Clean stores, check. Customer reopening communications that clearly state when and how business will be conducted, check. Now that reopening protocol has been established (despite the fact that no one knows how many consumers will actually show up), it’s time to focus on the future.
And, as the past two months have shown, the future is digital.
Retailers have shown that they understand the digital shift. Retail sales dropped 16.4 percent in April, while eCommerce was up 8.4 percent. But what retailers of all shapes and sizes may not grasp at this point is the importance of data as the digital shift takes hold as a core consumer behavior. The evolution will be powered by data, which is becoming more and more essential as the weeks wear on.
Stephen Collins, the newest board member of the artificial intelligence (AI)-driven retail data platform EDITED, was formerly a senior executive at Double Click, where he witnessed the creation of its ground-breaking customer targeting platform, DART. He believes the retail industry needs to work to further democratize access to data and data creation. Collins suggests that retailers, especially small to mid-sized ones, should contribute and draw from a data consortium that can inform marketing and eCommerce operations.
“This crisis has been a shock to the system,” Collins said. “And it’s quite possibly the beginning of the great golden age of eCommerce. Maybe it can get retailers to refocus on data, which can produce personalization and boost customers’ loyalty. That should be the top priority for competitive strategy – retailers simply have to focus on loyalty as we come out of this crisis.”
As earnings season came and went over the past two weeks, it became evident that some companies have an intimate relationship with their customers and their data – and some don’t. For example, Peloton is mastering the art and science of data. Yes, they’re riding a strong tailwind right now, with health-focused consumers willing to spend north of $2,000 on a bike.
But on its earnings call, it was evident that the company collects intent data from the customers who subscribe to their digital platforms in order to accurately project sales. Peloton knows it doesn’t have enough manufacturing capacity to fill current orders, and so it backed off its marketing spend for Q1 and April. And when the company does bring its factories back online, it expects to continue its growth rate during the calendar year.
In fact, Peloton is confident that word of mouth alone, not big-budget campaigns, will drive sales this calendar year.
“We do a post-purchase survey to ask our new buyers where they first heard about Peloton and what’s influencing their decision,” said CEO John Foley on the earnings call. “And we've seen word of mouth grow as a percent of what new buyers cited as influencing the purchase decision. It’s growing faster than we've ever seen it. So clearly, our customer experience is unmatched. And [the] way we treat our members as investments is paying off, such as our delivery, member experience and post-purchase service.”
Some analysts believe data and loyalty will be among the positive business tactics for retailers as the crisis moves into its reopening phase. Not that it’s the only one – but as Churchill said, “never let a good crisis go to waste.”
“There just might be a few silver linings in this dark cloud,” said Sean Claessen, chief strategy officer at Bond Brand Loyalty. “There could be several of them, if you pay attention. Look at a brand like Chico’s. Now they’re opening stores by appointment only. It’s not an optimal growth strategy, but look at what it can teach the chain about its most valuable customers. Look at all the data it can generate and the conversion opportunities it presents.
“In the past, someone would take 12 outfits into the dressing room and leave all 12, and the store would never know why,” he continued. “Now, the store can know why that happened without being intrusive, and can then apply some of that knowledge more widely. Capturing that kind of data and understanding that it’s golden can lead to huge insights.”