In the era of technological innovation, data is the currency, and every startup, challenger brand and legacy retailer needs it to provide better customer experiences and close more sales.
At Advertising Week New York 2019, data was at the forefront of almost every conversation, session and panel. As more brands see the apparent advantage DTC brands have through data collection and activation, they’re focusing more on putting the customer at the epicenter of every interaction.
Whether it was spoken about on stage or said between attendees while they sipped their drinks and waited for speakers, it was clear that data is everything to marketers today.
We’ve all seen how the technology landscape has substantially shifted in the past two decades—and its enormous effect on the customer experience. The steady incline of innovation has been paramount to successfully build authentic 1:You relationships at scale. Putting the customer first is correct—but to do that at scale you need to know everything about each customer.
DTC brands like Glossier have excelled in this regard. Ali Weiss, SVP of marketing at the beauty power brand, said during a panel discussion, “Technology enables us to scale one-to-one personalization,” noting that every channel is important to holistically match customer touchpoints.
“Data and technology fuel that authentic connection,” she added. “You can build authentic one-to-one relationships at scale if you’re building the right tools and experiences to believe that.”
Ali Weiss SVP Marketing, Glossier and Maureen Sullivan COO, Rent the Runway, chat about how they connect with consumers during an Advertising Week New York panel, “New rules for a consumer-led world.”
And their approach is working.
Glossier often sees their brand and products passed up generationally—younger generations share the brand with their parents and grandparents. This is unique in the beauty industry, as beauty products and brands are traditionally passed down from mother to daughter as opposed to going the other way. The brand connection to Glossier is strong, and it shows in how their customers choose to share it.
In another panel session on personalization, Oded Benyo, president of Epsilon-Conversant, echoed a similar sentiment. “You have to have great data to even be able to talk about personalization, but then you have to be able to activate it too,” he said.
Data is important, but the activation channels and how it’s used are equally important.
In the data world, direct to consumer (DTC) brands are winning because they place the customer in the center, creating data and feedback loops. The loop fuels the entire machine, allowing the DTC brand to adjust the product and offering based on customer feedback.
This was a catalyst for Rent the Runway. In a panel session, Maureen Sullivan, COO of the high-end clothing rental company, noted how transformative customer reviews have been for getting people to try their service, which was totally new for women when they started out.
They launched reviews of individual clothing items around 2013, which was a controversial topic at the time because designer brands don’t typically have reviews of their clothing (if they sell through their website at all).
Since then, reviews have been the #1 driver of conversion since real women want to hear from other women on what fits—and what doesn’t live up to the expectation.
“It set us back with the brand and designer community, but our CEO believed that was the experience that would matter to our community,” Maureen stated. And she noted that now, the designer community is benefiting from the reviews and producing certain items specifically for Rent the Runway.
Glossier’s Weiss also noted the importance of customer feedback to influence the brand and product. She talked about a feedback loop from the brand to the product to the experience, which pulls from digital, offline and product-based experiences. This, in turn, creates data to influence brand changes, then product updates, then more experiential information. “The voices of the customers are so much louder than the voice of the brand could be,” she said.
To build on that, Stacey Hawes, data practice president at Epsilon-Conversant, noted that understanding who your customers are is very much about understanding each individual. “It’s relevancy and personalization, but it’s really about emotion,” she said. “You can’t figure that out without the right data at the core to understand who they are.”
DTC brands have been able to build that data through community, experience and feedback with their customers, creating a library of interactions and information that legacy brands simply don’t have. (Which brings us to the next point...)
The vastness of the data landscape illustrates how fast it’s susceptible to change. Brands just don’t have access to the same data that they did in the past; furthermore, many legacy CPG brands didn’t move fast enough to use the data efficiently. Where CPG brands have failed, DTC brands stepped in with progressive strategies that put the customers in the center, as we saw earlier.
Brian Andersen, the cofounder of LUMA Partners, highlighted the data decline of CPG brands through market changes including programmatic becoming the vast majority of advertising today, time spent on mobile devices outside of cookie-based environments (i.e. apps) and increased privacy regulations restricting the collection and use of data.
“The most impacted is the third-party data ecosystem,” he said. “With the constriction of the third-party environment, making sure you can collect and use your own first-party data is critically important.”
And this has not been an area where CPG brands traditionally excel. Without first-party, or even purchase-level third party data, they’re getting left behind.
Amy Lanzi, EVP and commerce practice lead with Publicis Media, said, “CPG brands are realizing they really need to change their marketing strategies to be able to solve for that.”
Furthermore, the panel noted that CPG brands are large organizations that don’t easily shift direction. DTC brands have agile, nimble organizational structures that give them room to breathe, test and adjust in ways that many CPG brands aren’t set up for today.
DTC brands are notorious for driving acquisition through social and search, but with increased competition and privacy concerns, walled gardens aren’t a blue ocean of opportunity anymore for DTC and legacy brands.
Arthur Sadoun, CEO of Publicis Groupe, cautioned against relying too heavily on walled gardens for marketing. “The walled gardens can help deliver fast personalization at scale, but if you don’t start to build your own ID, you won’t be able to thrive in the future,” he said in conversation with Suzanne Vranica of The Wall Street Journal. Brands need to build their own identity that spans across multiple channels and infuse it with third-party attributes to truly understand each individual.
Susan Pierson, the founder of Margaux, said their brand allocates most of their spend to walled gardens because there’s low-hanging fruit in those demographics. But she recognized that they can’t use social forever as their CPA will go up into 2020.
In a panel with DTC brands, Bobby Ghoshal from Candid noted that marketing on Facebook feels like paying a monthly tax to the “troll under the bridge.” He added that “it all sucks, and you see it in our CPA—it’s a black box.”
As these experienced marketers can attest to, building a self-perpetuating machine that loops customer data back to product development isn’t easy.
Take a note from DTC brands, your customers are your biggest assets. They’re able to provide genuine product feedback for you in real-time and that data can then be leveraged to understand who they are, their emotions and their thought processes.
And at the end of the day, good customer data is the cornerstone of marketing today. Your data needs to not only fuel every part of your marketing efforts, it needs to be the foundation of your brand.