It can be tricky aligning retail marketing priorities with customer interests. Marketers and merchandisers need to move product, but it’s not always clear which customers should be exposed to which products. Getting the right SKUs in front of the right people results in purchases and revenue. But presenting people with offers they find irrelevant risks churn. In this article, we give our thoughts on aligning marketing and merchandising priorities with customer interest based on our experience working with retailers that need to sell inventory and are keen to please customers while doing so.
Decide which products you want to promote
Figure out what you need to promote. We’ve found that most retailers do so according to factors such as:
– What is appropriate for the time of year?
– What worked well the same time last year?
– Is there excess inventory that needs to be sold?
– Are there new products that we need to launch?
Once you’ve decided on your priorities, you need to figure out which customers should be exposed to which items. However, it’s often not immediately clear if the products you have in mind will resonate with customers. Sometimes a batch and blast approach will be sufficient, but ideally more targeted methods can be used, such as demographic or RFM based segmentation.
For example, if you need to move excess summer wear towards the end of the season, you can divide the inventory by women’s wear and men’s wear and send to each of their respective audiences. Although this is still painting in fairly broad strokes. The ability to personalize marketing outreach beyond demographic or even RFM segmentation will allow you to better align merchandising priorities with customer interest. And to do that you need data.
Use data to determine which customers will be most receptive
Transactional, web, and email data can be used to determine which customers are receptive towards which products and to what degree. Transactional data will provide the clearest picture of purchasing intent, but web and email data are helpful as well.
Still, data alone will not tell you which customers like which products. That data needs to be analyzed in order to yield actionable information. While it would be nice to have your own analytics department perform this task for each of your projects, usually the most practical route is to use a solution. Solutions that perform such analysis go by many names, such as predictive analytics, recommender engines and personalization solutions. Whatever solution you decide upon, it should be able to tell you which products resonate with which customers.
Coherent Path solutions, for example, use a fancy type of math called hyperbolic geometry to create a “map” of the “space” in which customers browse and purchase products. Without getting too far into the weeds, this allows the system to determine a given customer’s position within that space, the direction in which they’re moving through it, and their distance from various products. The closer a customer is to an item, the more he or she will be interested; the farther the customer is from an item, the less interested he or she will be. In this way, our solutions enable retailers to determine who will be the best fit for their merchandising and marketing initiatives.
Select channels and run campaigns
Once you’ve decided on what to promote and have determined which customers will be most receptive, you need to choose which channels to conduct outreach through. We find that email is often a good channel to facilitate merchandising initiatives. It allows you to send the products you want to the people you want to send them to, and also allows you to easily measure the results of your campaigns.
Another option is to use display advertising and retargeting to promote items to the appropriate customers. This can be used to both facilitate online sales and move inventory through in-store purchases. For example, rules-based targeting that restricts ads to people that are 1) nearby a certain store or set of stores; and 2) that are likely to be interested in the product(s) in question can help drive in-store purchases by directing people to the store (while also giving the option to purchase online).
It can be challenging getting merchandising and marketing initiatives to align with customer interest. But it’s doable. First, decide what you need to promote. Second, collect transactional, web and email data. While transactional data usually provides the clearest view of purchase intent, web and email data are valuable as well. Once you have your data in place, you can use a solution to parse it and tell you which customers will be most interested in which products. Then you can choose which channels you want to conduct outreach on. We find that email is a good channel because it allows for easy measurement and segmentation, but other channels such as display advertising and in-store can be effective as well.