Why Omnichannel Is the Future of Retail for Millennials (and Everyone Else, Too)
This article was originally published on AdAge.com on Sept. 27, 2018.
The modern consumer is no longer a single-channel shopper. A recent study of a major U.S. retailer’s customers found that 73% followed an omnichannel purchase journey, compared with just 7% who were purely digital. What's more, fluidity between channels is increasing, which allows retail brands to shape shoppers' experiences and ultimately build a competitive advantage founded on omnichannel customer intelligence.
The imperative for marketers, therefore, is to devise an omnichannel strategy that connects with core customers as they move between retail channels and touchpoints. Yet most retailers don't outperform across audience development, measurement and activation plans, the combination of which is the key to success. It’s not simple to accomplish. So start by building support and commitment within your organization to begin this journey toward marketing excellence.
The best place to start: millennials. No consumer segment commands more attention than millennials, who comprise 75 million U.S. customers with close to $600 billion in spending power. Despite cries announcing the end of traditional retail, millennials spend a greater share of wallet at department stores than the U.S. population overall; 50% of the demographic prefer brick-and-mortar shopping over e-commerce; and 56% shop in-store at least once a week. But they are not just walking into the store blind. They’re actually visiting retail locations as part of a truly multichannel shopping experience: 67% of millennials buy in-store after doing online research first.
For example, consider Ashley, a 25-year-old who pulls out her smartphone and launches the app for her favorite cosmetics brand while waiting for a friend. Thanks to AI technology, Ashley is directed to products that match her skin tone and align with her browsing history and previous in-store purchases. Later that day, she passes the brand’s store and swings by on her way back from lunch to pick up the suggested products. Mission accomplished. The best-in-class retailers have been implementing a successful omnichannel strategy to support this for a while now. What does it take to devise your own strategy so your customer doesn’t become your competitor’s?
Customer intelligence: Know your millennial consumer
Identifying the millennial consumer is a complex endeavor, and once you accomplish this task, the hoops you’ll have to jump through to become better omnichannel marketers will be just as difficult — but the rewards will be well worth the effort.
Appealing to millennials in general is a challenge. There’s not one characteristic representative of the entire demographic. Millennial is just a macro term of a set of age groups and (partially true) stereotypes. There’s no one way to slice it — segmenting in the aggregate isn’t a means to success. It’s expensive, inefficient and limits your marketing options by tying up large portions of your marketing investments. Beyond age and gender, it’s understanding income, interest and affinity, too. Not every millennial wants to travel the world. They each have different levels of disposable income and different shopping experiences.
Another challenge for brands in an omnichannel environment is consistently and persistently identifying the actual customer at any point on their path to purchase. There are the customers you can’t see, from in-store shoppers who don’t participate in loyalty programs to customers who never log in. Plus, the anonymity of digital shopping can lead to inexact or inaccurate data: Are those dozens of site visits via the same Wi-Fi just one visitor returning multiple times — or many visitors sharing an Internet connection in a coffee shop? If a cookie records activity across multiple websites, is that one person’s browser behavior — or the interactions of multiple family members who share a laptop?
Shared identifiers among millennials is a particularly common problem: There's a good chance that the shopper you think is logging into your site is actually someone else: 21% of 18- to 24-year-olds have been found to share streaming-video passwords with people who don't live with them, for example. And depending on the data, it could be hard to differentiate the millennial customer from the baby boomer parent, considering that 15% of 25- to 35-year-olds are reportedly living with their parents.
The path to solving both of these problems is identity resolution: the science of connecting customers’ many identifiers across channels (like email addresses, cookies, phone numbers, mobile device ad IDs and home addresses) into a single customer profile. Also important to note is that 60% of identity data is outdated within two years, so keeping regular tabs on your customers in those data lakes you've been building — centralized repositories for large amounts of information — is an essential part of ensuring the identifiers you use to track your customers are accurate and up to date.
In order to keep up foot traffic — and engage millennial consumers — retailers must adapt to the ever-changing paths to purchase with the ability to engage throughout the customer journey. You really need to look at your customers and work with identity and customer-intelligence partners who can expand the picture with second- and third-party data to learn about them on an individual level. Think granularly: where they’re shopping, what their interests are, what they respond to and where they’re consuming media — which is how the cosmetics brand captured Ashley’s attention, pointing her to specific products.
