Navigating Channel Disruption and Evolving Consumer Technology

Retailers compete across both channels and verticals for the greatest customer experience Achieving the Greatest Customer Experience

As retailers begin preparations for the 2017 holiday To rise above their competition, successful retailers season, they fnd themselves on a highly competitive must achieve the “greatest customer experience.” But landscape that is becoming increasingly intense. to both meet consumers’ hightened expectations and With dozens of new technology—and data-driven differentiate themselves from direct competitors, they approaches for engaging consumers, retail brands need innovative cross-channel techniques that provide will look to achieve not only the highest standards of personalized, contextual experiences. These efforts products and services, but the highest standards in must be driven by intelligent consumer data to help terms of cross-channel customer experiences as well. acquire new customers and drive existing customers Additionally, customers’ quality expectations no longer back to purchase. differ from vertical to vertical—customers expect agility, responsiveness, and satisfaction from every retailer, no Worldwide Business Research partnered with matter what they’re selling. IgnitionOne to analyze cross-channel marketing practices and holiday readiness based on a survey of 550 leading retail executives. The results show marked success with cross-channel marketing efforts. The vast majority of retailers manage their cross-channel 60% advertising campaigns in house, which gives them of retailers claim acquiring more fexibility in terms of achieving a complete view of customer data and streamline investments in new new customers is the most technologies. Additionally, successful retailers are important marketing challenge leveraging offine customer data for online marketing, for 2017 – 2018. and attributing traffc and sales across channels using multi touch and last-click attribution methods.

Many retailers are positioned for success in terms of holiday readiness. They are using customer data to identify targeted customer segments to make specifc 67% offers, to personalize experiences with dynamic creative across channels, and ultimately differentiate their of retailers identify personalization brands in the competitive retail market. as a goal for cross-channel But in an industry where customers’ perceptions of marketing in 2017 – 2018. retail brands and their heightened level of expectations in terms of customer experiences—an industry where customer engagement with retailers’ brands can quickly fuctuate in an online environment—retailers will continue investing in sophisticated marketing techniques and measure brand perception to drive successful cross-channel experiences in 2018.

2 Retailers prioritize acquisitions in their cross-channel marketing efforts.

In modern retail, acquiring customers and preventing Far fewer retailers identify selling more to new them from engaging with competitors is critical. customers or engaging with inactive customers as Although retail brands prioritize retaining customers a priority. 11% of retailers claim selling more to new in 2017 – 2018, acquiring new customers is the customers is their most important marketing challenge, most important marketing challenge among 60% indicating acquiring new purchases is more important of retailers—the only majority among four choices than their volume; and 7% of retailers identify available. In comparison, selling more to existing reactivating lapsed customers, which may not be the customers is the most important marketing challenge best application of retailers’ time and effort given the for only 20% of retailers, the second largest; although climate of the market. In fact, 59% of retailers claim selling more to existing customers is the most or reactivating lapsed customers is their least important second-most important marketing challenge for over marketing challenge—by far the largest group of half of retailers (57%). retailers to rate any option in this way.

Please rank the following marketng challenges in order of importance for 2017 – 2018, “1” being “most important.”

1 2 3 4

Acquiring new customers 63% 18% 11% 8%

Selling more to existing customers 20% 37% 31% 12%

Selling more to new customers 11% 31% 37% 21%

Reactivating lapsed customers 7% 13% 21% 59%

78% of retailers manage cross-channel advertising in - house.

3 Leveraging all existing resources to engage with category is agencies, which manage cross-channel potential customers as consumer expectations advertising campaigns for only 39% of retailers—half evolve requires agility, which the vast majority of as many as retailers managing campaigns in - house. retailers appear to achieve by managing cross- channel campaigns internally. Among fve options, Only 6% of retailers employ tech providers with where retailers could select all that apply to them, services to manage their cross-channel advertising 78% of retailers claim to manage their cross-channel campaigns, while 4% of retailers don’t advertise. 1% of advertising campaigns in - house—the only majority retailers use some other resource for managing their among the options available. The next most popular cross-channel advertising campaigns.

