Trust drives loyalty. Relevance reinforces trust. How, then, do retailers earn that trust? According to consumers, trust is earned through a consistent, personalized customer experience (CX) – with three of four retail consumers saying they are more loyal to brands with consistent customer service and experiences.
According to Deloitte’s 2024 Retail Industry Outlook, retail executives’ most cited growth opportunity for 2024 was strengthening loyalty programs, knowing that trusted companies financially outperform their peers up to 4X, and that customers who trust a brand are 88 percent more likely to buy again.
Retailers, however, are not meeting lofty customer standards for what constitutes a modern, omnichannel CX. In the Deloitte study, for example, modern retail services that include buy online, pick-up in-store (BOPIS) and buy online, return in-store (BORIS) are widely available, but most retailers have a hard time pulling them off without friction. For example, just 1 in 10 retailers was able to offer an alternative pickup option, and a third failed to indicate how long it would take to receive a refund.
Composable CDPs Stay Ahead of Changes in Customer Expectations
Agility, specifically being able to quickly pivot to new and emerging CX use cases, is a key capability for meeting the level of personalization that customers expect. A need for agility extends to the entire marketing stack. A composable CDP provides brands with the ability to meet both new and emerging use cases. For a CDP, modern and composable means being able to activate your data to any end channel to meet your customers in ways that adapt to new channel innovations and consumer behavior changes. It means being able to bring in your own models so you can work with AI the way you want, without CDP restrictions. As customers change how they shop and how they interact – such as being more comfortable interacting with generative AI (genAI) applications and natural language processing (NLP) – brands can no longer afford to have monolithic, intractable systems or technology that are purpose-built to do one thing.
According to the Deloitte research, half of retail executives are prioritizing AI-driven personalized product recommendations in 2024. Yet, only five in 10 are confident in their company’s ability to use AI effectively across their businesses, hampered by rigid technology that makes it costly to quickly spin up a new AI application. Composability helps solve issues of intractability. Best understood as a modular approach offering the freedom of choice to obtain best-of-breed components that complement existing investments, composability prioritizes agility and helps enterprise retailers more quickly reach untapped business value.
A composable CDP that runs in a data cloud and performs core CDP functionality without having to replicate data – known as a “data-in-place” or “zero-copy” CDP – allows you to control your customer data behind your own security perimeter while connecting to all your MarTech touchpoints and enterprise data sources. By building a cohesive platform through API integrations, companies balance control with the flexibility to add or change components as use cases evolve.
Retailer’s Opportunity to Double Down on Loyalty
Consumers’ baseline expectations for seamless personalization include brands knowing who they are across channels, and catering to their individual preferences however they choose to engage. Because strengthening loyalty programs is such a key retail initiative, the key to success is to cultivate a detailed, up-to-date understanding of today’s and tomorrows consumers, and to use that deep understanding to provide a superior CX.
With that in mind, here are the top three things retailers must consider when looking at a customer data platform (CDP) as the cornerstone of their CX strategy.
1. Dynamic Segmentation = Contextual Understanding = Loyal Customers
McKinsey lists “microtargeting” as one of four imperatives that retailers must prioritize to meet the consumer of tomorrow. By microtargeting, it means segmenting an audience to target customers who demonstrate a particular shopping behavior or preference, vs. a generic, static segmentation by age, gender or geo. The latter is inadequate for engaging a customer with a relevant CX in the moment of interaction because it does not provide a contextual understanding of the customer. A static segment is also likely to be outdated the moment that it is created.
When a customer abandons a shopping cart, for instance, that action should immediately move a customer between segments because it materially impacts the brand’s response. Should the brand offer a discount for the abandoned item? Perhaps a discount on a complementary item? These are not one-size-fits-all decisions, but rather depend on what the brand knows about the customer. What is her lifetime value? Her average monthly spend? What is her cart abandonment history, i.e., does she eventually buy? Is she comparison shopping?
