Amid the uncertainty of today’s economic turmoil, one thing is clear: Consumers aren’t spending the way they used to. In fact, according to a recent poll by BDO Seidman LLP, more than half (54%) of retail CMOs surveyed cited uncertainty in the financial markets as the one external issue that will have the greatest impact on the holiday shopping season. But, while retailers expect this holiday season to be the most difficult in years, there are ways to make sure they are getting the most impact from their marketing investments.
Even though consumers will be smarter about where each dollar is spent, their shopping won’t come to a halt. Discounters can expect to fare well this holiday season because savings and promotions will be the main incentive for shoppers. In order for retailers to realize revenue from these discretionary purchases, they will need to target their marketing campaigns based on deeper insight derived from each consumer’s spending habits.
Marketing campaigns focused on traditional demographics or customer segments will not give marketers the insight they need to maximize their revenue from this year’s shift in spending habits. Visibility into recent purchases offers companies the ability to effectively target products to the consumers who will respond at the time that they will respond. This approach — placing the customer before the product — is an important tactic for retailers to consider this season.
Current marketing campaigns need to shift away from prioritizing product traffic and promoting the inventory that a retailer wants to sell toward building a dialogue with targeted customers. Retailers need to ask themselves, “What does this customer want and when?” rather than “which product do I want to promote?”
Reaching customers on an individual level is complicated. Fortunately, there is a variety of cost-effective tools that can simplify this process for retailers. Many retailers already have the necessary data in their systems — it just has not been used to maximize marketing campaigns. These tools use predictive analytics and mathematical optimization on consumer purchase behavior to identify the optimal marketing recommendations at the individual level.
At a time when businesses can neither risk losing a loyal customer nor afford to implement expensive new IT applications, it is more important than ever to use innovative software tools to turn existing data into more effective marketing campaigns. Deploying a marketing campaign based on data analysis at the individual level can boost store traffic, purchase frequency, conversion rates and shopping cart size, ultimately helping retailers maximize a conservative marketing budget.
Jane Johnson is the retail/CBG practice VP for Fair Isaac Corp. Reach her at [email protected].