Leveraging Customer Data to Drive Personalization and Boost ROI
By Ajay Gupta| 2.26.20
Today’s customers increasingly expect a personalized approach from the retailers they choose to purchase from, no matter if they buy online or in-store. At the same time, retailers are now leveraging data to deliver the personalized experiences (i.e., the right message/experience to the right person at the right time) customers want.
In this landscape of growing personalization, not being able to serve your customers in a data-enabled manner will hurt your brand and revenues.
Advances in marketing technology, especially in the way customer data is collected and leveraged, enable greater levels of personalization across different channels. Among the most important capabilities is being able to recognize customers across multiple devices and channels. Technology that allows websites and apps to accomplish this is a large part of how companies can deliver personalized experiences without having to start over every time a customer opens a new browser.
Data silos inhibit personalization
Having a unified database of customers — a “single source of truth” — is the starting point for all personalization efforts. For many brands, customer data is siloed within different systems.
So, a marketing manager might do a one-off campaign with sweepstakes and the results are stored in one database that only that manager and her team can access. Maybe somebody else is doing a CRM outreach based on website registration. That also might be a separate, siloed database for the CRM team.
If it's a retail franchise, a franchise owner might be collecting his own email and phone numbers from customers. Because of siloed databases like these, companies have historically struggled to provide unified, personalized service. Silos also impact data quality. When you have separate records, they start to create duplicate records over time unless you have a unifying ID.
Let’s assume Customer A moves or changes her email and her data is not properly updated. Now the company has two different records for Customer A, even though it's the same person. That’s what low data quality looks like, and it hurts your customer engagement and personalization efforts.
Data enhancement to help drive personalization
Data enhancement means taking in customer data, whether through a CRM, a company website, or an app, and enhancing it by adding unique customer identifiers along with various attributes such as demographics, behavioral tendencies, and spending habits.
Creating one single identifier will eliminate the problem where you don't know a customer when she is on an app versus a website. If you start treating the same customer differently depending on where they are, it disrupts personalization.
A big goal of data enhancement is to save cost in the long run, especially if you're doing direct mail and email campaigns. But data enhancement also ensures that you're giving the same offers to the same person across different devices and channels, reducing friction in cross-channel, cross-device engagement.
Too many brick-and-mortar retailers have become cautionary tales of forgetting to focus on customer personalization. Many end up taking a blast marketing approach where they spend more time trying to chase after new customers versus coming up with a good system for tracking existing customers coming into their stores and putting relevant offers in front of them.
The number of sales associates in those stores today are fewer and those associates are overworked. Retailers need to consider other methods for collecting customer data and tracking foot traffic. It might be through geofencing or creating additional incentives (like a free photo booth that works if a user provides an email address) for customers to sign up for a newsletter or discounts.
How one retailer drove personalization and ROI
Stirista received a “Best Retail Campaign” award from the DMA (now part of Association of National Advertisers), for a campaign we ran with hair salon/retailer Great Clips. The company did not like the idea of over-couponing, which was expensive.
So, we dug into the Great Clips customer database and created segments, splitting its audiences into good customers, better customers, and best customers. Each customer segment had a different trend in terms of how often they’d come into a Great Clips salon. Based on those behavior-based segments, we started personalizing Great Clips’ offers.
The best customers were coming back whether they were getting coupons or not. We started showing this segment a video ad, sending them an email, reminding them about a haircut without sending a coupon. And for customers who were coming once a year, we started doing more aggressive couponing.
By changing how Great Clips approached its own customer database, we were able to increase ROI by a stunning 315% and cut marketing costs simultaneously, a massive win-win.
In terms of customer engagement, personalization also led to higher open rates, higher click rates, a greater number of haircut appointments being made via the Great Clips app, and more.
Finding a partner to help drive personalization
When companies seek out a data partner, they sometimes get too hung up on data sourcing and the number of fields somebody has. But a more important concern is how you’ll leverage the data, and how the provider can help you do so effectively.
Lots of passive data providers will charge a licensing fee, deliver the data, and that's the end of their engagement. You need a provider who’s able to help you understand what can be done with data. You need a more cohesive strategy that connects your in-store team with the agency and data provider to get the full benefit.
Today’s retailers are struggling with being able to match Amazon on price. If you're going to be the higher-priced alternative, you have to come up with something that differentiates you.
Being able to use customer data effectively, as the Great Clips example shows, can make a significant difference in customer satisfaction and help your brand stand out. If you're collecting customer data and you're not leveraging it effectively, you might as well not collect data at all.
About the Author
Ajay Gupta has served as CEO of Stirista since founding the company in 2010 at age 26. Without accepting external funding, Ajay has overseen the data-driven, marketing services company’s rapid growth from 2 employees to a 41-person team spanning three continents. He has been named a Marketing EDGE Rising Star and was part of the San Antonio Business Journal’s 40 Under 40 list. Under his leadership, Stirista has won an Ad Age Best Places to Work award, a DMA Silver ECHO award, a third-place DMN Award, and a spot on the Inc 5000 list.