Multichannel. Perfect Storm: Driving Value from Your Multichannel Data. White Paper

Transcription

1 Multichannel Optimizing Online Marketing with a Single View of Cross-Channel Customer Activity Did you like this white paper? Tweet about it! Twitter.

2 Contents Executive Summary 3 Tracking the Fast-Moving Multichannel Consumer 3 The Dual Channels of Multichannel Commerce and Marketing 3 The Importance of Measurability and Optimization 4 Fueling Online Marketing with Offline Channel Data 4 The Perfect Storm: Import, Analyze, Execute, and Measure 5 Import: Gain a Single View of Multichannel Customers 5 Analyze: Segment Your Customers for Personalized Engagement 6 Execute: Enhance Cross Sell and Target High-Value Customers 6 Measure: Tune Campaigns and Optimize Budget and Marketing Mix 7 The Coremetrics Approach to Multichannel Marketing and Analytics 8 Conclusion 9 2

3 Executive Summary A proliferation of shopping channels and increasingly discriminating customers has turned the multichannel commerce phenomenon into one of the greatest challenges facing merchants today. For marketers, this surge has introduced a host of issues. Marketers are under pressure to assess the impact of online marketing campaigns on offline sales (and vice versa) and to optimize the many moving parts into a revenue-generating machine. Meanwhile, they need to meet customer expectations for a relevant, seamless experience across all channels. Online marketing has the opportunity to seize an advantage. This white paper outlines practical steps that your organization can take to import data generated by customer activity in stores, call centers, and other offline channels into your online marketing system. This newly merged offline and online data supplies a single view of multichannel customer activity and is prime for analysis and segmentation, campaign execution, measurement, and optimization. It s a perfect storm waiting to happen, and if done right enables organizations to: Understand customer activity online and offline Optimize marketing based on a multichannel customer view Zero in on high-value customers based on multichannel behavior Enhance cross sell, up sell, and personalized messaging Meet customer expectations for a unified multichannel experience Tracking the Fast-Moving Multichannel Consumer With the growth of multichannel commerce, customers have become faster-moving and more elusive than ever. They research online, and buy in stores. They browse a print catalog, and order at your web site. They order through your call center, and want to receive an order confirmation . Retailers are scrambling to keep up. They recognize multichannel customers are especially valuable. The average household income of U.S. multichannel consumers (who purchase both online and in stores) is $72,000 a year 28% more than window shoppers (who research online but buy only in stores), according to a report by independent research firm Forrester Research, Inc. 1 These hopscotching customers are on an upwards growth curve. Seventy percent of U.S. online adults have researched a product on the web and purchased it in a store, Forrester s study found. That number is bound to increase as apprehension over online purchasing continues to diminish. The Dual Channels of Multichannel Commerce and Marketing Retailers and their online marketing organizations face two principal challenges in responding to the multichannel commerce phenomenon: 1) Offering customers a consistent, seamless shopping experience across channels 2) Measuring and understanding multichannel customer behavior to optimize campaigns, capitalize on cross sell opportunities, and deepen personalized engagement Progress is being made on the first challenge. Retailers have made it a priority to implement systems designed to give customers a seamless experience across all touchpoints, while promoting cross-channel interaction. For instance, many offer downloads of discount coupons redeemable only in stores. Others have set up web terminals in stores to satisfy consumer demand for product research. Some offer ship-to-store delivery for online orders, saving consumers shipping costs (while bringing the customer inside the store). Some are striving to keep their web sites updated within real-time information on in-store availability of products. 1 Forrester Research, Inc. Profiling the Multichannel Consumer, August