Who manages your cross-channel advertsing campaigns? (Select all that apply)

In-house 78%

Agency 39%

Tech provider with 6% services

Other 1%

We don’t advertise 4%

Retailers are leveraging rich data for targeting and cross- channel capabilities.

At the core of successful cross-channel initiatives 85% of retailers claim they are using email lists—the are retailers’ abilities to leverage customer data, and only majority. Almost half (43%) of retailers claim they maintain data that is consistent with real customer use ecommerce shopping cart software. experiences as they occur. Consequently, retailers are using their own data to carry out sophisticated cross- A substantial number of retailers claim to use each of channel marketing efforts for customer acquisition the less popular types of data as well. 36% of retailers and retention. claim they use POS data, and 36% of retailers claim they use direct mail lists for cross-channel advertising. Retailers report use of internal data sources to Only 5% of respondents claim their companies use leverage in their campaigns. When asked what CRM other types of CRM data for cross-channel advertising. data they are leveraging for cross-channel advertising,

4 What CRM data are you leveraging for cross-channel advertsing? (Select all that apply)

Email list 85%

Ecommerce shopping 43% cart software

36% POS data

36% Direct mail list

Other 5%

Meanwhile, most retailers’ cross-channel marketing Some sophisticated cross-channel marketing tactics tactics have become sophisticated, using targeting, are used by fewer retailers. However, over one- segmentation, and remarketing strategies to acquire quarter of retailers (26%) use remarketing based and retain new customers. When asked to select all on next-best product to drive customers back to tactics currently in use for cross-channel marketing, purchase. Among two time-oriented strategies, 13% three majorities emerged. First, 65% of retailers use cross-channel frequency capping, and 10% use identify targeted segmentation for specifc offers dayparting tactics. Only 3% claim they use some other as one of their tactics—the largest group among tactic for cross-channel marketing. the options available. Second, 56% claim they use remarketing based on product of interest as a tactic for cross-channel marketing; and third, 51% identify dynamic creative and personalization as such.

What tactcs are you using for your cross-channel marketng? (Select all that apply)

Targeted segmentation 65% for specifc offers

Remarketing based on 56% product of interest

Dynamic creative/ personalization 51%

Remarketing based on next-best product 26%

Cross-channel 13% frequency capping

Dayparting 10%

Other 3%

5 Cross-channel measurement and attribution techniques have a ways to go for most retailers.

As the industry evolves, retailers are discovering a better view of the customer’s path to purchase. that performance metrics and attribution that do Another 11% claim they use media-mix modeling to not capture the extent of customers’ cross-channel measure their cross-channel advertising, allowing experiences paint a limited picture of how they engage them to estimate the impact of assorted marketing with those retailers’ brands. This leaves uncertainties techniques on sales, then forecast the impact of in critical areas like discovering how customers are future techniques. acquired and both how and when retention techniques are succeeding with existing customers. That means 32% of retailers are taking a holistic, multichannel approach to measuring cross-channel advertising. But the remaining 68% of retailers continue to approach marketing on a limited or channel-by-channel basis. As opposed to multitouch 32% attribution, 27% of retailers—the largest group among of retailers take a holistic, the fve options—continue to use last-click attribution to measure cross-channel advertising. 22% of retailers multichannel approach to claim they enhance and optimize each of their channels measuring cross-channel individually, which may make it diffcult to achieve advertising. The remaining 68% a seamless cross-channel experience. And 19% of of retailers continue to approach retailers are not using a measurement technique at all. marketing on a limited or As part of their cross-channel marketing efforts, channel-by-channel basis. retailers are investing in techniques that drive offine traffc and sales in addition to digital ones. But while emerging technologies are doing more to combine Many retailers have invested in new methods to digital and physical environments and become a part achieve this holistic view of the customer experience. of consumers’ everyday lives, most retailers continue When asked to identify one technique with which they to utilize only existing or accessible digital tools to are measuring their cross-channel advertising, 21% of measure online-to-offine results. retailers claim to use multitouch attribution, providing

How do you measure your cross-channel advertsing?

