The costs of digital visibility for retailers are soaring and competition is rife. This digital transformation is playing out against an economic backdrop marked by the highest inflation rates witnessed in the UK in four decades, coupled with a cost-of-living crisis, causing consumers to spend more judiciously. While the cost-of-living crisis may be improving, it will take time for consumers to feel the impact. Given that customers still crave support along their purchase journeys, marketing approaches must now be mindful and consumer-centric emphasizing consumer value and collaboration.
On top of it, Google and Apple are removing online identifiers that third parties use to target consumers online, meaning brands are required to look for new ways to reach their desired audience and develop meaningful connections. The simple truth is retail is a crowded market and the marketing strategies from the past won’t cut it anymore.
Brands are encouraged to think divergently, consider diversified brand and influencer partnerships, and stay updated with current trends to extract maximum value and return on investment. Despite the ongoing economic struggles, industry experts have offered up few clever hacks that can help businesses transform their marketing strategies and enhance customer experiences.
Hack 1: Give customers more to love through brand partnerships
Jim Rudall, head of revenue EMEA for Shopify, says in troubled times brands need to remember how they connected with customers in the first place. He argues: “The cost of acquisition and new customers is getting steadily more expensive, but you have this huge loyal customer base who fell in love with your brand to begin with, so how do you get them to engage with you in a more deep and meaningful way to reward their loyalty?” Rudall advises “doubling down on your story” to resonate with loyal customers and grow average order value and frequency or boost share of wallet in challenging times. Some companies have been teaming up to drive mutual benefits from a digital marketing perspective.
Last year, sports nutrition brand Myprotein utilised partner marketing to provide its customers with value-added purchase rewards. With over 8.6 million monthly visitors to its site, Myprotein wanted to enhance customer loyalty and monetise its online inventory by selling ad-space to non-competing retailers. It leveraged brand partnerships to offer exclusive retailer discounts to retain existing customers, while also incentivising new customers with unique rewards. They also gained a new revenue stream through referrals to the similarly-minded but not competitive brand, SimplyCook. Myprotein referred over 56,000 customers with a conversion rate of 26.39%. Meanwhile, 32% of Myprotein shoppers who selected the free trial at checkout were new customers, and the brand generated £150,000+ commission through the SimplyCook campaign.
Hack 2: Don’t underestimate the power of influence channels
It’s a given that retailers and brands need to spend their marketing budgets in the most productive channels. However, when consumer sentiment is low, it makes even more sense to double down on the areas offering the best performance.
Influencer and affiliate marketing channels continue to be successful for brands, while social media in general is where consumers spend their time. Influencer channels are effectively another shop window for retailers and brands. By building relationships with relevant influencers with significant followings, they can take their ‘stores’ directly to shoppers.
A perfect example of this is TikTok, which will have over 900 million users worldwide in 2024, according to market research group Insider Intelligence. That makes it the third-largest of the so-called ‘Big Five’ worldwide social networks comprising Facebook, Instagram, TikTok, Snapchat, and Twitter.
TikTok more than doubled its worldwide user base between 2019 and 2021 (291.4 million to 655.9 million), coinciding with the shift to primarily online communication in Covid-induced lockdowns. By 2025, TikTok is expected to be approaching one billion users. This makes it a fertile ground for brands looking to use influencers and content creators to help spread their respective messages.
Sally Minto, digital director at Revolution Beauty, says, “We’re one of the biggest beauty brands on TikTok. People are searching on TikTok now, you have to stop stressing so much about Google these days and start thinking about where the consumer is. This year is going to be more challenging around budgets so [in terms of marketing and shopping] it’s all about optimising that experience, using the tools you’ve got and trying to create more connected customer journeys across the platforms they are using.”
Hack 3: Emphasise ‘value’
Customers want brands to be empathetic to their financial situation, especially during an economic crisis and will be expecting deals as the year goes on. The IMRG, an e-tail trade association, 2022 report, ‘The Modern Consumer: how shoppers are behaving in a cost-of-living crisis’ found, people in the UK are changing the way they shop. They’re budgeting, seeking discounts, and considering an array of credit options. Even though consumers may be keenly focused on markdowns, brands need to emphasise what they stand for and what value they bring to the consumer, rather than embarking on discounting strategies alone.
James Roper, founder of IMRG, says: “Sales are sometimes good, but wall-to-wall sales making a lot of noise are not good for business – I want to see businesses focusing on quality and value.”
