eTail West in Palm Springs, California, was back this year as an in-person event , and it was superb to see so many of retail’s leading marketers gathered once again. eTail was kind enough to invite Cardlytics to talk about how brands can use purchase data to achieve sales growth and inspire loyal customers, and which revenue plays should have our focus in 2022 and beyond.
For those of you who missed it, here’s a summary of the top insights I shared.
Standing strong amid disruption
The power of Cardlytics’ data is the reason I joined this company nearly three years ago after working at notable technology companies such as Google and Facebook. Through our partnership with top banks in the US and UK, the Cardlytics ad platform serves over 175 million consumers with cash-back offers, which enables us to leverage $3.7 trillion in annual spend data to create precise targeting strategies and performance metrics. From a longer point of view, digital advertising is embarking on an historic transformation thanks to third-party cookies going away and Apple’s app tracking policy – our targeting and insights rely on neither.
Because of such disruption, many brand marketers may feel as though they are at a crossroads, but there is good news, and plenty of it. Marketers can lean into real purchase data and eliminate the guesswork inherent in demographic and contextual data to find out what really moves the needle for both online and offline sales. More specifically, they are starting to develop ad investment strategies around incrementality, which measures sales that wouldn’t have occurred without a specific interaction.
Pressure-testing our assumptions
From talking regularly with Cardlytics advertisers, we know that there’s been a shift in marketing mindset. Yet, we didn’t want to assume anything and decided to pressure-test what we’ve been hearing. So, we surveyed roughly 100 marketing execs to understand their current priorities.
Here are the key findings:
An eyebrow-raising contradiction
Interestingly, 79% of marketers admit a lack of accurate data or analysis was their biggest problem. At the same time, nearly everyone (99%) believes they have it all figured out. It’s an eyebrow-raising contradiction.
More focus should be on loyalty
We were surprised that only 4% said their biggest growth opportunity was with infrequent or lapsed customers even though our platform insights challenge this notion. Studies show that repeat customers spend 67% more than new patrons, which also cost around 5X more to convert. The ROI related to customer loyalty cannot be underestimated and is a huge growth opportunity we see for brands that may be lacking in this area.
Old-school demographics don’t work well enough
Demographics, as an indicator of consumer spending patterns, are far from the most efficient targeting model. In fact, we learned that 47% of marketers believe they need to challenge long-held notions that demographics should steer their strategy. The idea that segments of hundreds or thousands of customers should all be thought of as virtually the same person seems to have run its course. One-to-one advertising is now advanced enough for marketers to zero in on different customers at an individual level.
Not all customers are worth the same investment
Using actual purchase data can guide marketers on the true loyalty of their customers. Take these two customer types, for example:
Does it make sense to target the “loyalist” with the same ad spend or cash-back offer as the “customer of many”? Of course not. Ultimately, marketers want to convert the “customer of many” into a “loyalist” with targeted advertising that draws intelligence from their shopping habits. In short, you should invest in the customers with the highest spend potential. The best indicator of this is how much they are spending in the category when they aren’t spending with you.
And, as our survey found, nearly 6 in 10 marketers (59%) lament the lack of competitor visibility due to not having the right data and set of tools. Their shopping habits, in other words, go beyond your brand, as do the indicators of their true value.
Allocate more spend where it has actual impact
Marketers need to allocate more spend toward generating loyalty and purchase data needs to be the source of that intelligence. Cardlytics partners with top financial institutions such as Chase, Bank of America and Wells Fargo to serve their customers relevant ads based on purchase history and location. This data allows marketers to not only accurately target customers but also reach customers who regularly shop with competitors, and then accurately measure the incremental impact of that campaign on growth and loyalty.
How should marketers keep the momentum building?
The answer to that question is to measure, improve and continuously repeat your process. Understanding a customer’s consideration set means knowing what it takes to win them over. And that means going beyond traditional attribution models—where isolated actions like click-throughs get too much credit for a consumer’s purchase decision—and embracing data-based incrementality analysis.
Test, test, test
To do all of that, marketers must have data to understand the impact of each channel. They should form test and control groups based on prior spend data—from category to amount to frequency—to ensure a clean test, which isolates the variable to measure marketing channel, creative, or messaging. While such testing can be a lot of work, it’s the difference between brands that grow their revenue and loyalty and those that are falling behind.
Cardlytics is here for brands that want to strengthen relationships with their most valuable customers and win new customers from competing brands. Take advantage of our free advertising opportunity report to learn how consumers spend with your brand versus competitors. Click here to get started.