Today we posed the question of competition, and whether the big financial institutions can survive without Fintech or not. We know that competition in the banking landscape is very low, with the big 4 still holding most of the power in the market. It’s been a subject that we have discussed a lot at Dynamic Read More…
What retailers need to get right for customer acquisition
Fri 10 August 2018 - 2:41 pmIndustry Finance | Information Technology
Bankruptcies and store closures are hitting once iconic local brands like Oroton and Marcs and international brands like PayLess and Toys’r’Us, yet eCommerce operators like Amazon continue to relentlessly bolster their power.
While it seems like an unfair fight, it’s certainly not the end of an era as it may seem. Yes, the challenges of today’s commerce landscape are significant, but the current digital era also creates tremendous opportunities. This is especially true when evaluating today’s evolving approaches to customer acquisition.
Companies like The Good Guys, Coles and Woolworths are already leading the way. They have created performance-based solutions, improved in-store experiences and have leveraged online platforms to meet shoppers at every point during their journey.
There are other positive trends in the retail industry. According to the Global Powers of Retailing Report from Deloitte, ongoing population and tourism growth has contributed to 3 per cent growth in Australia’s overall retail market. The report suggests that with increased competition from both local and international retailers, such as Alibaba in 2017 and JD.com expected to do the same soon, we’ll see further consolidation in the next 12 months.
The retail transformation extends far beyond our own local market, with the increased interest from large international retailers opening up significant opportunity for small and mid-sized Australian retailers. If anything, these retailers are best positioned for success. They are nimble, creative and eager to adapt to changes, such as providing unique experiences to shoppers. They are also unafraid to take bold moves, turning themselves into laboratories for innovation.
But even with the most progressive of thinking, the key will be finding ways to improve customer acquisition to fuel revenue and profits. The good news is that – with the ubiquity of affordable new technologies – there are tremendous opportunities for scale.
Embrace Data Collaboration: Data is the coin of the realm when it comes to customer acquisition. Retailers must know their prospects in order to make a relevant, compelling product recommendation. But unfortunately, individual retailers do not have enough scale to build an effective personalisation platform. One proven workaround is to form data collaboration alliances, which allow for better reach and ROI. The most successful collaborations do require in-depth planning. Who are the best partners? Is the data fresh and relevant for purchase intent? There must also be a focus on compliance to avoid data breaches, which can expose a company to enormous legal consequences. Finally, there must be a strong performance-based strategy in place to ensure the data is used effectively across all customer touch points.
Audit Current Shoppers: The strongest applications of customer data result in acquisition strategies that are in a constant state of change and improvement. Seemingly unimportant details – such as the color of a “Quick View” button – can have a significant impact on a shopper’s experience. This means retailers will have to experiment and experience some new obstacles, which can be unnerving. But a willingness to change and adapt is certainly worth the effort. Pinpointing how to influence the consumers with the highest propensity to convert once will likely result in them converting again — filling the pipeline with a far more robust set of targets for the full lifecycle of the retailer.
Reactivate Inactive Customers: This can be a great strategy for cost-effective customer acquisition. In this case, retailers already have data on the customer and understand their needs. The customer, on the other hand, also understands the product and may have even demonstrated a certain level of intent. If the customer left because of issues like pricing, then this could be an opportunity to provide a discount or competitive incentive. Brands with new or improved offerings can reactivate a past customer as a way to reintroduce their catalog altogether. To understand the power of these approaches, look at UK global fashion retailer, New Look. By marketing to lapsed customers, the company was able to generate four times more orders with a 74 percent lower cost per order.
A Steady Path to Scale:
There is quite a bit of noise in the digital marketplace. As a result, it can be easy to get sidetracked, spinning resources on less impactful initiatives. To win in the current ecommerce ecosystem, taking the long view is the best approach – and will provide retailers the greatest payoff for sustainable growth.
Pressy Sankaran, Head of ANZ, Criteo
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