“[Customers] want a personalised, immersive experience,” says Amy Harman, Hotel Chocolat’s head of customer marketing. “If you just give them discounts they’ll just become deaf to it.”
For instance, intent.ly, the leading expert in optimising customer conversions for online retailers, made it easy to partner with its technology to reduce basket abandonment rates, improve conversions, and grow margins through intelligent, personalised prompts. The state-of-the-art technology allows advertisers to set this up on their sites in a matter of minutes.
As Gary Page, general manager at John Lewis Partnership, states, “As people become more cash strapped, they are going to be more careful about where they are spending their money.”
Hack 4: Leverage data to influence decisions
The best-performing retailers right now are making data-driven decisions in all aspects of their business.
“The magic word is data,” says Page. “It’s not just using data to understand what is happening across operations and customers, but taking the data and applying it in the right way so we can go on to make a positive change to customers and bring that value alive.”
For Hotel Chocolat, data deployment in marketing is fundamental to personalising its customer messaging. Harman says this customised messaging prompts a much stronger open and conversion rate compared to non-tailored communication.
“We are not batch and blast – it’s all about experience,” Harman explains. “That’s the ethos of the brand. When it comes to communications we do think about what data we know about the customer, what can we learn from them, what is it we want to say, and where we want to talk to them.”
As the adage goes, if you don’t or can’t measure marketing, you can’t manage it.
Hack 5: Outsource
Even in challenging economic times, retailers still target growth. However, with budgets hampered, they are tasked with doing the same or more only with fewer resources. As a way to offset costs or resources, leverage partners, especially those that can drive automation such as AI.
With the AI movement upon us, automation will continue to be an essential part of the online marketing mix. It streamlines processes and enables better use of available data to make informed decisions. APIs can be implemented to automate previously manual processes such as spreadsheet work and analysis.
Brendan Witcher, principal analyst at Forrester, says, “Automation will be the saviour for continued retail labour shortages. Ripple effects from the ‘Great Resignation’ will force retailers and brands to invest more heavily – and more strategically – in automation. Investments will automate functions required to run the business in corporate areas – for example, marketing, HR, analytics – and in the store.”
Meanwhile, a 2022 Gartner survey of chief marketing officers (CMOs) identified marketing data and analytics as a top capability gap. This was followed by customer understanding and experience management, and marketing technology. Indeed, 61% of CMOs reported their teams lack the capabilities required to deliver their strategy, suggesting a need for more strategic partnerships.
Ewan McIntyre, chief of research in the Gartner for Marketing Leaders practice, says marketing experienced “a historic surge in talent demand” last year.
“Prioritising the proper mix of resources should be a mission-critical priority for CMOs in order to attract and retain the capabilities they need to deliver against their CEO’s goals, such as focusing on brand and customers,” he remarks.
Hack 6: Stay the course
It may be tempting for retail and brand leaders to cut marketing spend amidst an economic downturn, yet it could be a strategic mistake.
“Crises are great – they always create opportunities, trigger innovation and growth,” says IMRG’s Roper. “In e-commerce, there is a suite of capabilities forever expanding with new things coming along.”
James Chandler, chief marketing officer at ad trade association IAB UK, says it is not just a case of simply carrying on marketing during economic slumps – all aspects of the discipline need to be considered and worked on.
“You still have to do top-of-the-funnel activity, even though it may seem hard to do it,” Chandler explains. “There’s plenty of research proving brands who manage to maintain spend in a recession come out stronger because everyone else in their category has turned it off.”
The Gartner CMO survey elicited some encouraging figures. Following record lows of 6.4% in 2021, budgets for CMOs as a percentage of company revenue climbed to 9.5% in 2022. Retail was up from 6.3% to 9.1%, but budgets for CMOs in consumer goods firms stagnated.
Moral of the story? Marketers should keep investing, even in fiscally fraught times because high-quality marketing efforts maintain customer connection and relevancy. This connection proves particularly fruitful when the economic conditions eventually improve. Stopping marketing efforts abruptly can backfire and allow competitors to seize the moment.
In 2024, retailers will face numerous challenges, but the right strategies can turn into winning plays. It’s clear strategic investment in marketing and prudent channel selection can make all the difference in reclaiming and expanding market shares.
Moreover, 2024 offers retail marketers an opportunity to learn and strategize from a different vantage point. It offers a chance to re-evaluate marketing strategies, identify weaknesses, and build on strengths.
Finding the right partnerships, measuring activity carefully, and crafting compelling and creative campaigns in growth channels should harbour encouraging returns on investment in challenging economic times.
