Debunking Retail’s Silver Bullets
Artificial intelligence, RFID trackers, predictive analytics — advancements have been positioned as the divine solutions sent from retail heaven to resolve the industry’s multiplying challenges. But in a market that’s increasingly fragmented from an operational perspective, so are the demands for holistic and encompassing programs that not only ensure survival in a dog-eat-dog industry, but also propel a brand to new levels of success.
Here, executives and thought leaders demystify some of the technological and tactical “silver bullets” that circulate the industry while wishing that retailers were more thoughtful before deploying razzmatazz strategies. Spoiler: technology is only one piece of the equation.
Tasso Argyros, founder and chief executive officer, ActionIQ:
Silver Bullet: Customer acquisition is the company’s main driver of growth. As retailers learn to navigate the new digital landscape, we’re seeing brands lean on acquisition-led strategies as a “silver bullet” for business growth. In fact, more than 60 percent of retailers last year said acquiring new customers is the most important priority. Customer acquisition is an easy key performance indicator and is often seen as tied to success and business growth.
The Truth: Although customer acquisition is an important metric for retailers, it should not come at the cost of putting resources toward customer retention strategies. In fact, the cost of acquiring a new customer can range from five to seven times the expense of keeping an existing one.
Rather than focusing solely on increasing percentage of new customers, it’s important retailers leverage existing customer data to drive personalized customer engagement that leads repeat purchases.
Katie Smith, retail analysis director, Edited:
Silver Bullet: You need an insight team to win.
We’ve noticed that retailers facing the need for enormous change are spending big bucks forming insights or innovations teams. Spotting the need to get smarter with big data and artificial intelligence, they make it the insight team’s responsibility, often bringing in experts or consultants from outside of the retail industry. These teams become the stakeholders of information, tasked with spotting new directions and opportunities and then sharing their discoveries business-wide.
The Truth: You need to empower everyone to be insightful.
Having an insights team is a declaration that insights aren’t everyone’s responsibility — they belong to a select group of people. It’s putting the future of the business into the hands of people who have very different objectives to those in other areas. Instead, retailers should be investing in training so that insights are a part of business-wide culture. That means the category experts, like buyers and merchandisers, can access information and are empowered to make decisions that will have a lasting impact on the business.
Rick Kenney, head of consumer insights, Salesforce Commerce Cloud:
Silver Bullet: Social commerce is a must for marketers.
The Truth: Despite industry hype around social media playing a critical role in commerce the past few years, results from the Salesforce Q1 Shopping Index have shown that the growth of shopping using social media channels has essentially been flat quarter-over-quarter since Q1 2017. In fact, social media channels represented only 4.7 percent of all visits to e-commerce sites and two percent of all digital orders in Q1 2018. Social media has been an emerging channel, and with that comes an expectation of high growth, but the truth is that high growth is not materializing in e-commerce.
Lori Mitchell-Keller, global general manager of consumer industries, SAP:
Silver Bullet: Online is the place to be. E-commerce is driving most sales growth in retail, so without an online presence, retailers will lose customers and sales to their competitors. Focusing all efforts on establishing and integrating an online marketplace will prevent retailers from being left behind in the “retail apocalypse.”
The Truth: Although retail is undergoing an extraordinary period of change, it’s a growth period, full of opportunity — making this more of a retail renaissance than apocalypse.
While it is imperative to have an online presence, that alone is not enough. To thrive, retailers shouldn’t underestimate the value of brick-and-mortar, but rather invest in creating unique, personalized experiences across retail’s new normal. It’s not about “What channel should I invest in?” but rather “What consumer journeys do I need to invest in?”
Furthermore, retail’s new normal isn’t about simply selling a product. Retailers must go deeper, helping consumers achieve an outcome. To achieve this, data is key to tailoring to consumer wants and needs. I often ask retailers “How would you sell joy to a consumer? What about security, comfort or control?” This challenges retailers to leverage data to elevate their brand position to meet consumers’ needs beyond selling them a physical product. Retailers are moving from counting customer transactions to building lasting relationships.
Shireen Jiwan, founder and chief investigator, Sleuth Brand Consulting:
Silver Bullet: Take your retail presence anywhere and you’ll make new fans with pop-ups.
The Truth: Pop-ups do indeed untether the physical retail experience from its mother ship, but they can also feel intrusive or even exploitative — especially when the experience feels like a solution for the retailer versus the shopper. Consider, for example, the retailization of Coachella or Art Basel where energy drinks and apparel companies compete with sneakers and tech for the affections of stranded, inebriated crowds.
The best pop-ups are actually more like pop-ins: clever, solution-oriented and seamlessly embedded in ways that make sense for participants. When done well, retailers can use these meaningful moments to forge powerful emotional connections with new audiences. This was case when Lyft announced the Austin Musician Rideshare Program at SXSW in which it gave local musicians free rides to and from their gigs. By joining forces with local venues and artists as the festival grows, Lyft will establish loyalty among festival influencers and brokers.
If you’re going to show up somewhere uninvited, bring something people will really want and remember. Do your homework. figure out what your tribe’s unmet needs are in that venue. Then over deliver with style and grace.
Gil Eyal, ceo of HYPR:
Silver Bullet: The biggest myth is that in order to succeed in influencer marketing, you need to hand over creative control to influencers. The idea is that they know their audience well and can create content that resonates. This is the fallacy that gets brands in trouble because modern marketing teams apply extensive research to understand which messaging works with their audiences and which conveys their brand identity best. We see brands that won’t allow employees to send out a presentation that isn’t in company colors, but will allow influencers to do whatever they want.
The Truth: Influencer marketing is just another form of marketing. You need to apply the exact same fundamentals — identify audiences, test messages against them and measure results. If you allow influencers to post whatever they want, there will never be a system you can follow, and you will never have scale because you won’t be able to apply anything you learned onto the next post.
Ryan Patel, global brand-building executive, former vice president of global development at Pinkberry:
Silver Bullet: Data solves all problems. Specifically, this notion that once you acquire data on the consumer, industry, competition, trends, you are “golden.”
The Truth: Data analytics are important, but how the analytics are implemented is key. Just because one has access to data doesn’t necessarily lead to success — it’s just the start. It takes time to break down data to a meaningful form to truly understand all the implications behind it. There is hardly ever a clear, direct correlation to an answer. Brands must sift through what’s important to their core values and what’s vital to your own consumer. There needs to be a point of view on the data.
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