4 But the second challenge of measurement and optimization remains a black hole for most online marketers, raising such questions as: How does one channel affect another? Do some of these cross-channel techniques cannibalize sales from other channels? Which channels and campaigns should get the most marketing dollars? Are channels and campaigns working together to maximize revenue and satisfy customer demands? The proliferation of sales and marketing channels makes multichannel campaign performance difficult to track and monitor, the Aberdeen Group said in an in-depth study. 2 In fact, 87% of all organizations struggle to measure and compare online and offline return on marketing investments. The Importance of Measurability and Optimization Online marketing requires measurability to excel. The best online marketers use web analytics in an integrated online marketing platform to measure and optimize performance across online channels, i.e., their web storefronts, marketing, paid search, display ads, and social media. Multichannel commerce introduces a twist to the equation. Marketing needs to account for the effect of online marketing on offline channels, understand how offline marketing influences online behavior, and leverage data that customers generate by offline activity to inform online marketing campaigns. These insights are especially important as organizations boost spend for online marketing and curtail investments in traditional offline campaigns. (In 2009, nearly 70% of respondents to a Bloomberg BusinessWeek Research Services survey, sponsored by Coremetrics, reported they were increasing their online marketing spend). 3 Chief marketing officers (CMOs) and online marketers are under pressure to justify those increased expenditures. Without better visibility, marketers can be prone to under-investing in campaigns that are driving sales in another channel, or over-investing in campaigns that aren t producing strong results. They lack the hard, quantifiable data needed to make informed budgeting allocation and marketing mix decisions. The effects on online marketing can include: Lost cross sell and up sell opportunities A fractured and incomplete customer view Poor visibility into high-value customers Inability to optimize personalization campaigns Mismeasurement of campaign effectiveness Fueling Online Marketing with Offline Channel Data Data fuels the online marketing engine. Online marketing has delivered strong return on investment because of its prowess at capturing and leveraging the tons of data that is generated by customer activity on the web, including site visits, campaign response, browsing habits, purchasing, and other conversions. Yet most online marketers have only scratched the surface of the data available to their programs. Forward-thinking online marketers are looking at the vast stores of data their organizations maintain from customer activity in offline channels in brick-andmortar stores, through print mail and catalogs, via call centers, and at kiosks. This transactional and registration data represents a gold mine for online marketing, and for marketing as a whole, if it could be combined with online activity information create a more complete profile of the customer. In terms of dollar value, offline purchasing is far greater than online purchasing. In U.S. retail, only 8% of sales will occur on the web in 2014 even after years of successive double-digit growth, Forrester Research, Inc. estimates. 4 2 Aberdeen Group, Cross-Channel Campaign Management: Next Generation Multichannel Marketing, October Bloomberg BusinessWeek Research Services, From Survival to Success: Honing the Practice of Online Marketing Measurement in a Time of Change, February Forrester Research, Inc. Forrester Forecast: Double-Digit Growth for Online Retail in the US and Western Europe, press release, March

5 Many companies have developed customer data warehouses that have captured purchasing data from point-of-sale (POS) systems, direct mail, call centers, and other offline channels. Over the years, they have incorporated additional information to build out customer profiles. These dimensions may include: Geographic location (municipalities/addresses) Demographic and behavioral characteristics Psychographic and ethnographic distinctions Profitability and lifetime value scoring Time-sensitive triggers (fixed contracts, seasonal events) But offline channel data is housed in disparate transactional and analytic systems, typically beyond the reach of online marketing. The Perfect Storm: Import, Analyze, Execute, and Measure Traditionally, merging disparate enterprise data sources is a costly and time-consuming integration project. Today, the best online marketing solutions offer intuitive, prebuilt templates to access and move offline channel data, as well as a software-as-a-service (SaaS) delivery model that minimizes the need for IT involvement. Whereas a large-scale data integration project may take months, limited-scope importing of select highvalue data segments and sources is practical and achievable in a matter of weeks. A SaaS-based import solution, as a component in an integrated online marketing platform, helps organizations avoid the complications apt to occur with custom coding and manual processes. The target for data imported from offline channels should be a customer database that has tracked customer web purchasing and browsing behavior over time and which serves as a foundation for integrated online marketing solutions for personalized , paid search, targeted display advertising, social media, and more. A comprehensive platform will give online marketers all the tools required to create a perfect multichannel storm in a four-stage closed loop: Import: Move customer offline purchasing and registration data from disparate databases into your online marketing platform to create a single view of customers offline and online activity. Analyze: Analyze your merged multichannel data to identify cross sell and up sell opportunities, segment customers by highest value, demographics, and other characteristics, and choose the right messages for the right customers. Execute: Deliver personalized s and a targeted web experience that leverage your newfound insights into customer multichannel activity, and use optimal channels to drive sales and deepen customer engagement. Measure: Measure and optimize marketing performance across all channels and customer and campaign types with a visual ad hoc reporting solution, and compare your performance against competitors and within your industry. Let s take a closer look at some capabilities and strategies for the four stages. Import: Gain a Single View of Multichannel Customers Starting small is the key to success for online marketers that want to access and leverage offline channel data. A prioritized, limited-scope initiative aimed at cherry-picking select data points from select sources is a sound strategy to keep the effort focused and to gain support from data owners and business executives. With the right solution, prebuilt templates will aid in data extraction and profile compilation by matching addresses, and in certain instances street addresses, phone numbers, or other identifying information. The solution will also import data on products purchased, i.e., price, quantity, order ID, etc. It should be configured to automatically update on a regular basis, such as daily or twice daily. 5

