Online shopping has changed the face of retail and redefined consumer expectations. As Bain & Company partner Darrell K. Rigby boldly predicted in 2011, “Retailers relying on earlier formats [will] either adapt or die out as the new ones pull volume from their stores.” Fast-forward eight years and the assertion holds true, but progress in business-critical areas remains slow.
While Rigby’s predictions of increasingly digitalised retail have become reality, many brands are lagging behind. With so many channels, data sources, and consumer behaviour changing by the day, measurement has become more important than ever. Yet most retail marketing lack the insight needed to improve performance, optimise spend, and enhance the consumer experience.
So, what are the measurement mistakes marketers are making today, and how can they be put right?
Lack of clearly defined business objectives
With 87% of UK retail purchases made online, the need for a strong digital marketing and measurement strategy is clear. Yet a recent Smart Insight study found that while almost half (49%) are running digital initiatives globally, most marketers have no defined strategy. And without a strategy, it’s impossible to define success.
Proving the effectiveness of digital marketing efforts requires clear alignment between marketing activities and business goals, and the right key performance indicators (KPIs) to track progress towards those goals. When establishing KPIs, focusing on clicks, likes and shares may seem to present promising signs of engagement, but these metrics fail to indicate a future purchase. By connecting digital marketing KPIs with desired business outcomes, such as sales and revenue, marketers can demonstrate the value of their efforts on the bottom line.
Reliance on rudimentary measurement
Consumers’ increasingly complex path to purchase isn’t news. Recent reports indicate that digital is playing an increasingly important role in consumers’ offline purchase decisions. Understanding the impact of each digital touchpoint on both online and in-store sales is critical for improving performance, yet rudimentary measurement techniques such as last touch attribution and customer journey analytics are the norm. While these methods may provide insight into the last channel a customer interacted with before buying or even a typical purchase path, they don’t reveal the value of each touchpoint, and often cause certain channels to be significantly under- or over-valued.
To optimise results, retail marketers need an actionable understanding of what is influencing consumers across their entire journey. By embracing more sophisticated measurement approaches that analyse the impact of every touchpoint, such as multi-touch attribution, marketers can identify the triggers that drive sales and optimise their investments accordingly.
Basing decisions on old data
Retail is a fast-moving market. Consumer behaviour is always changing, and what worked yesterday might not work today. Yet most marketers are basing their daily digital decisions on data that is weeks or even months old — well after the market has changed. Or worse, when it’s too late in a campaign to change course. In fact, our research shows that a third of daily spend is wasted when it’s based on old data.
When it comes to optimisation, retailer marketers need up-to-date data at the same time they make decisions. This is another area where multi-touch attribution can come in useful. Using data that is modelled fresh every day, marketers can identify the creatives, placements, keywords and other tactics that drove each day’s conversions. By speeding up insights this way, marketers can react more quickly to performance fluctuations while campaigns are still in-flight.
Missing key coverage areas
A recent study found that 73% of consumers use multiple channels during their shopping journey. In fact, today’s consumers are exposed to an average of almost six touchpoints with nearly 50% regularly using more than four – and new and influential marketing channels ranging from social media sites to over-the-top TV (OTT) are emerging every day.
Yet walled gardens and privacy regulations like GPDR are imposing stricter requirements on data, creating coverage gaps that make it difficult to achieve a holistic view of each consumer and assess the full impact of digital marketing investments. Multi-touch attribution can help fill these gaps, but requires partnering with vendors that have early access to new channels and data sources. Retail marketers would be wise to look for solutions that offer the broadest range of coverage, so they can account for all the factors that influence purchase decisions, and claim and measure audiences on the newest channels before the competition crowds in.
Striving for perfection
Retail marketers are faced with the challenges of trying to predict human emotional responses to marketing, and accurately measuring which tactics were most effective in driving each desired outcome. It’s a complex task that’s only going to get more difficult. The key to measurement success is focusing on progress rather than perfection.
There’s no such thing as a perfect data set or exact predictive science on human behaviour. As such, marketers need to be pragmatic about measurement. Even small improvements will translate into bankable outcomes. And the rewards are well worth the effort — for retailers with media budgets of £5M or more, optimising with multi-touch attribution can save hundreds of thousands of pounds each year, while improving their ability to deliver results.
With consumers changing their digital shopping behaviours about as often as they switch their socks, retailer marketers need to think on their feet or risk falling behind. Doing so means addressing the fundamental mistakes preventing them from capturing the data and insights required to improve performance and optimise spend. By addressing these common measurement mistakes, marketers can keep pace with consumers, reduce wasted spend, and seize each opportunity to bolster sales success and profitability.
By Ben Samuel, VP EMEA, Nielsen Marketing Effectiveness