Think Tank: Five Steps to Win on Relevance, Not Just Price, This Holiday Season
For retailers, Black Friday and Cyber Monday have largely become a race to the bottom — who can win pure volume with the lowest possible prices? With retail holiday spending expected to exceed $1 trillion this year according to Deloitte’s annual forecast, even a tiny share can mean huge revenues. The question is, how much are brands leaving on the table simply by blasting out massive discounts to all customers? And how much more successful could they be by crafting radically relevant offers instead?
To achieve radical relevance, you have to identify your holiday gift-givers — and then reach out to them with the right message, at the right price, at the right time and via the right channel. That is only possible when you detect all signals they are sending you, from historical purchase data to real-time browsing, and use that information to create offers they are eager to follow up on.
Without these capabilities, heavy discounting is one of the only ways to win mindshare when every form of media is saturated with holiday promotions. And since consumers can discover whether competitors are offering even bigger discounts, you are forced to enter the race to the bottom, whether you like it or not.
Imagine instead that you could use all your customer data, enriched by AI and other advanced analytics, to provide personalized — even curated — holiday shopping experiences. That means identifying gift-givers and using their past gift-giving and other behavior to create timely, compelling gift ideas for this season, without having to resort to slashing prices to the bone.
Here is a five-step plan for using your own first-party data to win on radical relevance this holiday season.
1. Identify gift-givers and their behaviors
Shopping behavior tends to change radically during the holiday season, and many of those behaviors are strong indicators of gift-giving. By identifying gift-givers by these behaviors, you suddenly have a trove of critical information — e.g., purchase time and date, price point, channel, promotional information, product category, etc. — that you can use to personalize messages this holiday season.
Key indicators of gift-buying behavior include customers who buy outside their product category, usually shop in-store but suddenly shop online, ship items to addresses different from the billing address, with larger basket sizes than during the rest of the year, and only make purchases from your brand during the holiday season.
By creating a unified view of historical customer transactions and behaviors across channels — including product, price, promotional and shipping details — marketers have the ability to explore that data interactively and discover audiences likely made up of gift-givers.
2. Craft personalized offers
Once you identify gift-givers, you can unleash marketing creativity — plus advanced analytics — on all that granular information from previous seasons’ purchases to craft highly personalized offers for this season by using product affinity, AI-driven product suggestions, price sensitivity and promotions optimization.
Since you know what a customer has given in the past, you can use that data to quickly create an offer for the same product, products in the same category, or complementary products.
AI-generated ideas for “best next purchase” suggestions can go the next step, offering fresh and unexpected gift ideas that have been popular with other gift-givers with a similar set of demographic or behavioral attributes. While price-related data about previous gift purchases can provide key insight into price sensitivity, which is invaluable in crafting the right price points or promotions for the right segments of customers to drive conversion. An example application is luxury shoppers attracting high-ticket items vs. value shoppers looking for promotional offers.
Instead of implementing across-the-board discounts, AI-driven price optimization solutions enable you to craft highly personalized offers based on the price sensitivity of individual customers. As a result, you can drive top-line revenues without sacrificing
the bottom line.
Of course, personalization requires robust, flexible AI capabilities that can quickly produce intelligent next-purchase suggestions and optimize promotional offers by leveraging all relevant customer data.
3. Deliver messages via the optimal channel, at the optimal time
Because it is harder to win mindshare in the run-up to the holidays, it is vital to reach out via channels that are most likely to first, grab gift-givers attention, and second, drive purchases.
Timing is crucial. To optimize channels, you need to understand what marketing messages have worked in the past, while also drawing on recent behavior. Some shoppers make all their gift-giving decisions by Thanksgiving. Others race to catch up in mid-December. You don’t want to reach out to customers after they have made their key purchases. But you don’t want to send messages to last-minute shoppers who are not even thinking about gift purchases yet. By understanding when customers have done their gift-buying in the past, you can time messages for the moments they are most likely to break through the noise.
Thus, it’s necessary to deliver cross-channel campaign orchestration with channel optimization that automatically determines the best channel and timing for a message based on all the relevant data.
4. Deliver differentiated invitation-only experiences
During the holidays, retailers are increasingly enticing gift-givers with invitation-only experiences, from time-limited, in-store discounts to Champagne receptions. Such events are great cross-sell and up-sell opportunities while building intimate relationships between your brand and customer. However, you can make them even more successful when you use deep, granular information to personalize these experiences, inviting the right people to participate in the right experiences.
These experiences may include high-end in-store events, which can broaden your customer base outside of typical high lifetime-customer-value customer, or loyalty promotions which combine both gift-giving and loyalty behavior data to customize offers for gift-giving that include loyalty-based enticements, from extra points to free gifts available in-store.
All this can be achieved by marketers who are matching physical address of customers to closest brick-and-mortar store, while combing customer data to build highly targeted audiences.
5. Look for gift-giving look-alikes
AI-driven look-alike models quickly identify a trait or set of traits shared among existing segments of your customers — e.g., high-value customers or those likely to churn. It then identifies other customers who share the same key traits, creating a segment of likely candidates for targeted campaigns.
Because shopping behavior changes so much during the holidays, there are a number of look-alike opportunities. The largest numbers and holiday spend belong to the gift-givers segment. Besides finding look-alikes, it is worth testing different creative messaging across this diverse group to create more targeted segments within the gift-givers category. With value shoppers, holiday promotions are often used to make non-gift purchases. By finding look-alikes, you can craft value-based messages and offers likely to drive conversion. In addition to gift-givers, “self-gifters” are more likely to splurge on an expensive treat for themselves during the holidays, so targeting their look-alikes can be well worth the effort.
Identify look-alikes with pre-built, AI-look-alike models that still provide the flexibility to adjust to your own unique customer and brand offerings, as well as centralized A/B/n testing capabilities to gain more information about look-alikes.
While it may feel a little late to change course this holiday season, there is so much opportunity to continue the peak growth you experience this season well into next year with the right customer data platform in place to support the access to data and hands-on management of customer intelligence and campaign execution.
Originally published by Women’s Wear Daily.
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