6 The objective should be to focus on those areas that can generate the greatest payback in the least amount of time and align with goals of greater measurability, personalization, and sales. Marketers should also take a long-term strategic view. Work with business partners to share the results of the initiative and repurpose it as part of a broader customer data integration initiative. Some points to keep in mind: Make the business case. Be prepared to sell the idea up the ladder. Back up your proposal with hard-number metrics and a strategic business plan. Executives with past experience in data integration may be wary of high costs and delays. Start small and think big. Focus on discrete areas that can deliver high payback with minimal investment and risk. Collaborate with data owners and marketing units. Collaboration is essential. Prepare to roll up your sleeves and forge new relationships with peers. Bring together your online marketing units ( , paid search, etc.) and get backing from as many senior leaders as possible. Be prepared for possible protect your turf resistance from some data owners. Test and validate imported data to ensure accuracy. Marketers and IT should take pains to ensure that imported data is accurate and comports with the formats in online marketing systems. Conduct tests and scrutinize for anomalies. Cast a broad validation net and engage stakeholders in reviewing the results. Newly merged offline/online data will give you, for the first time, visibility into who your company s most valuable customers are. Use those insights to segment high-value customers by any number of dimensions campaign responsiveness, purchasing sums and frequency, geographic locations, and so forth. The more you know, the more finely you can tailor personalized campaigns for each individual. For online marketing, insight into high-value customers is important, because many high-value customers will buy expensive items, and buy them in stores. You can also: Identify other potential high-value customers. Analytics will let you identify others who share characteristics of your high-value customers. Data from offline customer systems may include such data points as income, customer lifetime value, and so forth, that can be put to use. Segment by abandoners. With offline data, you can segment registered users who browsed products online, and later purchased in a store, and target them as engaged customers responsive to online marketing, rather than as idle abandoners. Leverage merchandising data. If you import data on product profit margin, cost of goods sold, and inventory levels from offline systems, that data can help you devise campaigns for maximum profitability and match high-margin products to the most likely buyers. Analyze: Segment Your Customers for Personalized Engagement The objectives of analysis are to assess cross-channel campaign and sales relationships, and to create new customer segments based on combined offline/online activity for more personalized engagement. Execute: Enhance Cross Sell and Target High-Value Customers Customers are increasingly demanding relevance in their interactions with brands. They expect to be recognized and catered to, regardless of which channel they use. They don t care that you maintain disparate data stores of their offline and online activities. They are looking for relevance and consistency at every touchpoint. 6

7 Your newly enriched online customer database enables you to answer those expectations. Personalized cross sell and up sell is a prime focus area. If a customer purchases a bed in a brick-and-mortar store, your online system would lose out on cross sell opportunities unless it was aware of the offline purchase. With visibility into multichannel activity, you re able to send the customer a personalized offer for a new comforter and pillows. Other objectives: Trigger and track offline sales. A unified database helps you make the most of efforts to drive in-store traffic with online coupons and other incentives. An automated system enables you to track effectiveness of these online/offline programs and capture additional customer behaviors to further fine-tune personalization. Exploit new geographic information. Importing offline data will add zip codes and even street addresses for a number of your customers. That data can be leveraged to promote in-store sales and other special events. Boost offline subscriptions and contracts. Your online marketing solution can track fixedtime subscriptions and service contracts initiated in offline channels and reach out to subscribers with reminders and incentives for renewal and/or upgrades. Take action after call center inquiries. Keep tabs on customers phoning into a call center with inquiries, upgrade orders, or cancellations. Offer these customers further assistance or cross sell promotions, or invite them to rate the service they received or use your online help system. Measure: Tune Campaigns and Optimize Budget and Marketing Mix Multichannel analytics enables online marketers to continuously measure and optimize campaigns across channels. Marketers can gain visibility into performance by any number of combinations spanning customer segments, offline and online channels, top- and lowselling products, campaign effectiveness, and more. Measurement with a flexible ad hoc reporting solution is essential to understanding the cause-and-effect of multichannel relationships and tailoring campaigns for maximum business impact. Quantifiable data helps marketers make smart decisions on budget allocations and marketing mix and gain an edge in the competitive multichannel world. Assess offline impact of online marketing campaigns. You can measure and adjust how your online campaigns are driving traffic and sales in stores, and to a lesser extent to call centers. A reporting solution will enable you to establish and performance metrics in a visually inviting dashboard and drill down to explore relationships at a granular level, e.g., open rate of high-value customers vs. in-store purchasing. Measure catalog and print effect on online activity. With the temptation to curtail print catalog and direct mail spend, marketers should understand the effect the vehicles may have on online sales. Many customers are prompted to a web site visit and purchase because of what they saw in a catalog the question is how many and the net value. Multichannel analytics give you newfound visibility into these issues. 7

