Survey: Retailers Shift Focus From Acquisition to Retention
Changes by major tech companies to bolster user privacy are complicating online marketing — so much so that retailers are now focusing more on keeping existing customers than targeting new ones, a new retail report revealed Thursday.
Sixty-nine percent of the retail marketers queried said they are now prioritizing customer retention. That’s a notable shift for a sector that has historically obsessed over pulling in new business.
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The survey, sponsored by e-commerce marketing platform YotPo and conducted by retail marketing events firm CommerceNext, polled 104 high-level marketers representing billions of dollars in revenue. The scope suggests that the report’s findings reflect an overarching retail trend, driven by changes in the tech sector.
Technology companies have grappled with privacy legislation, such as Europe’s General Data Protection Regulation and the California Consumer Privacy Act, as well as intense scrutiny from elected officials. While the direct effect on retail has been somewhat minimal, with 86 percent of survey respondents satisfied with their own compliance, recent actions coming out of Silicon Valley have them much more concerned.
“Privacy compliance for things like GDPR or California privacy laws had some impact, but on [retailers’] acquisition, marketing and ability to target and so on, it’s been nothing in comparison to the impact from Big Tech,” Scott Silverman, cofounder of CommerceNext, told WWD.
“Google has been saying that they’re going to be getting rid of third-party cookies. Things like retargeting are really becoming much more challenging,” he explained, referring to the search giant’s plan to banish third-party browser cookies, a key tool used for tracking and ad targeting, and replace them with a group-based targeting tool by the third quarter of 2023.
It’s not alone. Apple required app-makers to obtain express permission from iPhone users before tracking them — a move that spurred Facebook to reevaluate its ad targeting approach. The social media company now must find a way to continue personalizing ads, even when less user data is available, so it’s looking at artificial intelligence to fill the gap.
Some of these changes are still underway, creating plenty of uncertainty about the future of online marketing. But for some brands, early signs already look unsettling. Forty-three percent of digital-first marketers said acquisition performance didn’t meet expectations.
That’s led them and others to double down on first-party data — the sort of customer information derived from direct relationships between brands and shoppers — rather than rely on outside platforms they can’t control.
Certainly tech’s moves affect retailers of all stripes, but not in equal measure, hitting legacy retailers and their digitally native counterparts differently.
When it comes to tech, the incumbents are racing to play catch-up, according to Silverman. As they lay down a foundation for customer data platforms and personalization, digital-first brands, which are much further along in their tech stacks, are pressing forward with retention efforts, including referral marketing, influencers and a greater focus on branding and storytelling.
“Retention marketing is really where you can take advantage of first-party data,” he pointed out. And since younger, techier brands tend to have modern, more sophisticated platforms, “they haven’t been held back by legacy systems.” They’re free to pursue more retention efforts, which can be a massive benefit during the pandemic-driven boom in online shopping.
Not that established retailers aren’t pushing for first-party data as well, with programs like email-based loyalty programs. But they have another hurdle: “Incumbent retailers are focusing on their strengths, which is omnichannel, and that is always a big undertaking,” continued Silverman.
“Inventory visibility is critical for any omnichannel strategy. If you’re going to tell a customer to pick up curbside or pick up in store, or even you want to ship it from the store, you need to know where it is. And that is a much harder thing to do accurately than it seems,” he added. “There are a lot of systems involved in that.”
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