The real challenge for retailers and brands is not necessarily reaching new audiences but retaining the audiences in play. It requires a holistic look at owned and paid channels to see where and how to use personalized messages to reach cautious consumers.
Predicting consumer behavior today may feel like using a Magic 8 Ball to forecast revenue. Unfortunately, “ask again later” won’t satisfy most CEOs. The past few years have dramatically altered consumer spending behavior, while privacy changes have made it more expensive to pursue traditional online audience building. Now, economic uncertainty is adding to people’s worries.
But if you step back, the real challenge is not necessarily reaching new audiences — it’s retaining the audiences you have now. Retaining customers efficiently requires a holistic look at both owned and paid channels to see where and how you can use personalized messages in new channels to reach cautious consumers.
In today’s environment, cash is king, and many companies want to hang on to what they have and hoard their budgets. There’s a natural tendency to pull back on spending, but it’s only a short-term solution. To maximize efficiency with the channels you use, stick to targeted channels and spend on channels that can deliver efficient ROI, such as content, email and SMS marketing. Paid programs will provide opportunities to add exclusions and focus targets, but email and SMS will help you get your message out at a lower cost.
Balancing between acquisition and retention in a tough market means you can’t just cut costs everywhere, you have to stretch your budget so you can keep investing for the future. Focusing on retention delivers better ROI not only because it’s lower-cost, but also because it lets you activate your highest LTV customers and capitalize on the bank of goodwill you’ve already built with that customer.
To build a long-term channel strategy that will provide better personalization and retention, advertisers and marketers should take the following steps.
1. Stop “renting” your data. Ultimately, with one of the major platforms, you’re not buying their data — you’re just paying for access. Facebook and Google provide direct, last-click validation, but the underlying data is less reliable after recent privacy changes — and costs have gone up as much as 30% in recent years. To counter this, focus on building your own data set from customer interactions, utilizing zero-party data and identifying your most loyal customers.
2. Don’t wait for a purchase to start building a profile. To improve retention in the future (and help with acquisition now), start building a profile before someone has even made a purchase, from when they first come to your website. Create compelling ‘first-time’ offers that you can deploy in an optimized email capture campaign to drive a customer to your website initially, then start expanding the profile with behavioral data and zero-party data from a quiz or preferences questionnaire. Few customers will purchase something the first time they visit a site, but reaching them again traditionally requires paid ads. If you can invite a person to your email or SMS list on first visit, that’s a much less expensive way to follow up, and any data you capture early on can help personalize follow-up emails or texts.
3. Cautiously look at rising stars for lower rates. It’s important to compare the cost of acquisition across multiple channels, both owned and third-party. Emerging platforms like TikTok or BeReal can bring new audiences – you’re not as likely to get duplicate customers, and you have an opportunity to lock in a new audience while rates are low. To reach this market, rely less on expensive display ads and use newer social channels to acquire customers at a reasonable price. Then you can automate and optimize email channels to keep these new customers engaged and drive conversions over time.
4. Optimize landing page content and messaging based on intent. For most brands, their product and category pages are the same for every visitor, regardless of where they are in the funnel. But there are some conclusions you can make about a shopper’s mindset based on how they’ve arrived at your site. Use search keywords to inform personalization and messaging on your landing pages. This is easier with search engine marketing, but you can also draw conclusions based on where SEO traffic lands, say a category or product page instead of your homepage. For non-brand search terms that suggest a consumer is comparison shopping (e.g. “Best e-bikes”), focus customized messaging on specific value propositions where you can beat competitors bidding on the same terms. If you pride yourself on being a low-price leader, highlight this on your landing pages. If your company has an excellent return policy, then showcase how you beat competitors in customer experience. You want to show the customers the products they’re looking for, but also remind them why they should buy from you.
5. Use LTV and ROI to customize product recommendations. Along with customizing landing pages, you can use personalization to showcase the products that lead to higher customer LTVs or better ROI in the short term. For a retention campaign, this means pairing the ads you show to someone with the product pages the ad links drive to, so you can drive customers directly to the best pages. This provides a merchandising opportunity to highlight category-related products, and personalize which products show up first. Instead of just using the default product sort order in your e-commerce platform, look at which specific high-value, high-margin products could fit the customer’s needs to help you build a stronger business over time.
I wish I could tell you what this market will look like two years from now, and predict the supply chain situation, the newest social platforms and best ways to reach customers while following privacy regulations. Your Magic 8 Ball may be a better bet for all that!
But I can tell you that improving and enhancing the data you own directly is a long-term investment that can pay off across multiple marketing channels. To thrive in this economic environment, marketing teams need to use the degree of personalization and segmentation from online platforms and apply that same approach to owned channels. Then marketers can see returns from personalized experiences that keep customers engaged through a downturn, and super-charge results when purchasing picks back up.
Jason Davis is the CEO and co-founder of Simon Data, the only Customer Data Platform (CDP) purpose-built to increase campaign performance through faster, more precise segmentation and personalization. A data scientist-turned-entrepreneur, Davis previously founded Adtuitive, a retail AdTech platform that was acquired by Etsy in 2009. While at Etsy, he led several engineering teams including data science, analytics, and big data infrastructure. Davis holds a Ph.D. in machine learning from the University of Texas and spent time developing search algorithms at Google.