8 The illustration below depicts one of the many analyses available in an ad hoc reporting solution, in this case, a comparison of top-selling products across offline, online, and combined channels. One of the many analyses in an ad hoc reporting solution compares sales of top-selling products across offline, online, and combined channels. The Coremetrics Approach to Multichannel Marketing and Analytics At Coremetrics, we re focused on helping marketers excel in a multichannel world. Our SaaS-based solutions are engineered to help you relentlessly follow your customers over time, both online and offline. We offer technology that lets you anticipate their future buying decisions based on that history, and tap into that rich historical data to deliver your best message to your targeted customers. The Coremetrics Continuous Optimization Platform Comprising all Coremetrics solutions, the Continuous Optimization Platform delivers a 360-degree view of the customer, bridging gaps across marketing programs and data sources to make effective multichannel marketing a reality. It is powered by Coremetrics Lifetime Individual Visitor Experience (LIVE) Profiles, a robust database that tracks and stores customer activity over the long term in all online and offline channels. The platform features these multichannel solutions: Coremetrics Import The Import service application allows users to flexibly merge data obtained from other sources with information captured by Coremetrics site tracking technologies. With a simple and intuitive user interface, the SaaS-based Import offers preconfigured templates to accelerate and streamline data access and import. It also features: Access controls. Administrators have flexibility to establish permission-based usage by individuals, roles, or groups. Testing and validation. Import includes testing and validation features to ensure that data is accurate, formatted correctly, and manifests properly within the Coremetrics reporting solution. Direct upload. The user interface enables pointand-click import either on demand or automated per specifications, with no FTP client required. 8

9 Coremetrics Explore With a rich visual interface, the Explore ad hoc reporting solution lets analysts drill down into data for insights into customer behavior and campaign effectiveness. They can create custom reports on any variety of dimensions, such as cross-channel activity, sales by customer segments, geographic trends, and build dashboards that track key performance metrics. Coremetrics LIV LIV gives marketers the flexibility to automatically deliver personalized s to customers based on specified scenarios. For instance, LIV may be configured to generate personalized s to individuals who abandoned a shopping cart, or to send follow-up offers for related products or accessories after an in-store purchase or call center inquiry. Coremetrics Benchmark Coremetrics Benchmark lets you compare your multichannel marketing performance against competitors in your industry. This unique solution delivers aggregated and anonymous industry-specific competitor data that benchmarks your performance and helps you identify strengths, weaknesses, threats, and opportunities. Conclusion It s not as if we woke up one morning and all of a sudden the world had turned multichannel. Multichannel commerce has been here for many decades, ever since brick-and-mortar stores began fulfilling orders by postal mail, and later by telephone. But now changes are unfolding fast and furious. Online marketing executives need to have the multichannel phenomenon squarely in their sights to meet its many challenges, seize the opportunities that it offers, and sidestep the risks of inaction. Practical, achievable solutions are available. As always with online marketing, the answer exists in data. Forward-looking companies will aggressively explore how they can leverage their data from both offline and online channels to import, analyze, execute, and measure and unleash the perfect multichannel marketing storm. 9

10 About Coremetrics Coremetrics is the leader in marketing optimization. Its products help businesses relentlessly optimize their marketing programs to make the best offer, every time, anywhere, automatically. More than 2,100 online brands globally use Coremetrics Software as a Service (SaaS) to optimize their online marketing. Coremetrics integrated marketing optimization solutions include real-time personalized recommendations, targeting, display ad targeting across leading ad networks, and search engine bid management. The company s solutions are delivered on the only online analytics platform designed to anticipate the needs of every customer, automate marketing decisions in real time, and syndicate information across all customer channels. The company is privately held with funding from Accel Partners, FTV Capital, Highland Capital Partners, and W Capital Partners, and is headquartered in San Mateo, California. Find more information at or call Coremetrics has strongly supported online privacy since its inception. To learn more, visit Did you like this white paper? Tweet about it! Twitter. Corporate Headquarters 1840 Gateway Drive, Suite 320 San Mateo, CA Tel: Coremetrics Europe Ltd. Wellington House 20 Queensmere Slough Berkshire SL1 1DB U.K. Tel: +44 (0) Coremetrics.com 5296