And what tools should you be using?
With the proliferation of digital-first, direct-to-consumer brands, we are also seeing a wider range of more creative and high-tech marketing approaches—and as a result, a greater increase in marketing spends. While digital-first, DTC marketing, data collection and product development are sometimes considered to be in a totally different category from that of more traditional forms of retail, retailers across the board in the sleep sector may have more shared commonalities and challenges than they realize, especially when it comes to customer data collection and organization.
This recent Retail Dive Brief explores a report put out by Commerce Next and Oracle that sheds light on the future of marketing for DTC brands. According to the brief, “78% of DTC companies increased their marketing budgets from 2018 to 2019, a rate ‘dramatically’ higher than traditional retail peers, of whom about 60% reported increasing their marketing spend.”
Even more interestingly, the report goes on to highlight a shared pain point for both DTC brands and traditional retailers: “The Commerce Next and Oracle report also identifies some shared pain points impacting retail marketers across the board. Retail marketers both young and old are struggling with silos and delivering a unified customer experience. The research suggests that 65% of marketers will increase their spend on CDPs [customer data platforms] this year, and 52% will spend more on personalization technology to account for those gaps.”
This data point is telling because it shows that while digitally native brands might have the upper hand on online data collection or a deeper understanding of digital marketing, they are having challenges when it comes to scaling their businesses to more platforms. On the other side of the coin, traditional retailers might have data collection and experience delivery down in-stores, but are still figuring out how to offer a consistent experience online.
So what is a CDP and why is relevant?
A CDP or customer data platform collects, connects and stores customer data across a retailer's platforms. This includes in-store, on the website, on an app, via email, engagement on social, you name it. According to this article from Evergage,“The CDP Institute defines a CDP as ‘packaged software that creates a persistent, unified customer database that is accessible to other systems.’ There’s a need for a unified customer database that can act as an easily accessible single source of truth and allow marketers to truly understand each individual customer — especially as marketers have been struggling to connect customer data across their organizations for a long time.”
Perhaps the rise of digital DTC brands like Casper and Warby Parker as well as their subsequent transition into hybrid digital and brick-and-mortar businesses have spurred the hype for CDPs. Or maybe it’s a product of customer demand. As consumers, we are wanting brands to be nearly omniscient in understanding and anticipating our wants and needs—and a CDP can help retailers deliver the unified customer experience the consumer of today dreams about.
What are the applications of a CDP?
According to this story from The Relevancy Group, 62% of companies that leverage a CDP use it to enable individualized personalization in email, 55% for advertising and 53% for real-time targeting. But the uses are limitless.
The expansion of products from mattresses to sheets, glow lights or other more holistically sleep-related products is a smart marketing move for both DTC and more traditional brands. And these new product line-ups can be customized using data from the CDP.
Traditionally, retailers might need to take a new product from a manufacturer, have it on the floor for a few months and then review return data or even request customer feedback to help the manufacturer and the retailer gauge its viability as a product. But with digital-first and more traditional retailers developing a multi-platform presence and using data collection tools, updates to inventory can happen much more rapidly and be primarily based on customer feedback. Essentially, it’s supply and demand at its nimblest.
Additionally, even more traditional manufacturers are starting to reverse their process. Rather than throwing an initial product out there and seeing how it goes, then pivoting based on feedback, Corsicana Mattress, for example, built its recent line-up to target data-based consumer profiles. The brand’s website says it well: “We listened to what people like you want in a mattress company and reworked our entire process - from concept to design - to create the perfect mattress for you, whether you want a performance mattress that uses state of the art technology or you prefer the durability of traditional craftsmanship.”
The key here is ‘listening.’ It may take time to implement a CDP, it might not be in your budget right now, but what’s most important and why this tool is receiving a lot of buzz right now is that customers want to feel heard and want to have retail experiences and access to products that are tailored to their wants and needs. And, regardless of the technology you possess now, this is the goal retailers need to set out to achieve in order to stay competitive in today’s crowded market.
This article originally appeared in Sleep Retailer eNews on June 13, 2019.
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