Being able to dynamically move customers between segments in real time in concert with a customer’s real-time behaviors is a key capability for meeting a customer with a magical marketing moment – one that is hyper-relevant not just based on what you know about a customer and the customer’s intent, but also in the pitch-perfect cadence of a customer journey. An online browsing session, for instance, might trigger swapping out an outbound email. An in-store purchase might change what a customer sees on their next visit to the website homepage.
For dynamic segmentation to keep up with the cadence of a customer, an enterprise CDP should provide a no-code environment for marketers to create granular segments that may be used in every channel without having to lean on IT or other external resources. Having to create and pull lists of customers or generate SQL are antiquated concepts that prevent brands from having the needed up-to-date understanding of a customer as the customer journey progresses.
2. An Agile MarTech Stack to Meet Your Evolving Use Cases
Dynamic segmentation speaks to a brand’s need for agility to engage a customer with relevance on any channel – at any time. A need for agility extends to the entire marketing stack. A composable CDP provides brands with the ability to quickly pivot to meet both new and emerging use cases. As customers change how they shop and how they interact – such as being more comfortable interacting with generative AI (genAI) applications and natural language processing (NLP) – brands can no longer afford to have monolithic, intractable systems or technology that are purpose-built to do one thing. For a CDP, modern and composable means being able to activate your data to any end channel to meet your customers in ways that adapt to new channel innovations and consumer behavior changes. It means being able to bring in your own models so you can work with AI the way you want, without CDP restrictions.
According to the Deloitte research, half of retail executives are prioritizing AI-driven personalized product recommendations in 2024. Yet, only five in 10 are confident in their company’s ability to use AI effectively across their businesses, hampered by rigid technology that makes it costly to quickly spin up a new AI application. Composability helps solve issues of intractability. Best understood as a modular approach offering the freedom of choice to obtain best-of-breed components that complement existing investments, composability prioritizes agility and helps enterprise retailers more quickly reach untapped business value.
A composable CDP that runs in a data cloud and performs core CDP functionality without having to replicate data – known as a “data-in-place” or “zero-copy” CDP – allows you to control your customer data behind your own security perimeter while connecting to all your MarTech touchpoints and enterprise data sources. By building a cohesive platform through API integrations, companies balance control with the flexibility to add or change components as use cases evolve.
3. Data Quality is a Key Component for a Contextual Understanding
How does a CDP approach the issue of data quality? Consumer data is inherently messy. The popularity of composability is one factor that brings the issue of data quality to the forefront, because some CDPs tout themselves as being composable that are little more than reverse ETL tools. Some do not even store customer data. Data quality – which should be core CDP functionality – is viewed as another application’s responsibility, with the problem being that it then becomes difficult to trust the quality of a unified customer profile. A CDP that sits on someone else’s Customer 360, for instance, may apply some very basic matching or cleansing before sending data downstream, but rudimentary measures do not yield a contextual understanding of a customer across channels. For instance, a basic deterministic match might break apart two different email addresses, but that is not the same as a real-time, updated unified profile that will actually tell a marketer or business user which email address to use when the customer self-identifies in one channel vs. another.
For retailers to cultivate a detailed, up-to-date understanding of their customers, completing identity resolution and data quality processes as data enters the system is a critical step. Taking care of cleansing, matching, validation and data governance in real time at data ingestion eliminates the latency that derails a relevant CX in the cadence of a customer journey.
To build loyalty and trust in an economy that has consumers prioritizing value, retailers must re-think their personalization strategies. With Redpoint, they have options. Dynamic segments that reflect an up-to-the-moment understanding of a customer that can be built without writing code. An agile marketing stack anchored by a composable CDP that will never lock you into a single approach or application. Data quality as a core competency to ensure that the resulting unified profile reflects the absolute latest and most accurate understanding of a customer.
For more on why leading retailers turn to the Redpoint CDP as the most complete, composable CDP to take them to the next level on the personalization roadmap, click here.
