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At the height of the pandemic in 2020, global retail sales fell by 2.9%. A year later, it bounced back to 9.7% growth. Yet global retail sales will see reduced growth this year as customers significantly cut back on purchases to cope with the cost-of-living crisis. Brands now risk having fewer sales, increased churn, and lower revenue.
Deal-seeking customer behavior is soaring as shoppers turn to alternative brands for deals and discounts. In fact, Amazon Prime Day had customers purchase over 300 million items (largely essentials) – the highest ever recorded. With talks of a potential second Prime Day later this year, businesses now face an even more challenging Golden Quarter.
It’s a sensitive time for shoppers and a crucial period for businesses. Customers will remember how brands adjusted their marketing models in response to the crisis. To help you get this right in time for the Golden Quarter, we’ve nailed down key facts and insights to help you adapt your campaigns.
TABLE OF CONTENTS
1. Current state of eCommerce & Retail 2. How inflation has affected customer behavior & businesses 3. 8 essential tactics to adjust your marketing strategy
THE CURRENT STATE OF ECOMMERCE & RETAIL
The aftershock of the pandemic and other 2022 global affairs have caused the cost of goods to rise worldwide. In the U.S., the consumer price index hit the nation at 9.1%. The high cost of food, energy bills, and fuel is pressuring households to cut back on items they don’t need.
The U.K.’s inflation also hit a 40-year high of 9.4% and is speculated to hit 12% in October. Shoppers are scaling back on their spending as U.K. retail sales fell off the back of inflation, dropping by 1.1% in May – the worst month since January 2021. European countries are also seeing similar, with Germany’s inflation hitting 7.9% and Italy hitting 8.6% – both the highest rate in decades.
HOW IS INFLATION AFFECTING CUSTOMER BEHAVIOR?
The pressure on everyone’s wallets has shoppers feeling like they’ve lost their purchase power. During the COVID-19 lockdowns, people had government financial support to cope with restrictions and being unable to work. But “post-pandemic,” they’re now left to cope alone financially. It’s reduced their spending potential as they limit purchases, restrict to sales items, cut unnecessary subscriptions, and downgrade to cheaper “essential” alternatives.
This has a knock-on effect on businesses such as Netflix; having felt this quickly, they’re finding alternative ways to generate revenue. In fact, Netflix announced plans to launch ads in 2023 after taking a hit of 1 million unsubscribes in Q2.
Shoppers are patiently waiting rather than impulsively buying as they research and compare products across channels. A third of U.S. customers even waited for Prime Day to purchase a certain item at a discounted price. The same goes for the Golden Quarter; 51% of U.K. shoppers see Black Friday as vital to make their cash go as far as possible during the peak.
HOW IS INFLATION & NEW CUSTOMER BEHAVIOR AFFECTING BUSINESSES?
The pandemic revolutionized shoppers in becoming digitally conscious. They yearn for added value, the best deal, and great service in their purchase journey. These high customer expectations mean businesses must exceed these to build consumer confidence in their brand.
Marketers are battling a domino effect of negative KPIs: higher basket abandonments, lower conversions, decreased AOV, and less revenue. Customer acquisition is also becoming expensive as consumers are more selective about who they purchase from.
In a Future plc survey, 95% of respondents expect brands to take “corrective action” in response to the cost-of-living crisis. Yet 47% look to brands to meet them halfway by reducing prices. You’re faced with a dilemma: raising prices to protect your margins or slashing prices to avoid a drop in revenue for the short term. But there is a third option:
Sustainability.
Using what you already have can streamline all stages of the customer journey to help you add value to your CX for your existing prospects and customers. Unifying your customer data can give you a “single source of truth” to provide an insight-led approach. This can be your key differentiator to help you keep customers engaged to drive conversions and customer retention in the run-up to the Golden Quarter and after.
8 ESSENTIAL TACTICS YOU NEED TO ADJUST YOUR MARKETING STRATEGY
Shoppers are selective about who they do business with, but you need to be selective about where to invest your marketing.
Identifying high-value customers who are likely to convert can keep your margins healthy and at a lower cost. Personalizing your loyalty programs for these customer segments can create an engaging CX and grow customer loyalty. Essentially, this helps you grow sales for the long term. But to do this right, you need to understand your customers with real-time data and analytics.
1. GET AGILITY WITH THE RIGHT MARTECH STACK
The right MarTech impacts your marketing agility. Yet some brands are making do with tight budgets and siloed systems that limit the ability to draw insights and react accordingly.
If you’re looking to improve your MarTech stack, then you may want to look at your Customer Data Platform (CDP). CDPs have become a necessity rather than a “nice-to-have,” making it easy for you to unify fragmented data and get a 360-degree view of your customers and their journey.
If you have limited resources, consider consolidating your existing technology to reduce unnecessary spending and streamline your marketing.
2. BUILD YOUR CUSTOMER BASE WITH DATA CAPTURING
Finding creative ways to capture customer data in a GDPR-compliant way before the peak can help you build your database (check out some tactics here). Doing this now allows you to learn about your potential customers through your CDP and send out relevant content to shoppers already engaged with your brand.
Investing in a platform that enriches customer intelligence and generates predictions helps you spot opportunities to capitalize on. You can easily segment audiences, create personalized content, and send these on the right channel at the right time.
