across social media sites to maintain the brand integrity. Social media monitoring tools will allow the retailer to track Facebook, Twitter, blogs, and product feedback forums to identify the brand perception in cyberspace.
The 'Cross Channel Retail Marketing' report has been made available for download from Aberdeen's web site - click here (free registration required).