Last click 27%

Evaluating and optimizing each channel 22% individually

Multitouch attribution 21%

Media-mix modeling 11%

Not currently using a measurement technique 19%

6 For example, 51% of retailers—the only majority—use tie online advertising to offine traffc or sales. 16% of CRM/POS data to tie online advertising to offine retailers claim this does not apply to them at all. traffc or sales. 38% use A/B testing to identify connections between digital and physical channels, the Among all categories to measure, brand perception next most popular category. is less tangible than ad performance, but essential in guiding future advertising initiatives. When asked how Fewer retailers use geography-oriented technologies they measure brand perception from their cross-channel to drive offine traffc or sales. Only 15% of retailers advertising, retailers heavily favor the more expedient us geofencing, and 12% of retailers use beacons, to digital options available. Majorities in two categories emerged with much greater responses than the others.

How are you tying online advertsing to ofine trafc or sales results? (Select all that apply)

CRM/POS Data 51%

A/B Testing 38%

Geofencing 15%

Beacons 12%

Not Applicable 16%

63% of retailers measure brand perception from their Among the remaining categories, only 8% of retailers cross-channel advertising with email surveys. 54% use use mail-in surveys, and 2% use focus groups. 4% claim web surveys to measure brand perception from cross- they use other methods to measure brand perception channel advertising. from their cross-channel advertising, and 6% use no methods for measuring brand perception in this way. Only 16% of retailers use in-store surveys, the next most popular choice; and 12% use phone surveys.

How do you measure brand percepton from your cross-channel advertsing? (Select all that apply)

Email surveys 63%

Web surveys 54%

In-store surveys 16%

Phone surveys 12%

Mail-in surveys 8%

Focus groups 2%

Other 4%

N/A 6%

7 Retailers succeed in launching data-driven targeting, contextualization, and personalization initiatives.

Although retailers prioritize acquisitions in their Only 16% of retailers use onsite offers to message advertising campaigns, most have developed data- shoppers after they abandon their carts. 10% of driven strategies for remarketing to lost potential respondents claim the question does not apply to them. customers, namely those who visit their websites and abandon their carts before purchase. And while the A majority of retailers plan not only to use customer vast majority of retailers use email remarketing—72%— data for targeting consumers, but for improving their substantial numbers of retailers are investing in display, shopping experiences as well. In fact, when asked to social, and search remarketing as well. Inevitably, many select all goals for their cross-channel advertising in retailers are using multiple methods to engage with 2017 and 2018, 67% of retailers—the only majority— cart abandoners. selected personalization.

The fact that 72% of retailers use email remarketing As brand differentiation becomes increasingly indicates most retailers are now defning customer important for retailers, providing personalized, groups and targeting them successfully. Among other contextual shopping experiences—truly making a remarketing methods, display remarketing is used by customer’s experience his or her own—is essential 33% of retailers. Over one-quarter (28%) of retailers use to differentiating one’s brand in a single vertical, and social remarketing to message shoppers who abandon achieving a superior customer experience across all their carts, and 20% of retailers use search remarketing. verticals as well.

How are you messaging shoppers who abandon their carts? (Select all that apply)

Email remarketing 72%

Display remarketing 33%

Social remarketing 28%

Search remarketing 20%

Onsite offers 16%

Not Applicable 10%

But some retailers are aiming for more sophisticated Meanwhile, 35% identifed activating the same capabilities than others. 21% of retailers claim to use audiences across channels as one of their goals. And multitouch attribution, and almost half of retailers in either case, about one-quarter of retailers claim bid (46%) identify multitouch attribution as one of their optimization (25%) and real-time activation (23%) are goals for cross-channel advertising. goals for 2017 and 2018. Only 3% claim they have other goals for cross-channel advertising in mind.