NOTE: Mapp Cloud does more than a regular CDP – it builds on top of your existing customer data through zero and first-party data collection (with GDPR as priority). You can create and build unified customer profiles using real-time data to quickly act on your customer’s needs based on their behaviors, desires, and interactions with your brand. Lookalike audiences can also be made to target potential high-value customers with similar interests.
3. PUTTING CUSTOMER INSIGHTS AT THE CORE OF YOUR OMNICHANNEL MARKETING
Every customer interaction must be relevant and personalized to help you cut through the noise and engage audiences. Every individual consumer is unique and shows different behavior patterns, depending on their previous engagement with your brand.
Segmenting your audiences based on their demographic, behavioral, and historical data is crucial. Next, personalize your content based on these insights. Finally, use your analytics to identify the channels and times they’re most active on and trigger automated and relevant communications on the right channels.
NOTE: Our “How to move from gut-feel to actionable insights” eBook walks you through how to put insights at the core of your insight-led marketing.
4. EXCEED CUSTOMER EXPECTATIONS THROUGH YOUR CX
What you think is above the bar may be the very minimum. It’s crucial to get the basics of the customer journey right to cover basic consumer expectations. What if friction in the customer journey caused abandonments, such as a field validation error or even SCA issues? This may be causing huge drop-offs at a crucial time of conversion. Having a CDP can make this clear to act accordingly.
“Stress-test” your marketing by launching your sales before Black Friday. This helps you to identify your weak spots and optimize the CX in time for the Golden Quarter. By ensuring shoppers have a smooth and seamless CX with your brand, it adds value to their purchases to turn them into returning customers.
5. BE SENTIMENTAL & OFFER FLEXIBILITY IN A CONSCIOUS WAY
It’s the tough times customers remember, so it’s important to show empathy through your incentives to build positive customer relationships. Offering fair pricing shows empathy, but it’s also important to be subtle and conscious of how you communicate.
Promotional emails with a time limit wouldn’t be good marketing as it pressures your shoppers. This can cause unsubscribes and churn. Instead, let your customers know that a product they’ve been revisiting multiple times has a price drop as an FYI. This shows you’re being considerate and not pressuring them to make a sale.
Offer other service alternatives to give a sense of flexibility to customers, such as:
Payment options: Offering “Buy-Now-Pay-Later” services such as Klarna gives consumers a sense of purchasing power back by allowing them to spread payments.
Return policies: Be transparent about your returns policy. While the option to return can encourage shoppers to convert, businesses such as Boohoo and Zara choose to charge customers for returns as shipping & returns become costly. Be clear about this, as it builds trust with consumers. They’ll understand!
In-store/curb-side pick-ups: Give customers the flexibility and confidence to choose how they receive products. It saves costs and ensures your fulfillment meets customer expectations.
6. REDEFINE YOUR LEVELS OF CUSTOMER LOYALTY
Customer loyalty comes from an emotional connection with your brand. Rolling out standard loyalty programs and constant discounts can make your brand seem uninterested in your customer’s needs which can drive churn. Be more conscious of your definition of “loyalty segments” and what shoppers look for in a brand. Having personalized experiences and rewards in return for loyalty makes every conversion worth it to customers.
But just because customers aren’t spending as much with your brand as last year doesn’t mean they’re less loyal. It could mean they are still spending their entire budget in this category with you and simply can’t afford to spend more. Using your CDP makes this clear, as deeper customer insights are key to identifying what pages they’ve interacted with and their spending pattern.
7. PERSONALIZE YOUR CONTENT WITH RELEVANCE, AUTOMATION, AND AI
Avoid sending standardized communications – no one wants those. Personalized content helps you cut through the noise, drive engagement, and increase conversions. It’s also a sustainable strategy for brands that can’t undercut competitors on price as they focus on building consumer trust.
Using customer insights at the core of each interaction drives relevance in your cross-channel marketing. Some examples can be:
Sending discount offers on products they’ve purchased previously
Recommending similar items to products they’ve been visiting
Back in-stock alerts for products in their wishlist
Aligned with AI and advanced automation is essential to help you design, test, and optimize your cross-channel communications.
8. BE OMNIPRESENT TO RE-ENGAGE CUSTOMERS
Your CX needs to be frictionless across all online and offline touchpoints. To truly be omnipresent, consider adding robust data collection in your brick-and-mortar stores on your to-do list. This lets you combine online and offline data into your unified customer profiles to get a truly comprehensive view of your customers and their journey.
Use your customer analytics to uncover your customer’s go-to channels, to trigger the right content, on the right channel, at the right time. This helps you become more selective in your cross-channel marketing, making each personalized interaction highly relevant and impactful across email, in-app, SMS, push, and more. Geo-targeting can also encourage customers to pop into their nearby stores.
CONCLUSION: USE THE RIGHT TOOLS TO HELP YOU GET AHEAD
It’s essential to ensure a unique and memorable customer experience for both consumers and prospects – regardless if they purchase or not. To successfully adjust your marketing strategy, you need to review whether you have the right tools and data by your side.
Mapp Cloud comes with a customer data platform (CDP), a customer intelligence platform, an AI-powered engine, and marketing automation capability – all in one place. This means a single solution is sufficient to run highly personalized, cross-channel marketing campaigns powered by real-time customer data and generated insights.
Looking for more tactics to improve your marketing for and beyond the Golden Quarter? Download our Retail of the Future eGuide!
This article was first published by MAPP. Permission to use has been granted by the publisher.