Blog

Contributor: Andy Stockwell, RedEye Commercial Director

Stockwell: the success of the creators of digital retail
not to underestimate

The furious bidding wars for ownership of Topshop and Debenhams have made headlines in the past few weeks … but another traditional retail story has emerged as well. That was the news that two of Britain’s greatest pioneers of online sales, 15-year-old online gift retailer Notonthehighstreet and 21-year-old greeting card e-tailer Moonpig, launched their own takeover and flotation news with forecasts of £ 150m and Have announced £ 400 million each. It’s a two-half story showing how early investment in innovation, technology, and data can future-proof retail businesses.

With the pandemic continuing to drive online shopping and the legacies of some of the UK’s top stalwarts pending, the continued success of digital retailers like Moonpig, Notonthehighstreet and Topshop’s new owner ASOS cannot be underestimated. And there are a multitude of actionable lessons brands and retail marketers can learn from their approaches to help address the new marketing challenges retailers will face in 2021 and beyond.

Our own survey of 200 UK marketers tasked with uncovering the status of their 2020 marketing budget allocations and spending plans for this year has given us compelling evidence that the retail digital revolution is not just here, it is crucial that Joining the Revolution No Longer An option for businesses looking to thrive in the ecommerce landscape of 2021. In fact, 65% of the companies we spoke to said they would invest more in digital media this year. Retail companies say they will invest 17% more in marketing technology and 11% more in content marketing. Based on our research, this widespread intention to invest more in improving digital skills appears to be the result of a now pressing pandemic business challenge for retailers in all sectors – customer loyalty.

Solve the puzzle of customer loyalty

With Moonpig and Notonthehighstreet’s barnstorming achievements and the number of digital brands seeing record breaking new customers in 2020, you may be forgiven for this trend to continue – at least for the digital frontrunners. However, our survey shows that customer loyalty worries rose 31% from 2020 to 2021. This makes customer retention the single most important challenge businesses lose sleep on. This statistic points to the fact that retailers are in a race to retain the new found customers they’ve won through multiple bans – usually buyers who may look slightly different from their existing customer base. The undeniable truth is that in the current climate, your customers are literally a click away from your competitors. As more people learn and get used to new ways to digitally interact with brands, companies need to improve their loyalty strategies as customers don’t simply revert to pre-pandemic behaviors.

The most effective way to do this is to take a customer-centric marketing approach that ensures that both new and existing customers are accurately segmented based on their recent buying and browsing behavior. This data is used to send relevant communications based on the stage they are at in the customer journey. This is not limited to just promoting new products and offers. Notonthehighstreet gave their customers the opportunity to unsubscribe from Mother’s Day emails last year as some customers may be having a difficult and emotional time. This thoughtful approach was so well received by so many customers that it will be back for Mother’s Day in 2021. The brand was tuned to the behavior of its customers in such a way that it could implement a well thought-out customer loyalty strategy to reduce high churn rates or lack of customer engagement for Mother’s Day communication. An approach that will undoubtedly satisfy current customers and win some new ones.

Connect behavioral data with customer choice

We have seen a massive increase in the visibility and use of marketing automation in businesses, and it is gratifying to see that the value of data-laden marketing automation is now understood and recognized by retailers. The rise in digital data means brands have access to more data than ever before, but it’s not about how much data you have. The point is to make sure that you are using this data effectively to deliver a better customer experience. Using AI and predictive analysis to connect customer data and choices was envisioned as the next stepping stone for customer retention, conversion and retention to further increase their lifetime value. Because of this, it’s encouraging to see 42% of our marketers are ahead of the curve and budgeting for technology so they can better understand their data this year.

One of the greatest benefits of using customer behavioral data is that it helps identify the frequency and flow of effective lifecycle communication to ensure that the right touchpoints are in place for a smoother customer experience.

It could be argued that the desire to offer more customer choice based on insights from customer behavioral data was one of the main drivers behind Asos’ acquisition of Topshop and Topman. At the time of the announcement, CEO Nick Beighton said, “The acquisition of these iconic UK brands is an extremely exciting moment for Asos and our customers and will help accelerate our multi-brand platform strategy.” He went on to say that the deal will be a driver the recent online growth of both brands (due to pandemic shop closures) made “perfect sense” for Asos at all levels. Judging from the reaction of some customers who claim they have not shopped at a physical Topshop / Topman store in years, Asos made a wise business decision by linking their customer data to a wider range of customers.

Build digital foundations to stand the test of time

Digital retail exploded in 2020 and is expected to continue into 2021. Brands therefore need to create the right technological foundations in order to survive in a digitally oriented world. Even brands that have traditionally been digital at their core must be prepared for continuous innovation to keep up with changing consumer behaviors and expectations. That thinking is so deeply embedded in the ethos of Notonthehighstreet that in August 2019, months before either of us heard of COVID-19, new CEO Claire Davenport stated that the top business priorities for the year ahead were “continuing in invest the tech platform and focus on gradually changing the partner and customer experience. “This approach may be a more difficult balancing act for brick and mortar players, but it’s not impossible, as Next demonstrates. Despite its legacy as a catalog retailer, the brand managed to pool its online business against all odds and became one of the unexpected winners of the tough Christmas 2020 trading period.

Digital brand transformations accelerated in 2020 due to the need, from the partnership between Deliveroo and Morrison to MAC’s virtual makeup assistants. However, they also highlighted the need for companies to invest more in improving their employees’ digital skills. A recent study by LinkedIn found that digital marketing is one of the fastest growing sectors for new jobs in the UK. The number of jobs hired for ecommerce features during the pandemic increased 143% and the number of freelance digital content jobs increased 118%. The role in social media and digital marketing also grew 52% in 2020. It is important for companies to consider the digital skills of their employees when investing in technologies and systems that support further business growth in a digital world.

Conclusion

For retail businesses planning to use this year’s marketing budget to increase their data and technology investments and solve the 2021 customer loyalty problem, there are obvious options for the cut such as: B. Events. The budget pivot could be a complete overhaul of legacy technology systems or a commitment to empower your workforce with more digital expertise. The most persistent lesson, however, is that flexibility and adaptability are core business attributes that all retailers must consider in order to cope with new virus varieties, legislative changes or changes in customer behavior while we wait for the as-yet undefined new normal ‘to emerge.