The pandemic forced businesses to accelerate their implementation of digital commerce experiences by a whopping three years. However, companies – especially retail and consumer goods – have not updated their data strategy to match the capabilities of these new technologies. As a result, they’re losing an opportunity to maximize the Customer Lifetime Value (CLV) of their most valuable customers.
Inactive first-party data is keeping brands from realizing the full value of their marketing technology solutions. Organizations have a lot of first-party data (the data they collect directly from their audience) on hand that can be analyzed to drive personalized experiences through owned channels. However, according to Forrester, 60% to 73% of this data goes unused or unanalyzed.
The good news is that marketers can build strategies that take advantage of a souped-up marketing technology (martech) stack. By activating first-party data, you can better understand your customer’s purchase behavior and better segment your audience by CLV.
Data strategies need to shift to take advantage of an upcoming first-party data revolution. According to Merkle, 84% of marketing, analytics, and technology executives say integrating and connecting first-party data is a high priority over the next 6-12 months.
Three trends will influence the value of first-party data, especially for retail and consumer goods companies:
- Permanent changes in consumer behaviors caused by the pandemic.
- It’s the end of third-party cookies for targeted marketing.
- More advanced personalization at all touchpoints in the customer lifecycle.
Let’s take a closer look at each trend.
First-party data can reveal changes in consumer behavior
While retailers were strengthening their online operations last year, they also collected new data about their customers and their purchase behavior. Businesses can use their new first-party data to calculate and segment by CLV. This will allow them to understand who their most valuable customers are, and to recognize new pandemic-impacted patterns on how consumers purchase from and interact with brands.
With almost a year’s worth of valuable first-party data collected on new customers and new behaviors, brands need to reconstruct their understanding of customers and recalibrate their marketing efforts.
Marketers can also reach out to existing customers in lower-value segments, and retain those at risk of going to a competitor. With almost a year’s worth of valuable first-party data collected on new customers and new behaviors, brands need to reconstruct their understanding of customers and recalibrate their marketing efforts.
With a vaccine rollout in progress, how can brands prepare for post-COVID customer behavior? The previous models and forecasts aren’t going to accurately predict the future. Harvard Business Review said, “Businesses should not take for granted the data they gathered before COVID-19 will accurately predict buyer behavior in the socially distant economy.”
Navigating the crumble of the third-party cookie
In January of 2020, Google announced it would be the last major browser to remove third-party cookies. Third-party cookies allowed marketers to target customers on channels their organization didn’t own. They were great for real-time marketing, but were inherently flawed because users could delete cookies from their browsers. There was also a lack of transparency into what information was being collected and how it was used.
Cookies are not completely disappearing. First-party cookies on owned channels are still a valuable way to engage with customers. Marty Kihn, senior vice president of Product Strategy at Salesforce, highlights that losing third-party cookies won’t harm advertisers and publishers.
Personal doesn’t just mean upleveling a generic experience with a person’s name. It’s about dynamically creating a personal experience at each and every moment – from the first search that helps customers ideate their needs to their final purchase, and every moment of the journey in between.Mathew Sweezey, Salesforce’s principal of marketing insights
In addition to cookies, a Customer Data Platform (CDP) can be used to build similar targeted experiences on owned channels by unifying data into a customer profile. Data can then be activated in Marketing Cloud tools like Email Studio for targeted email marketing campaigns, and Journey Builder for cross-promotional marketing across email, mobile, advertising, website, direct mail, sales, commerce, and service, to drive engagement with customers through the right channel.
Begin with strategies that use owned channels like email, SMS, and social for the most personalized messaging. Then turn to channels like SMS, email, and push notifications to deliver data-driven targeted messaging similar to the ads formerly curated by third-party cookies.
Step up personalization tactics with first-party data
“Personal doesn’t just mean upleveling a generic experience with a person’s name,” said Mathew Sweezey, Salesforce’s principal of marketing insights. “Instead, it’s about dynamically creating a personal experience at each and every moment – from the first search that helps customers ideate their needs to their final purchase, and every moment of the journey in between.” True personalization is cross-channel orchestration that uses customer engagement levels to decide what to send next – along with thoughtful product recommendations.
If this all seems like too much to take on, know that you don’t have to do everything at once. Organizations don’t have to scale their personalization strategy across all customers immediately.
Experiment with personalization strategies such as dynamic content in Email Studio, used to let you define attributes such as age and gender to send more targeted messages. You can also collect customer feedback through Interactive Email for real-time feedback. Use this data for better targeted communication across multiple channels like email, SMS, and push notifications in Journey Builder.
Monitor digital behavior to understand each customer’s interests and build one-to-one personalization across all touchpoints with Interaction Studio. Start these tests with a small population of customers with a high CLV to determine which strategies drive the results you want.
Purchase behavior has changed, and old forecasts no longer represent the current state of the customer. With the right data to help you understand the value of each customer, businesses can invest the right amount of marketing dollars to develop and retain customers in an entirely profitable way.