How First-Party Data Has a Crucial Role to Play in Digital Commerce
Digital Commerce has seen significant uptake. According to 86% of surveyed leaders – digital commerce will be the most important route to market in the next two years.
Most CMOs report that they met or exceeded digital commerce revenue and profitability targets last year, which reflects an unusually favorable operating environment. This creates a challenging outlook for CMOs. There will be pressure to sustain performance and deliver incremental results, even as customer preferences and behaviors continue to evolve in the direction of a “hybrid” mix of digital self-service and in-person experiences.
The last few years have shown a significant period of change and disruption to customer purchase journeys, behaviours, and expectations. This has resulted in significant digital commerce growth on a global scale at an accelerated pace. Seventy-seven percent of leaders surveyed agreed that the COVID-19 pandemic forced their organizations to set up an online presence and launch digital commerce in a short amount of time. Across business models, organizations are most commonly leveraging digital-first innovations and direct-to-customer platforms to meet customers’ needs for digital commerce.
The Digital Commerce Outlook Will Be Challenging for CMOs
While consumers anticipate that many of their new habits will outlast the pandemic, they are also eager to return to a “hybrid” mode of engaging with brands both digitally and offline.
Consumers miss various aspects of the in-store experience, such as casually browsing products, exploring and trying out products in person, and finding deals. It’s safe to assume that customer purchase habits will continue to evolve, with customers shifting back to previous sales channels, causing a dip in digital commerce sales channel penetration.
This will vary depending on the customer and the industry. Nonetheless, it creates a challenging budgeting and planning situation for CMOs:
• B2C organizations have a challenging outlook, as an already extremely crowded and competitive space will become more intense. Leaders surveyed expect this to continue as they compete for customers’ attention and share of wallet.
• B2B organizations are mostly in a phase of digitizing pre-existing routes to market, and their challenge is to stay ahead of competitors who are also evolving their digital commerce strategies. They also need to think about how they leverage demand generation and marketing tactics to drive more value from new and existing customers. Executive leaders are well aware of the shifting digital commerce customer and market dynamics in 2021.
They recognize that this growth and performance was a given based on the customer shift from traditional to digital commerce channels. In fact, despite large meeting or exceeding commercial targets, only 27% of surveyed marketing leaders reported that they exceeded their senior leaders’ performance expectations for revenue and profitability.
Surveyed leaders agree that they haven’t future-proofed their organization. 37% believe they have the necessary digital commerce capabilities to be successful in the future in terms of talent, partners, process, and operations (best practices, technology, and analytics). Specifically, respondents reported that they need to evolve their digital commerce capabilities to produce more tangible digital commerce results. In doing so, they will also need to wrestle with the transformational aspects of digital commerce.
To close the gap between high expectations and future performance, CMOs need to socialize the challenging commercial outlook with other senior leaders. By jointly setting expectations through robust commercial scenario planning and creating a roadmap to evolve digital commerce capabilities, the target expectation-perception gap can be closed.
First-Party Data: A Strong Arm for CMOs
The significance of first-party data is its ability to help businesses truly understand their customers and build an accurate customer profile to improve relationships along every aspect of the customer journey. Winning in digital commerce in today’s uber-competitive online marketplace starts with having a top-notch e-commerce data strategy that can lead to offering personalized commerce experiences for your loyal customers. Ensuring that your marketing strategy is a data-driven strategy is arguably the most important step in optimizing your marketing efforts for your e-commerce business.
Lead with Loyalty Programs
Brands implementing a loyalty program on their e-commerce website or mobile app can reap benefits in collecting first-party data. In such cases, customers are extremely motivated to engage with the brand to provide additional personal information that they would have otherwise avoided giving. Earning rewards and benefits can also appeal to passive audiences also to shop repeatedly on the website. Incentives for website-specific events like subscribing to the newsletter, completing a quiz or their personal profile are becoming increasingly popular for brands running a loyalty program.
Build emotional bonds with your audience
Customers often feel connected with brands that understand their needs and cater to them continually. It is the brands’ responsibility to ensure that customer feedback is always considered and acted upon to deliver higher customer satisfaction. When brands engage with customers across social media, email, mobile apps, and retail channels, the expectation is to provide a highly individualized shopping experience taking past behavior and purchase history as well as purchase intention into consideration.
Brands should think about using all the intelligence collected from e-commerce channels and applying it to other channels in real-time to provide a highly individualized experience. A simple strategy could be to implement a mobile Wallet solution that creates new ways for shoppers to shop from their mobile devices. Delivering personalized digital coupons or updates about in-store events or having a digital loyalty card makes the shopping experience extremely seamless as customers switch between online and offline channels.
Impact on E-commerce
When brands show they are responsible with data collection and are using it to provide better shopping experiences, customers are inclined to assist with sharing more about themselves. With stricter government laws and data privacy regulations in place, Brands should prioritize the implementation of consent mechanisms that allow customers to opt into experiences of their choice.
E-commerce brands like Amazon, Sephora, and Expedia have implemented customer-centric loyalty programs that provide not only benefits to customers but also a great shopping experience that has in turn helped brands retain their customers. Sephora allows customers to take a quiz on the website or complete their profile and get additional points as well as personalized recommendations. Hudson Bay, Canada’s iconic department store, asks customers to provide information about their body type to provide best-fit recommendations without being creepy.