The three new rules of retail marketing

The three new rules of retail marketing
Carl Tsukahara is CMO at Optimizely and is responsible for all global marketing strategy and execution. A 25+ year veteran of Silicon Valley, Carl Tsukahara was most recently CMO for Birst, a category leader in delivering enterprise business analytics to major global corporations. Prior to Birst, Carl was Executive Vice President of Marketing and Products for Evolv (NASDAQ:CSOD), a provider of predictive analytics/machine learning solutions, where he managed marketing, engineering and product management. At Evolv, Carl drove explosive market awareness and product innovation, leading to an acquisition of Evolv by Cornerstone On Demand. As a strategy and marketing consultant, Carl also worked with companies and product groups such as Workday, Microsoft, Riverbed Technology, Taleo, D&B, Hyperion, Symantec and VMware, working directly with the executive management of those organizations.

Marketers at top retail companies will tell you how much they have to adapt their strategies to keep up with the demands of the changing retail landscape. If recent ONS retail figures have shown us anything, it is that marketers are playing by new rules when it comes to customer engagement.  

Several common themes have emerged which makes it possible to define the three key new rules of retail marketing: 

1.) Retail brands offering the best digital experiences will win

Customer experience is at a tipping point, and retailers that provide a seamless customer-centric experience will not only stand out from the rest but encourage loyalty.

Case in point — online mattress start-up Casper found a way to upend the traditional way of mattress shopping by reinventing the entire experience online, emphasising the ease of purchase, delivery and return process.

digital and web teams must all work together

The company has won a cult-like following for its digital presence too, including the use of “Staycation Story Hacks” a Casper-owned website that houses content readers can share on social media. This will happen more in 2018 as consumer experiences increasingly focus on storytelling and engagement.

To achieve this level of increased interaction from consumers requires a great deal of collaboration behind the scenes. Traditionally retailers have worked in silos with one team focused on merchandising, one on marketing, one on product development, etc, but to create a seamless customer experience the product, digital and web teams must all work together to ensure pricing, images, checkout flow and content all align with the brand’s goals.

2.) Experimentation drives strategy and the digital customer experience

Gartner predicts the rise of mixed reality over the next five years, where users interact with real-world and digital objects in parallel to create an immersive experience.

This could be perceived as an evolution of the concept of omnichannel commerce, which first came about in 2003, when consumers had two distinct options: to buy in-store or online. Today, the customer experience goes far beyond those two channels. Touchpoints that didn’t exist even a couple of years ago — mobile everywhere, Alexa/Google Voice, virtual reality, connected cars, OTT programming — are adding to this complexity.

Marketers and developers must work together to create personalised, connected experiences. Multiple touchpoints can no longer be considered separate, as one influences the other for every consumer, every day.

In 2018, organisations will successfully scale this kind of constant innovation only through digital experimentation: testing every touchpoint and using outcome data to drive business decisions based on statistical rigor.

3.) If you ignore business metrics in optimising your digital performance, expect a shrinking marketing budget

This past year consumer expectations have heightened while marketing budgets have shrunk. According to a recent Gartner survey, in 2017 the average amount of revenue allocated to marketing was 11.3%, compared with 12.1% from the previous year.

focus on connecting marketing programs to the bottom line

Survey results suggested some marketers haven’t been able to justify previous budget increases because they failed to focus on business metrics that actually matter to their companies.

In all of the excitement around the latest AI trend or a breakthrough in VR, it appears the industry has abandoned its commitment to being outcome-driven and aligned with the rest of the business. Retail marketer must now focus on connecting marketing programs to the bottom line, asking what metrics are needed to see budgets increase next year and really help the valuation of companies. 

Marketers have to recognise that customer expectations have changed and raised the stakes for brand loyalty. Failure to do so will result in stagnation, diminished returns and, ultimately, the demise of retail marketing.

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