By Lloyd Davies, Managing Director, Making Science
With festive decorations working their way out of hibernation, many retailers are now turning their attention to the ‘golden quarter’, traditionally the busiest in the shopping calendar. However, after several years of disappointing festive sales any hopes that this season will be a lifeline to struggling retailers are being eroded by spiralling inflation — predicted to hit 18% by early 2023 — and the rising energy bills behind the cost of living crisis. Consumer confidence is lower now than during previous recessions, even before the full effects of this economic downturn have hit.
For retail brands to deliver results this holiday season, and weather the continuing storm, marketing efficiency and effectiveness will be key to attracting dwindling consumer spend. But new research from Making Science has revealed that marketing professionals in the retail and ecommerce sector lag behind financial and travel industries with their data practices. In fact, many retail respondents fail to gather data at all, weakening the impact of their advertising strategies.
In preparation for the coming raft of festive sales opportunities, it is crucial that retailers act now to address inefficiencies in their data practices and review their strategies to optimise results.
The state of retail data strategies
With the phase out of third-party data looming, it has never been more important for retailers to implement and operate an effective data strategy to optimise marketing efforts. However, with 7% of all retailers not collecting any data at all — online or offline — from their customers, they are at a disadvantage from the start. Of those that do collect data, 12% of retailers are not activating it; by comparison, this is significantly higher than the financial (1%) and travel (2%) sectors.
More worryingly, one in eight retail brands are not ensuring the quality of their data, while the sector also falls behind in its adoption of technologies such as AI or data automation. This highlights huge inefficiencies in retailers’ data strategies, with many collecting it but neglecting to invest in the techniques to extend and optimise its usage. By failing to take the last step in marketing efficiency, commerce businesses are wasting their efforts and failing to equip themselves with the information necessary to advertise effectively.
Not only are these current collection, validation and activation practices hindering ecommerce and retail businesses in the fight to improve their ROI, but the loss of third-party data will only increase the importance of first-party data strategies in the future.
Shifting consumer lifestyle and buying trends are an additional pressure on retail businesses; data insights will therefore be key to keeping up with behaviours and remaining relevant in the fight for consumer attention over the festive season. Those failing to focus their attention on curating and validating their own first-party data are leaving themselves at a distinct disadvantage.
Data collection is just the beginning
Despite having carried out part of the heavy lifting, 16% of retailers are not measuring the data they collect at all, while a fifth (21%) are not implementing well-known data enhancement machine learning tools.
With marketers having to work harder than before with the information available to them, conducting data collection is only completing half of the job. Yet, while general analysis techniques are widely implemented by retailers (59%), research showed they are struggling to achieve targeted objectives such as increasing ROI and conversion rate, reinforcing the need for tailored activity — informed by extended analysis — for the most success.
Advanced activation, analytics and AI
To ensure future opportunities are not missed and marketing activities are optimised, advertisers should look beyond general activation solutions. Tools that conduct basic, general analysis do not examine full, large-scale data sets, instead they extrapolate information from a smaller sample to draw a representation. Whereas, advanced analytics solutions can assess large amounts of data to produce in-depth, granular insights for marketers to target their advertising initiatives.
To further the usability of these insights, AI technology can then expand and extend information offered by advanced analytics tools. Through prediction-based modelling audience insights can then be broadened beyond the bounds of existing data.
Advanced analytics tools offer retailers exact information and clear guidance that not only inform tailored marketing content and strategies through audience profiling, but also influence marketing decisions-with advanced campaign measurement. Ultimately, this gives marketers an understanding of the varying levels of success delivered by different campaign elements. Carefully measuring what is or isn’t working allows businesses to meet specific objectives, for example tools such as BigQuery can be implemented by businesses who have identified that conversion rates are low to optimise products based on customer experience measurement.
If marketing purse strings are being tightened in tandem with consumer spend, better data activation could be the path to success for retailers to achieve true marketing effectiveness this festive season. With consumer confidence continuing to dwindle, every inch of data insight will help convince consumers to part with their precious cash, but only if retailers have effective first-party data strategies — with clever activation tactics.