Marketers should also encourage partners to adopt organizational strategies to improve data collection: A recent study finds that brands with “clearly defined roles and governance for managing consumer data and relations (had) increased more than 10% over the past fiscal year.” Williams-Sonoma, which has had a head start of more than 20 years in omnichannel, incentivizes cross-channel cooperation and data capture by rewarding in-store employees for initiating online sales.
Customer experience: Activate and captivate
Research has shown the more personalized the experience, the more engaged the millennial shopper will be. It’s the desire for custom experiences that drives millennials toward everything from craft marketplaces like Etsy to artisanal breweries. It's also undoubtedly one reason why 28% of millennials find personalized digital offers — based on their past purchase history — to be appealing. Even American shopping malls are getting in on the act: Instead of shutting down, some shopping centers like the updated Westfield Century City Mall in Los Angeles are converting into different types of spaces with a focus on environment and fluidity.
Strategically anticipating the wide variety of omnichannel opportunities that brands can seize gives them greater control over the outcome. For example, you could use address updates to know the moment a customer has moved to a new home, and then send a “welcome gift” to the customer’s new house, such as a new home furnishings catalog complete with coupons for her favorite products at the nearby store. Or you could follow up a browsing session online with a postcard or catalog relevant to that consumer’s expressed interest and intent. By phone number alone, you can recognize a valued customer who calls in to your company support line and automatically route that customer past the automated voice system — putting her in touch with a live operator who is waiting with loyalty and purchase information in hand.
For the 38% of millennial cosmetics shoppers who turn to friends for beauty inspiration, the path to purchase may have been different than that of Ashley, our cosmetics shopper, who shopped while waiting for a friend. They may have posted their augmented-makeup selfies to Instagram (accompanied by a poll), or messaged the picture to a few close associates to gather opinions before purchasing a new look. Ashley bought the makeup recommended on the mobile app, without much friction from consideration to sale.
From the brand’s perspective, this omnichannel engagement was a success. But what if her friend had arrived on time — would Ashley have even started her purchase path? A smart, omnichannel-minded brand has mere moments to get the attention of their on-the-go consumers whose attention may be fleeting and short, as we have seen with Ashley.
Customer analytics: Know what works (and what doesn't)
By capturing the types of behaviors and characteristics of the real people driving your e-commerce and in-store sales, you'll gain valuable insights to use as the basis for modeling vastly more accurate customer segments. That is the foundation that enables you to build far more impactful customer journeys for those segments than any broad, “spray-and-pray” demographic targeting can provide.
In order to surface, socialize and act upon these insights, implement a unified measurement platform that considers all factors that impact customers making purchases beyond simply the marketing you can observe at an individual level. This includes the economy, seasonality, competitor activities and non-addressable media including TV and radio. With your strong customer intelligence capabilities in place, you will also understand the consumer who became your customer, enabling you to capture her underlying likelihood to make a purchase. Ignoring this propensity will result in incorrect measurement.
Having more detailed data about individual consumers will allow you to refine your marketing, your messaging, the customer experience you provide and the segments you engage with.
But regardless of how up-to-date your data is, you still need to recognize and analyze the differing paths to purchase within your omnichannel retail strategy — and continually refine them, too, by translating the collected mountains of data on your shoppers into tangible experiences. And to effectively accomplish this without tying your teams in Gordian knots, you have to aim for the complex, not the complicated.
For example, Neustar tends to recommend that brands build anywhere from three to eight strategic audiences around which to plan and measure their marketing. Within any given campaign, you may refine those audiences to target just a subset. It’s more effective to execute at the granular audience level with highly targeted messages and promotions, but always consider the trade-offs between the level of effort and resources required and the incremental benefit of a surfeit of defined micro-audiences, thereby missing the forest.
Retailers that take these methodical steps to capture, compile, refine, update and analyze data about their customers and prospects are able to microtarget crucial millennial shoppers through an omnichannel approach. The clear benefit is increased sales and customer acquisition, building a crucial competitive advantage, today and into the future.
On the other hand, if your audience development, measurement and activation plans are not linked to your decision-making, confusion can result for your customers and your marketing teams and negatively impact your marketing ROI. Putting in the hard work upfront should relieve customer frictions and lead to happier customers that will spend more money with you more frequently. A clear win.