Today, data management is one of the most crucial aspects of growing a retail organization. Brands used to be preoccupied with obtaining first-party data, but now their focus is on understanding how to correctly exploit data in order to maintain business growth and client retention. According to a new CEO poll performed by CommerceNext, 65% of retailers list data management as the top challenge they encounter when attempting to exploit first-party data. CommerceNext surveyed 114 retail executives across brand types and verticals for its fourth annual benchmarking report, The Ascension of Digital Maturity, which was sponsored by conversational commerce leader Attentive. The goal was to understand the progress and current trajectory of the retail industry, with a particular focus on today’s top challenges and priorities.
According to the report, increasing customer acquisition costs is the greatest challenge for 66 percent of direct-to-consumer companies and 54 percent of traditional retailers in meeting their 2022 goals, making it critical for brands to effectively use first-party data to better maintain customer relationships and personalize experiences.
Over the last two years, macro factors, such as COVID-19, have caused retailers to expedite their digital roadmaps. Brands immediately built their e-commerce networks due to a pressing need. Brands are now focusing on increasing their digital investments as part of their long-term objectives. Traditional acquisition strategies are losing their hold on budgets, as merchants focus their efforts on customer retention.
Budgets for digital in 2022 are up from 2021, with more money set up for scaling. As a percentage of revenue, digital-first retailers are outspending incumbent merchants. All are, however, investing more in long-term growth initiatives, such as loyalty programs, improving segmentation, and integrating advanced customer data platforms, and attribution tools, than they were previously.
Although acquisition costs are rising, funds are being directed toward TikTok advertising, direct mail, television ads, and influencer marketing. One of the most difficult challenges for businesses is data management. Retailers have seen success with first-party data gathering strategies including e-mail, messaging, SMS, and promotions, but now they must figure out how to utilize this data for both customer acquisition and retention initiatives.
The most important approach for retail growth is retention. Retailers are concentrating their efforts on increasing customer loyalty and bringing in more first-party data in order to improve personalization and re-engage lost customers. To measure and improve metrics, more merchants are integrating SMS, consumer data platforms, and complex attribution technologies.
Although digital and data optimization are currently important components of brands’ and retailers’ strategies, economic considerations such as inflation and a potential recession may induce temporary reductions in investment in those areas. January commerce sales were strong to start the year, which is encouraging news, but spending fell in February and March.
Retailers are designing more customer-centric experiences to drive engagement in order to continue recruiting and maintaining customers. The acquisition remains a difficult aim for retailers, with the majority reporting that it is one of their most unhappy investment areas. Customer data privacy is likewise becoming more stringent, making it more difficult to obtain information from third parties.
The good news is that omnichannel approaches to acquisition appear to be working since they reach such a broad range of customers, from brick-and-mortar to mobile. Diversifying marketing channels looks to be the current answer for handling consumer acquisition, therefore companies should begin mobilizing now.