Using customer knowledge graphs, AI-driven shopper engagement, and first-party data in privacy-respecting ways are key to customer acquisition and retention
Given the complexity of shoppers’ purchase journeys, customer acquisition and retention have now become key priorities for retailers.
At the same time, one of the major barriers for retailers in acquiring and retaining customers is the challenge of building a holistic view of their customers. This is currently cumbersome due to data silos, a lack of advanced analytics capabilities, and the inability to activate or generate insights from first-party data.
Given existing data-use restrictions and the imminent ban on the use of third-party cookies, effectively managed first-party data has now become a valuable resource and a competitive advantage.
Retailers are therefore investing in data platforms and technology infrastructure to address these challenges, protect data privacy, and earn their customers’ trust. This means a greater focus on first-party data being collected from both online and offline interactions, and using data to create a personalized and secure shopping experience.
But how can retailers doing the same thing stand out, connect with shoppers, and increase traffic, conversion rates and basket size?
Solving for customer experience
Retailers can focus on the following three strategies to accelerate customer acquisition, solidify retention, and offer a superior customer experience:
- Build a unified customer data platform
Having a 360-degree view of customers and their preferences can help a retailer build a customer knowledge graph, which can then be used to drive greater customer acquisition, retention, and superior service.
Last year, an e-commerce platform in Indonesia created a centralized customer data platform to strengthen its focus on consumers and make more data-driven decisions. With a common platform, the firm was able to remove data silos, drive consistency across data, and synchronize customer attributes—which then created a foundation for successful activations using marketing analytics and personalization.
Build a strong personalization engine
The ability to contextualize offers and deliver a distinctive experience for shopper engagement gives a whole new meaning to customer loyalty and higher levels of customer retention. Retailers today can leverage AI and ML technologies to make better recommendations for customers without having to start from scratch. These solutions can maximize the value of data and help firms scale up seamlessly.
One furniture retail giant, for example, grew its global average order value for e-commerce by two per cent using an AI-driven recommendations engine in 2021. It also saw a 400% increase in more relevant recommendations displayed, and a 30% increase in its click-through rate.
Power up the retail media business
Retailers that have the scale can harness the power of first-party data to drive media income while boosting in-store and online sales: for example, by using data from transactions to provide closed-loop measurements for their campaigns.
Insights generated here open up new benefits for advertisers and shoppers by driving greater product sales and delivering more personalized shopping experiences.
Privacy rights are a priority
Success in personalization efforts requires a deep understanding of privacy concerns and how customer data is generated, stored, and used.
According to some studies, when customers trust a brand, they are twice as willing to share their personal information, and twice less likely to do so with a brand with poor data hygiene.
To build trust, retailers must be transparent about what data is collected, how it is collected, and why it is being collected. This has to eventually translate into direct benefits for shoppers: contextual personalization, a great search experience, and curated offers.
Data ultimately has to be kept safe, and the onus is on retailers to articulate clearly how their customer data is stored and handled.
It is now more important than ever to gain the trust of customers by showing them how their information is being used to deliver a seamless experience and lasting value. Retailers should aim to develop capabilities enabling them to make insightful data-driven decisions based on first-party data while respecting privacy at all levels.