Customer Marketing 2.0 for Online Retailers: Personalize or Vaporize
More and more online retailers are realizing how to leverage the gold mine hiding in their customer data. On a strategic level, effective analysis of rich customer data allows marketers to better understand the various personas represented by their users' behaviors, preferences and tendencies.
On a tactical level, the successful analysis of customer data allows the marketer to personalize offers and incentives to maximize their relevance to each individual. Not only does this help maximize customer engagement and spend (and reduce churn), it generates goodwill, enhanced brand perception and word-of-mouth promotion.
Evolving Consumer Attitudes to Marketing
Most consumers have become intolerant to the bombardment of mass marketing coming from every website, store or app with which they have interacted. Instead of encouraging engagement and improving brand perception, generic marketing to large swatches of one's target audience will lead to brand fatigue at best, and outright negativity at worst.
On the other hand, there are two encouraging differences between today's average consumer and that of 10 years ago: one, modern consumers that the brands with which they've interacted will try engage them via follow-up marketing communications and, two, personalized, relevant promotions are no longer considered creepy. This means that savvy marketers, namely those that discover how to send highly relevant offers to the right customer at the right time, will enjoy all the revenue and brand perception benefits mentioned above, as well as a hefty advantage against competitors.
Evolving Marketing Technologies
Parallel to the evolution of consumer attitudes is the evolution of marketers seeking technologies that can deliver effective one-to-one marketing. In turn, more and more technology vendors and service providers are developing solutions that attempt to deliver successful personalized interactions with customers. Due to the huge market waiting for the winning solutions in this space, both large technology corporations and entrepreneurial startups are focusing steadily increasing resources on creating the ideal solutions.
The complexity of the technologies used is likewise evolving. Some of the more effective science-driven marketing technologies now available include the following:
- Dynamic micro-segmentation: Continuous customer segmentation based on the data-driven identification of rapidly changing customer "personas," which can be used to simultaneously hypertarget hundreds of small, homogenous groups of users.
- Predictive behavior modeling: The science of applying mathematical and statistical techniques to transactional, behavioral and demographic data in order to predict future customer behavior and value.
- Automated campaign scheduling/testing/optimization engines:Fully automatic execution of single or multichannel campaigns via email, SMS, push notifications, on-site/in-app advertising, call centers, Facebook Custom Audiences, etc.
- Real-time, event-triggered campaigns: Deliver personalized offers and incentives to individual customers at the most relevant moment based on their last action, their particular purchase history, shopping patterns, customer life-cycle stage, predicted future value, risk of churn and other factors.
The Future: Personalize or Vaporize
The future is already here; only retailers that are able to interact with their customers in the context of their affinities and preferences will succeed. Customers expect their favorite retailers to understand what they want and need, and it's the marketer's job to proactively provide those offers to the right customers at the right time in the right way.
When done correctly, brand-customer interactions become more frequent, the relationship deepens and brand loyalty increases. Those marketers who fail this challenge will foster negative brand equity, lose customers to the competition and overpay for new customer acquisition.
Online retailers must learn to effectively personalize their customer marketing ... or they will vaporize.
Richard Mitchell is the U.K. country manager for Optimove, a customer retention automation platform powered by predictive micro-segmentation technology..
