Using Data and Measurement to Market in an Economic Downturn
This is a guest blog post from Kirsten Haitz, a transformative strategy and advanced analytics leader focused on improving the customer journey and accelerating digital transformations for Fortune 500 companies. She developed best-in-class customer experience and personalization solutions as well as data strategies and sophisticated measurement plans that drove $1.5B in shareholder value for Walmart, Williams Sonoma, Gap, Levi Strauss, and PWC.
Like consumers, retailers have been hit hard by the pandemic. As someone who’s led strategy and analytics for Fortune 500 retailers for 20 years, I’ve never seen anything like the devastating impact that COVID-19 is having on our industry. We’re all in crisis mode, but if there’s one thing I would say to brand and retail marketers who are contemplating a pause in their marketing during this unprecedented time: don’t.
The most successful advertisers continue to keep a stake in the game despite the economic downturn even if they reduce investment. What sets them apart? They invest in data and measurement tools that give them a holistic view of their customers to ensure they’re taking the most efficient approaches to shift strategy to align with evolving customer needs.
I know it’s tough to protect a marketing budget during a downturn, but eliminating it can cost more in the long run. There is plenty of data to back up the stay-in-the-game approach. For example, an American Business Press study found companies that maintained advertising during the 1974 recession and the year following had better sales during the recession and for two years afterward compared to companies that cut ad budgets.
From Beauty to Hardware: Adapt Messaging and Content to Evolving Customer Behaviors
My own quarantine commerce experience with some beauty brands has been as lackluster as my current skin tone, squandering an opportunity to connect with me when no brand can afford to. Please don’t try to sell me the new Spring color palette! The season will be over before I can be within six feet of anyone who can appreciate my honey peach plumping lip gloss or wild blossom blush!
Instead, help me adjust to the new normal – working from home. What I need is makeup tips for video conferencing so that I don’t look so washed out. Recommend some relaxing bath oils and spa products to help me de-stress. Understand how your customer’s needs are changing and adapt your content.
In contrast, take a look at The Home Depot. The retailer is still advertising on the airwaves and online, recognizing opportunities to keep top-of-mind for consumers. You can bet the company is basing decisions about how to do that by leveraging data and measurement to understand how customer behavior is changing.
For example, one of their primary campaigns in April assures customers, “We are here to help.” They highlighted how they’re responding to customer behavior and needs by closing stores at 6pm to restock and clean, extending return policies, promoting social distancing, and offering curbside pickup. In a simple ad message, they addressed all my top concerns in seconds, strengthening my trust, brand affinity and customer lifetime value.
Harvard Business School researchers wanted to understand new customer segments that emerged during the Great Recession of 2008. So, they looked at how customer behavior and psychology changed for four core audience segments, each defined by a different attitude: Slam on the Brakes, Patient but Pained, Comfortably Well-Off and Live for Today.
In order to help brands tailor their tactics, they analyzed how their behavior changed in a stable market versus a mixed one or a declining market. They found, “In past downturns, consumer goods companies that were able to increase share of voice by maintaining or increasing their advertising spending captured market share from weaker rivals.”
One important way for marketers to assess evolving consumer behavior to efficiently refocus marketing investments is to reevaluate customer propensity.
More Engaged Audiences, Lower Costs, More Opportunity
As the pandemic impacts the types of products and services consumers need, their media consumption is changing. In the current COVID-19 pandemic, Kantar found that customers hunkered down at home have increased web browsing by 70 percent, TV watching by 63 percent, and social media usage by 61 percent.
I’m an eternal optimist. To me, what that shows is people are engaging with media in a different way, and available more than ever to consider brand messages. I see this as an opportunity to increase brand awareness and market share.
Another silver lining? Less clutter. The economic downturn prevents a lot of brands from being in the market, which removes clutter and reduces the noise between a brand and its customers. This reduced static creates opportunity for brands to increase awareness and potentially gain market share as customers change their perceptions.
Plus, as other advertisers step back, the cost of media is getting cheaper. According to a new report from Social Bakers, cost-per-click and CPM rates are down. In fact, their recent research shows CPM rates in mid-March were less than half of the previous seven-month high in November.
That’s an opportunity for retailers to stretch their marketing dollars further. Data and measurement tools can help them quickly identify cost-saving opportunities across marketing channels and build them into their scenario planning.
The Right Tools to Adjust and Plan
So how can you do more with less? Retailers should leverage data and measurement tools to intelligently inform shifts in their marketing strategies and maximize the return on every precious marketing dollar.
Marketing mix models will need to be recalibrated to account for the dramatic changes in historical trends and signals affecting sales during this time. The social and economic impacts of COVID-19 are unprecedented and unpredictable, so adjusting these models is challenging but critical. That said, retailers can leverage marketing mix models to help with strategic planning and scenario modeling of investment levels and mix to help predict when and how fast we will return to “normal.”
The benefit of dynamic multi-touch attribution models (MTA) is that they constantly refresh and re-estimate the impact of marketing on a weekly basis. This makes them both reliable and agile for swift and granular marketing investment decisions.
Retailers can also immediately leverage the underlying customer journey data that feeds multi-touch attribution models to provide deep, rich insights into changes in customer behavior. Those who have already consolidated raw offline and online event-level data into a holistic platform will have an advantage over the competition.
Knowing your customers through a single, unified and persistent customer identity platform will also help marketers stay at the head of the pack. In 2008, marketers were unable to view marketing effectiveness with a consistent view of the customer. Today, retailers can leverage MTA to connect and optimize campaigns at a more granular level across disparate touchpoints. This is critical for in-flight optimization which a market mix model cannot address.
Combined, these two capabilities enable forward-thinking brands to analyze their customer behavior while the competition scrambles to integrate and normalize their data. Those who have not made this investment should consider prioritizing this in their roadmap coming out of the recession.
There is no doubt this global pandemic will change the reality for retailers going forward. Brands that invest in integrating a myriad of touchpoints along with a unified view of the customer will be able to act on richer intelligence, taking advantage of opportunities faster than the competition.