8 What are your goals for your cross-channel advertsing in 2017 and 2018? (Select all that apply)

Personalization 67%

Multitouch attribution 46%

Activating the same audiences across 35% channels

25% Bid optimization

Real-time activation 23%

Other 3%

In terms of technology, the majority of retailers have represent substantially large groups among the choices prioritized sophisticated, cross-channel investments provided. Chatbots (31%) that enhance the digital that empower them with a complete view of customer experience are also a popular investment opportunity. data, and then improve their capabilities in leveraging that data to enhance the customer experience. Less than one-quarter of retailers are considering investing in the remaining technologies in 2018, many Although retailers are considering investing in a wide of which are either untested in certain verticals or range of technologies, many have clear preferences may be inapplicable. 18% are considering Internet of over others. For example, 38% of retailers are Things (IoT), 13% are considering beacons, 12% are considering investing in real-time or contextual considering virtual reality, and 11% are considering marketing—the largest group in any category. augmented reality as potential investments. Only 2% of retailers claim to have other investments in mind. Achieving fexibility and agile means for acquiring 4% claim the subject does not apply to them. customer data is also a priority for retailers, as cross- device identifcation (34%) and CRM onboarding (34%)

What emerging technologies are you considering investng in for 2018? (Select all that apply)

Real-time or contextual marketing 38% Cross-device identifcation 34%

CRM onboarding 34%

Chatbots 31%

Internet of Things 18%

Beacons 13%

Virtual reality 12%

Augmented reality 11%

Other 2% N/A 4%

9 Finally, retailers are confdent as they navigate channel disruption.

more challenging. The migration of consumer activity to mobile is perhaps the most disruptive, and many retailers have struggled to adopt suitable technologies 47% for their customers and their businesses. of retailers are more than As previously stated, cross-channel measurement moderately confdent about their and attribution techniques have a ways to go for most mobile measurement capabilities. retailers. Although invisible to the eye of the consumer, managing attribution and customer data on emerging mobile channels is a challenge for retailers. But while Retailers must evolve as quickly as the habits and tastes almost half of retailers (48%) are more than moderately of their customers, and nothing is driving that evolution affected by the shift to mobile in terms of their ability more rigorously than consumer technology. The retail to track conversions, retailers are generally confdent industry has been especially volatile in recent history in their mobile measurement capabilities in comparison as those technologies become more sophisticated, with their competitors. Almost half of retailers (47%) and engaging consumers effectively is becoming are more than moderately confdent about their mobile measurement capabilities.

How strongly has the shif to mobile afected your ability to track conversions? Rate on a scale of 1 to 10, 1 being “not afected,” 10 being “greatly afected.”

10 5%

9 3%

8 10%

7 15%

6 15%

5 19%

4 9%

3 10%

2 4%

1 10%

10 How confdent do you feel about your mobile measurement capabilites in comparison with your compettors? Rate on a scale of 1 to 10, 1 being “not confdent at all” and 10 being “very confdent.”

10 4%

9 2%

8 14%

7 13%

6 14%

5 22%

4 11%

3 11%

2 3%

1 6%

In 2018, retailers must not only adopt new more changes in consumer technology and behavior. technologies that improve acquisition, personalization, The ability to adapt is essential, but speed to adaption and attribution, they must adopt new growth is quickly becoming the new standard for success. strategies that will allow them to continue adapting to

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About IgnitonOne

IgnitionOne offers technology and services that help marketers win. The company focuses on intelligent audience creation, real-time cross-channel scoring, and robust optimization – providing a layer for smarter marketing decisions and deeper insights, whether you use native IgnitionOne solutions such as Search, Display, Email, and Website Personalization – or the marketing technology you already have.

With a global footprint of over 450 employees in 10 countries, IgnitionOne is one of the largest independent marketing technology companies in the world, currently scoring over 300 million users monthly in 75 countries and powering more than $60 billion in revenue each year for leading brands, including General Motors, CenturyLink, Bridgestone, La Quinta and Acer, as well as advertising agencies such as 360i, GroupM and ZenithOptimedia.

For more information, please visit http://www.ignitionone.com or follow the company on Twitter @ignitionone.

About eTail

We launched eTail in 1999, and have been dedicated to supporting the growth of the retail industry ever since. What started off as 100 people in a room discussing where this sector is headed, has led to 2,000 senior-level ecommerce executives being inspired whilst learning and developing their company as well as their careers.

About WBR Digital

WBR Digital’s team of content specialists, marketers, and advisors believe in the power of demand generation with a creative twist. With senior executives from medium-sized businesses and Fortune 1,000 companies attending more than 100 WBR events each year, we are uniquely positioned to energize your organization’s marketing campaigns with a full array of marketing and bespoke content services.

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