Everyone has their own theory about how a small online bookstore quickly became the preeminent force in retail, capturing nearly half of all U.S. e-commerce sales and almost 5% of the total U.S. retail market.
This bookstore’s vast network of third-party sellers has certainly helped, as has its growing range of products and services—from consumer electronics to snack foods—and the soaring popularity of its loyalty program.
But, more than anything else, this bookstore has been able to achieve dominance by being the fastest, most effective user of customer data to improve the shopping experience. Its trailblazing use of data activation is the stuff of dreams for marketing textbook publishers.
It likely goes without saying that this bookstore is Amazon. And it should stand to reason that other brands would be wise to follow in its footsteps.
More Data, More Possibilities
In recent years there has been a massive explosion of accessible data—spurred by mobile, social, and media trends—and a great uptake in data management technologies, from enterprise data warehouses, to customer relationship management systems, to customer data platforms, to data management platforms. And these are just tools around customer data.
As a result, many businesses are now sitting on mountains of data, which has been collected from disparate sources and (hopefully) carefully collated. The next step is data activation, which is all about moving customer data from separate silos and connecting it to other data (and systems) in order to inform and drive bold business decisions.
It’s a simple principle, but it takes lateral thinking to execute effectively. In its early days, only the most imaginative marketers were deploying data activation to its full benefit—and to the benefit of their customers. In fact, from media buying, to dynamic ads, to content personalization, and to many other forms, data activation is fast becoming the calling card of marketers who understand how to create compelling user experiences by anticipating rapidly shifting customer expectations.
Brands That Activate Data To Unlock Growth
So what does data activation look like in practice? Backpack, travel, and accessory retailer Vera Bradley is a classic example. The retailer delves into past shopping behaviors to ensure customers are presented with the most relevant messaging via email, direct mail, and paid media. This kind of joined-up thinking was previously impossible in the days of siloed data and parallel channels, but it’s paying dividends now as the Vera Bradley customer experience evolves to become much more efficient, compelling, and intuitive.
Similarly, direct-to-consumer homeware brand Parachute is activating a diverse dataset on its existing customers to create and target Instagram ads to lookalike audiences. In other words, it is leveraging insights into its current customers to more effectively find, address, and convert new customers—an approach that has so far driven a 3.7x return on ad spend.
Data activation is also an incredibly versatile practice, lending itself to business planning as well as marketing communications. Online personal styling service Stitch Fix uses purchase data, user feedback, and algorithms to not only personalize the selections in each customer's fashion "fix," but also inform its suppliers about the kind of styles it expects to be in high demand.
Dollar General, meanwhile, is prospering even as other retailers fold in the face of online competition. In fact, it plans to open 975 new U.S. stores in 2019—a bold move that can be at least partially attributed to Dollar General's activation of location analytics. The business understands where its target customers live and work, as well as the kind of products and services it expects from region to region. This understanding is powering store expansion efforts and informing service enhancements, such as its partnership with FedEx for drop-off/pickup, especially in rural areas.
Is Data Activation Worth It?
Consumers have made it clear through their shifting purchase behaviors that they reward companies that personalize their experiences, make the shopping process easier and faster, and provide timely content that enhances their journey. On the business side, brands that use their data to efficiently acquire and strategically retain the right customers are set up to succeed in a fiercely competitive space.
It all sounds so simple, right? In theory it is, but data activation is not necessarily an easy or straightforward process. It takes the right tech stack, the right deployment, ongoing optimization, and—most important of all—the imagination to transform all that data into shrewd business decisions and better customer experiences. It’s an all-in-or-nothing type of endeavor, but the rewards are well worth the effort.