I had the pleasure of sitting down with Erin Raese, CMO at our partner Annex Cloud, in a recent Market Movers session (watch the full recording below) to discuss practical strategies for retailers to tackle reduced budgets, shrinking resources and uncertainty in order to come out ahead with stronger financials and deeper customer relationships. Here are 4 key takeaways from our chat:
Thinking about the modern CEO, it used to be that the CEO was a marketer or a product visionary or something like that.
And today’s great retail CEO, for better or for worse, if you want to think about Jeff Bezos in this category, they’re supply chain CEOs. They’re focused on getting you what you want when you want it, and with no deviation.
It’s the same for the modern marketing leader, except the supply chain isn’t the product, it’s the experience.
That experience relies on data. There’s a whole data pipeline and supply chain that needs to be healthy in order for you to deliver what a consumer actually wants in real-time, when they want it and how they want it.
This is why I think the questions of what ‘tech do you use’ and ‘how do you layer your strategy on top of it’ are so much more important than they ever have been. COVID started this era, but the recession is going to make it more obvious how necessary it is, and it’s in the CMO’s hands with the right tools, tech and team in place to help pave the way.
There’s compound interest in great relationships.
Erin brought up some great and timely stats that expand on the standard, ‘you’re getting 80% of your business from 20% of your customers.’ And that resonates even more in a tightened economy when the cost of acquisition and media spending is so high. When you drill down even further to address repeat rate and focus on your existing customers, if you can ‘increase your retention by 5%, you increase profitability by 75%.’ This is huge!
Shifting dollars to existing customers and building up that loyalty not only builds great customer relationships with your immediate base, but your best customers are most likely to refer others. When they refer somebody, that referral is worth more, and the process may even continue. With this, you’re building your active base and increasing repeat rate based on driving loyalty instead of focusing on top-of-the-funnel acquisition or trying to spend more to win customers away from competitors.
It’s important to keep in mind how flexible and agile are the systems that you put in place to support the problems that you had a few years ago. If those have changed and your tech isn’t flexibly adapting to the new challenges that you have, it’s probably the wrong tech. So when you talk about tech stack efficiency and tech stack ROI, is your foundation correct? We looked at this topic in more detail in a recent post on right-sizing your tech stack and investment.
It’s the same kind of thing when you think about revenue efficiency. As a customer data and marketing platform, we’re not going to influence your supply chain. We’re not going to influence the margins on your products, but what we can do is increase marketing efficiency.
Part of our role here is just being able to see it from a rightsizing perspective, just wanting retailers to have a stack that supports the actual outcomes that they’re trying to drive and an investment that’s matched to that desire and to that goal.
It’s one of the big areas that we believe are in retail marketers’ hands to really influence and help them build up that resilience in this time of just total economic uncertainty. There are a whole lot of ways in which you can influence that. And probably the biggest next point is focusing on the high-impact customer experience areas that you have within your strategy.
Being able to understand your consumers and deliver what they actually want at the time that they want it is paramount. From our perspective, it’s really about those insights that having a unified data platform with some level of intelligence built on top of it, teasing out those opportunities and teasing out those segments that work. And just making sure you’re asking the right questions of your data so that you can pull up the insights that you need.
It’s one of those things that from just a pure MarTech perspective, we wouldn’t necessarily think of, but then you get into these types of periods of economic contraction, where people are asking really great questions of their data and you need to answer it and you need to answer it in real-time. And then, there needs to be some layer of intelligence that just helps them move faster on whatever the action is that they need to take off of that insight.
I mean, I have a tendency to bright-side things. It’s my nature. I think it’s part of what makes marketing great is people who can see through the tunnel and look at the light, but just reflecting back on 2008, the financial crisis of 2008, and looking at the retailers that came out ahead and the amount of value they drove for their shareholders, which I think was something at 11%, which is five times what their peers were driving in 2018, 10 years after that recession.
And so, I think the pressure here to come out ahead and to use your data in the right way, and to understand your consumers and build the experiences, building that loyalty that matters most, it’s going to pay off in such a huge way. And so, I guess my feeling is just one of massive optimism for those marketers that get it right. There’s just a lot of winning to be had on the other side of this.
Or you can watch the session on Youtube here
Take the first step toward smarter customer marketing