Retailers Need a Growth Framework That's Customer-Led, not Channel-Led

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The concept of the customer journey came about a decade or so ago when retail looked very different, both in terms of how people shopped and where they spent their time.

Engagement was limited to a few channels: email and the website, and maybe a little bit of social or mobile. In that context, the notion of managing a customer journey made a lot of sense. The brand was in control and the marketer was able to dictate a lot of experiences in the journey, creating the narrative they wanted to create. There was no real way for consumers to respond and react back to brands. 

Today, all of that's changed. There are multiple social media channels that are important when it comes to the buying experience, email inboxes are more cluttered than ever, and SMS is a much bigger part of the conversation. 

Consumers have changed, too. They expect to be in control and want faster, more responsive feedback from brands and other customers on any channel at any time. The notion of the customer journey that was built up over the past 10 years doesn’t work anymore. Retailers need a new approach.

Refocus Around the Customer

Around the time that the customer journey became a big concept for retailers, they invested in CDPs and channel-specific technology with personalization strategies implemented only on a brand’s website and on email. Back then a focus on the customer was talked about in terms of the brand being better able to control customer experience, loyalty, and shopper marketing.

Today retail brands know they need more—to be more nimble, more real-time, and more responsive to customers. There are a few things that need to be layered into the process to enable a more nimble approach. Marketing channels often have separate budgets and separate goals, even though customers move across them all the time.

Promotions are still pushed based on products that need to move and revenue goals that need to be met. And customer data that was meant to be consolidated is still disconnected because the truth of the matter is that it’s simply too complicated to push every single customer insight into a single database and expect every channel to have real-time access to it. 

The conversation has long been to “focus on the customer,” but only recently have the tools and processes emerged that unlock this concept in practice. To really focus on the customer of today, retailers need metrics, team structures, and strategies that centralize insights with more agility and unify marketing silos so that actions are customer-led—with channels playing a critical supporting role. Today’s marketing approach needs to unlock value in real-time customer data; improve the ability to prioritize customer needs over product; and emphasize metrics that drive revenue now and customer value later

Shifting From Channel-Led to Customer-Led

Connecting activity across different marketing channels isn’t just about creating a cohesive customer experience like the old CDP approach. This effort is really about gaining a deep understanding of the types of customers that drive real value to the company and being able to recognize—and react to—signals based on that insight. This gives marketers back some control and helps them make sense of the complexity, react faster, and with more relevance to drive long-term growth. 

A good growth strategy is successful when it incorporates the lens of the customer and centralizes in to inform and prioritize channel-specific efforts. Retailers that prioritize customer insights first tend to acquire better customers, retain more customers, and have better margins and long-term revenue. 

How to align around customers instead of channels:

  • Use metrics that focus on customer value and contribution margin like identification rate, repeat purchase rate, and customer lifetime value instead of channel-specific metrics like CTR or channel-specific acquisition rates.
  • Create messaging based on recent customer behavior and purchase history, rather than prioritize product and inventory messaging. (Or, better yet, align the two.)
  • Align acquisition and retention strategies so that profits from retained customers can fuel the investment into new ones. And acquire new customers that show the same signals as the best-retained customers to maximize the potential lifetime value of each new customer. Compare this to having two separate budgets that compete and no retained customer information to find better new customers. 

We’ve found that following a customer-led strategy can deliver customer retention increases that are nearly three times higher than a channel-led strategy.

Aligning Around Customer Movement

For any retailer biting their nails because of the channel silos in their company, the shift is possible! A concept that can unify teams is “customer movement.” At any given time, retailers have new site visitors, shoppers who are about to become first-time purchasers and repeat purchasers who will either lapse or become loyal. 

Compare a full-priced purchase from a happy customer with a heavily discounted purchase from someone with a history of returns. The latter is a profitable purchase—and knowing how to move each shopper in that direction requires a number of things to be put in place, which will in itself, unify marketing teams.

First, retailers start to realize that they need to know who they are addressing at any given time and what their past behavior looks like. A major component of this is identification—being able to recognize a shopper or customer.

Next, retailers need to have access to more immediate and relevant insights in order to know where a shopper or customer is and what they might be inclined to do at any given time. These signals include onsite behavior, search data, social, and email and SMS activity to name a few. And finally, retailers need to determine how they will message that customer at any given time in order to maximize their relationship. This creates a collaborative, test-oriented environment that naturally brings teams together.

For example, knowing that website shoppers tend to respond better to a follow-up discount offer in SMS text rather than an email is something that transcends channel-based marketing. Channels naturally have to coordinate to act on these preferences. Aligning around customer movement also naturally unites metrics and goals. Rather than force sales through heavy discounts to drive revenue for a specific channel, teams can work together to identify who to send discount offers to at the right time and on which channel, and who is going to buy at full price and doesn’t need a discount at all. 

Realigning around the customer, for real, can drive short-term revenue. More importantly, it sets a company up for sustainable growth. Rather than feel the heat every time there’s a downturn, retailers with a customer-led strategy have a stable base of active and profitable customers that act like an engine to deliver a foundation of revenue and inform acquisition so that it gets better and more effective over time.

Fayez Mohamood is cofounder and CEO of Bluecore, an AI-driven retail marketing platform that brings together website, customer and live product insights to match customers with the products they love.

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