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The Digital Path to Purchase Comes of Age

January 26, 2015

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Last July, Scott Welty, global vice president for retail industry strategy at JDA, wrote, “The technology-driven shift to omnichannel shopping is the most transformative change to hit retail in decades. Yet in a global survey of CEOs conducted by PwC, only 22 percent felt this monumental shift would impact their organizations. Are these retail CEOs missing the boat?”[1] According to analysts at HRC Advisory, the answer to that question is a resounding, “Yes.” They assert, “While numerous retailers have collected years of customer data, only 9 percent are leveraging the information in a structured, usable way. … The finding was revealed as part of HRC’s latest retail industry study, which found that outdated organizational structures and processes, non-integrated IT platforms and a lack of a clear road map are major barriers preventing customer data in enabling a retailer’s omnichannel efforts.”[2]

 

Is missing the boat on omnichannel retailing a big deal? The answer to that question is also a resounding, “Yes.” According to FTI Consulting Inc., “Online sales are predicted to be about $300bn [in 2014], rise to $335bn [in 2015] and be worth $512bn by 2020.”[3] Even if consumers eventually end up making in-store purchases, the chances are high that they took the digital path to purchase somewhere along the way. FTI Consulting predicts, “Online sales will continue to grow at a double-digit rate for the next several years.” That’s a boat retailers simply can’t miss. Welty believes that too many CEOs are steering their boats by their wakes — hoping traditional courses will get them through today’s turbulent waters to help them reach tomorrow’s goals. He explains:

“In the midst of this omnichannel transformation, most of the CEOs surveyed still seem to be focused on the traditional levers of growth. Their top three priorities all deal with expansion — expanding into new regions or markets, expanding by opening more stores, and expanding through mergers and acquisitions. They appear to be fixated on the numbers at a time when success in retail is shifting to providing the best possible customer experience across channels.”

Zac Pinkham (), managing director EMEA at Millennial Media, believes, like many analysts, that a significant portion of a consumer’s digital path to purchase is going to involve mobile technologies. He writes, “We live in a world of multi-screens, multiplatforms, and multi-devices — from smartphones to connected TVs to wearables, to name but a few.”[4] He continues:

“Consequently consumers are ever more accustomed to using a variety of devices at different moments throughout the day, and increasingly in tandem with each other. According to the IAB’s RealView study, consumers spend one hour and one minute a day using at least two devices, sometimes three, simultaneously.”

Pinkham believes that “consumers [who] engage across a range of devices and mediums expect consistency from brands around look, feel and messaging.” That’s not as easy as it sounds. Michael Osborne, President of Smarter Remarketer, believes, however, that it may be easier in the years ahead. “For years,” he writes, “marketers have had two goals. They wanted to truly be able to engage with customers uniquely, based on both their interests and their value to our retail brand. They have also wanted to manage that conversation across every digital marketing channel, unifying email, web/mobile sites, display ad, and social efforts. While widely viewed as two separate goals, they were innately connected — how can you have cross-channel marketing without knowing who, specifically, you are communicating with? 2015 is the year when the promise of cross-channel marketing nirvana is fulfilled, finally.”[5] Osborne believes that the starting point for providing a consistent experience across channels is knowing your customer. He explains:

“The value of cross-channel marketing implies knowing your customers without conditions; demystify who each and every customer is by telling their stories. … That is when your cross-channel marketing strategy comes to life. … We have customers who are disengaging; we have customers who are highly engaged non-purchasers; we have customers who are aspirational in their web-based browsing, yet value based in their in-store purchases. In essence, we have dozens of customer types, and if we can honor who they are, we can bolster their value. Why now? Because there are a collection of next generation vendors who understand ‘understanding.’ They have internalized lessons learned over the last 15 years of solving the hardest challenges in retail, from the tactical to the strategic. For marketers who are open to the concept, they can have a partner in innovation vs. a vendor of technology. The technology has caught up to the vision.”

Jonathan Moran, a senior product marketing manager at SAS, believes that technology will “improve the marketing offers and messages we receive from brands in 2015” in three ways.[6] The first way involves geo-targeting. He explains:

“Have you ever pulled into a gas station and received an offer on your mobile device that lures you away from the pump and into the store? Have you ever received an offer for jeans while standing on the jeans aisle in a retail outfit? Does a latte offer pop up on your device when you walk past your favorite coffee shop? Maybe not yet — but you will. As more consumers and more consumers carry smartphones, delivering this type of geo-based marketing message or offer at the optimal time will become commonplace. And the brands with the most customer data will win.”

To learn more about how location-based targeting is coming of age, read my article entitled “Location-based Marketing is on the move.” The second way that Moran believes technology will improve marketing involves deeper personalization. He explains:

“Online retailers commonly use browsing or session behavior combined with purchase history to deliver ‘items you might like.’ This is a personalized offer but it could probably be improved upon. This year, I expect brands to take the next step — to go beyond using simple data metrics and become more adept at rapidly stitching together current online digital session data with offline customer information to dial up the level of personalization. As brands become more proficient at collecting, classifying, and using large customer created data volumes, the ‘next best offers’ or ‘next best actions’ delivered in channel will become more attractive to consumers.”

Customers want to feel special. They want to feel that they are getting value for the personal data they share. Sometimes that value doesn’t involve an offer but information. That’s why so many analysts now talk about providing consumers with experiences on their digital path to purchase. The final way that Moran believes technology will improve marketing involves using mobile devices and networks (i.e., the Internet of Everything) as sensors. He explains:

“Let’s face it, we all carry around a device that enables brands with mobile apps to maintain opt-in contact with us as consumers. The amount of data we emit as consumers from mobile app usage, social network usage, and our geo location information is valuable to brands seeking to improve their marketing efforts. These devices we carry are wifi-enabled — and how they interact with the networks they operate on is valuable information as well to network providers and ISP’s. This year we will see brands use data coming off of mobile devices and networks as a sort of sensor data — giving them sensor style information on our digital behavior and physical movement.”

Despite the fact that Osborne claims that technology has finally caught up with the vision, putting everything together to achieve desired results still requires a lot of thought and effort. It’s not simply a matter of gathering and analyzing data. Increasingly, privacy and trust issues must be taken into account (see my article “Big Data: Who Do You Trust?“). Nevertheless, the consensus seems to be that we are entering a new era in which the digital path to purchase will be the principal method consumers use.

 

Footnotes
[1] Scott Welty, “Are CEOs Missing the Boat on Omnichannel?Apparel, 8 July 2014.
[2] HRC Advisory, “Ninety-one Percent of Retailers Don’t Effectively Use Consumer Data to Create Omnichannel Shopping Capability,” SupplyChainBrain, 2 October 2014.
[3] FTI Consulting Inc., “Online Retail Sales Predicted to Hit $512Bn by 2020,” SupplyChainBrain, 4 December 2014.
[4] Zac Pinkham, “Cross-screen campaigns: Mobile’s new path for digital engagement,” The Drum, 15 December 2014.
[5] Michael Osborne, “In 2015, Technology Catches Up with Cross-channel Marketing,” Multichannel Merchant, 31 December 2014.
[6] Jonathan Moran, “Three Ways Big Data Will Change Marketing Offers in 2015,” Chief Marketer, 9 January 2015.

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