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Recently, a friend of mine shared a disappointing experience she had with one of her favorite fashion retailers. When making an online transaction to purchase her moisturizer and a pair of jeans, she selected the option to receive e-mails from the retailer. While the retailer in question has been diligently filling her inbox, her overall impression is that most of the content she receives has little application to her and is not reflective of her purchase behavior. Of particular frustration was an e-mail advertising a promotion for men’s underwear. At first, my friend laughed it off, thinking that, as a single woman, she has absolutely no use for or interest in shopping a men’s underwear event—but later, she became annoyed. Jokingly, I said to her, “So it’s supposed to be all about you?”
Shoppers tend to know more than you’d think about the retailers they frequent. For example, I often shop in department stores, and at the location I shop on a regular basis, I know where each major brand is located on the selling floor, the cadence of its major promotions and even when it starts hanging the holiday decorations. I have long come to accept that every transaction I make online or in-store is captured by the retailer, and in fact, I often opt to share additional personal information with retail outlets in the hopes that they will use my information to get a better understanding of my preferences, my needs and me.
However, while some brands and retailers get it right, many continue to spend their marketing dollars on distributing communications that miss the mark. I am thinking specifically about how I often receive catalogs for outdoor furniture from one of my favorite home furnishing companies in spite of the fact that I live in a tiny New York City apartment.
So, my question is, if we know so much about retailers, why don’t they seem to know much about us? Further, what good is collecting personal information if it isn’t going to be leveraged to better connect with customers?
As new and less expensive communication channels have emerged (primarily via the Internet), it is tempting for retailers to over communicate, often with broad messaging that’s less meaningful to individual customers. According to marketing consultancy Responsys, in 2012, top online retailers sent recipients an average of 210 e-mails annually, up 19% since 2011. Moreover, in campaigns executed across a variety of global markets and with multiple brand partners, customer science company dunnhumby finds that relevance increases customer interest and customer response, and that targeted, relevant communications in channels—including e-mail and direct mail or offers at point of sale—typically see double digit response rates.
In light of these facts, why aren’t retailers and brands more focused on relevancy? In today’s world of big data, customers provide retailers with their preferences in each non-cash transaction they make. If used correctly, purchase data becomes like the proverbial trail of clues leading retailers and brands from what customers have done in the past to how they will behave in the future. The implicit agreement behind this arrangement being that if customers are willing to share their information, it should be used to the customer’s benefit. Every irrelevant piece of e-mail and direct mail customers receive is a clear message that retailers and brands are not holding up their end of the bargain and increases the risk of customer alienation.
The beauty industry has traditionally been a leader, relative to other categories, in developing connections with the customer. Using a unique combination of selling tools, product expertise and emotional intelligence, the beauty advisor has been a competitive advantage to prestige brands, delivering a personal experience one customer at a time. This model even has been replicated in select mass and drug outlets in an effort to realize the business benefits that occurs when the customer feels recognized and special.
Given beauty’s heritage of in-store one-on-one relationships, it’s important that this experience carries through to the customer’s out-of-store experiences, particularly in the communications space. For example, if I am a frequent skin care buyer with minimal interest in fragrance, a good beauty advisor instinctively knows that the bulk of her conversations with me should be about skin care. Wouldn’t it be nice if the same intuition were applied to the communications I receive from the brand?
While speaking to the customer about what’s important to her is fairly intuitive, one leading beauty brand recently undertook a test to better understand the value of relevancy in its communications. In partnership with a major retailer, the brand conducted analysis to identify customer preferences by product type as well as by communication channel. The result was a multi-faceted campaign, executed across direct mail, e-mail and online display advertising, seeking to deliver the right message to the right customer in the right channel.
An important component in planning this campaign was an evaluation of past purchase behavior. Analysis of customer data found that households that buy makeup are more likely to buy more makeup rather than convert to one of the other two key categories of skin care or fragrance. This insight disproved a commonly held belief that customers shop across all product categories.
Armed with new perspective, the brand was savvy enough to apply the learning to its campaign. Unique versions of copy and creative were developed specifically for makeup customers highlighting the brand’s hero color products. Additional versions were developed with the skin care customer in mind, touting the benefits of the brand’s top-selling anti-aging items.
Once the brand solidified the “right message” component, it identified the right channel. Based on analysis of historical response rates and ongoing tests in multiple channels, customers were segmented based on where they were most likely to respond to communication. Fortunately, all of the brand’s efforts were well spent—the campaign delivered a significant sales lift relative to previous marketing programs.
While this is only one example, it speaks to the benefit of rethinking traditional approaches to communication strategies. Further, it demonstrates the importance customers place on being treated as individuals. As this brand learned, customer data is an asset beauty brands can leverage in their efforts to drive sales, improve ROI and build loyalty.
We know that customers love beauty brands. Taking the time to learn about her and providing her with relevant content demonstrates that we love her, too.
Lisa Katz is vice president of client management at dunnhumbyUSA, leading the company’s client engagement with fashion apparel, footwear, accessories and beauty manufacturers in collaboration with Macy’s. Katz has spent her career in merchandising, brand management and product development within beauty and apparel, working for Bloomingdale’s and Victoria’s Secret Beauty. She has also served as vice president, marketing and development at Jonathan Product, an entrepreneurial prestige hair care brand. Katz is an active member of Cosmetic Executive Women (CEW), and she earned a master of business administration in marketing from Fordham University in New York and a bachelor of arts in communication from the University of Michigan.