In the face of challenging times for retailers, there’s little denying the pressure that CMOs face to prove their value. Yet our view is that there has never been a better time to be a retail CMO.
After all, rising expectations provide new consumer opportunities, new channels provide more occasions to engage and sell, new data provides more actionable and targeted insight, and new tools and capabilities provide endless possibilities to engage and scale marketing initiatives.
What’s clear now is the need for a new approach to reaching consumers wherever they may be.
New Game, New Approach
In an ever-changing environment, consumer relevance is the key competitive advantage, and it requires a new approach. We call it “Living Business.”
Living Business is about becoming even more relevant by responding to consumers in real time. It’s about creating hyper-personalized experiences at the moments that matter to consumers, on their conditions. And it’s about applying the unprecedented power of today’s explosion of digital technologies and data, both big and small.
Consumers expect brands to keep pace. No longer won over simply by a retailer’s ability to offer the right product at the right price, they also expect their brands to have a clearly defined purpose to garner their trust. In turn, CMOs have an imperative to ensure their brands are agile enough to compete.
So what does this look like in practice? What are the principal changes that need to take place?
1. From Product-Centric To Consumer-Centric
Highlight the value of a product or service to a customer in the moment. How? By embedding a brand purpose that strives to deliver a brand, product, or service aligned with a customer’s core values. In fact, recent Accenture research shows that consumers who score retailers higher on purpose spent 31% more than consumers who scored them lower.
Take CVS Pharmacy, the retail pharmacy of CVS Health. It is moving beyond a purely transactional retail model where customers fill prescriptions; instead, the company is focusing on helping their customers on their path to overall better health. In this way, customers share the company’s purpose. It also helps satisfy their desires to feel cared for and helps build upon the trusted relationship most customers have with their pharmacist.
2. From Segmentation To Hyper-Relevance
Gone are the days of straightforward marketing segmentation. In its place is a focus on creating relevant, engaging interactions and becoming part of a customer’s everyday life in a more meaningful way.
Organic beverage company Suja Juice did this as part of its #ItsTheJuice marketing campaign, conducting social listening to identify people who were having a bad day or feeling sick or tired, and then offering to brighten their day with a delivery of juice. Using data from hashtags–like #mondayblues and #lackofsleep–the team reached out to almost 400 people and shipped nearly 6,000 bottles of product.
3. From Post-Campaign Evaluation To Agile Optimization
For too long, marketing has focused on looking in the rearview mirror. Taking an agile approach promises to change this by focusing instead on prescriptive and predictive intelligence to experiment and optimize in real time.
In recent years, Starbucks has been harnessing this opportunity, combining predictive analytics with location data from its 90 million weekly transactions to send offers to customers who are near a Starbucks branch. The offers are based on what the data predicts they will want on a certain day and time.
4. From Fragmented Data To Integrated Technology
It may be a huge priority, but many CMOs are still struggling to orchestrate their data and technology with the clarity and access that’s required for today’s industry. Those who have control are in a stronger position to use a rapid sense-and-respond approach with customers.
In recent times, for example, we have seen luxury department store Nordstrom move to managing its business primarily through two brands, Nordstrom and Nordstrom Rack, rather than by channel. The company invested early in its omnichannel capabilities, integrating inventory across stores and online. Today it has more than 60 combinations in which merchandise is ordered, fulfilled, and delivered. Through these investments, Nordstrom has strengthened the foundation to better serve customers and gain market share.
Nordstrom also has made meaningful progress in meeting customers’ expectations around speed, convenience, and personalization. It offers a number of ways to serve them on their terms seamlessly across stores and online, including services such as buy online and pick up in store, reserve online and try in store, and Style Board, for which customers work with personal stylists. This has resulted in a 30% growth rate across several key business areas.
Another interesting example is the Nordstrom Local retail store concept launched in 2017. These locations aim to bring a smaller, more agile version of Nordstrom to its loyal customers. The crux of the idea came from the company’s understanding that its customers preferred to shop online but wanted to pick up their goods in person to ensure they were just right for them. Alongside a boutique store experience, it offers a range of complementary services, such as juice bars, nail salons, and seamstresses.
Conclusion: The New CMO
With seven in 10 CEOs in Accenture’s survey acknowledging that their products and services should be more meaningful and relevant to customers, now is the time to embrace a new approach to marketing.
The tools necessary for this scale of change are at the ready. The onus is on CMOs to break down operational siloes and move their brands into this new era of hyper-relevance and agility. Those who gain the most ground will have both a digital offering that enables them to compete and a clearly defined brand purpose to win–and retain–consumer trust for years to come.