6 steps to predicting customer experience outcomes as digital transformation continues

With 2021 subject to many of the same influences of 2020, how can marketing teams begin to recognise – and predict – their new ‘normal’?

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In a world where brands rely on past data to predict future sales, and past behaviour to predict future demand, the pandemic-driven unpredictability of 2020 hit marketing teams like a digital tidal wave.

Suddenly, the buying patterns we thought of as ‘normal’ were upended. As the waves of social and economic disruption rushed over us, some brands found themselves riding high, swept along by newly emerging digital currents. Others struggled to stay afloat or latched onto lifelines within the chaos.

For brands in every sector, 2020 resulted in the “loss of predictability”, according to Adobe’s 2021 Digital Trends Report. “Customers of all kinds were driven online at a rate that amounted to a jump of five to ten years in projected adoption.”

In the process, close to one in two consumer brands attracted cohorts of customers that were previously unknown to them, while almost two in three experienced unusual growth in digital or mobile visitors, according to the study.

“The world will eventually return to a recognisable normal, but that normal will be digital,” the report concluded.

With 2021 subject to many of the same influences as 2020, how can marketing teams begin to recognise – and predict – their new ‘normal’?

1. Ecommerce readiness plus omnichannel distribution

According to Adobe’s chief technology advisor Scott Rigby, a robust ecommerce offering, supported by a variety of distribution options, is essential for brands looking to forge a consistent experience for these new, digital customers.

“Looking at 2021, there’s nothing predictable about it,” Rigby says. “For established brands that haven’t already invested in digital accessibility of products and services across a multitude of channels, that’s where they need to be focused.

“It’s about building flexibility and resilience and rebuilding market share. We’re coming in and out of lockdown all the time – you need to have that flexibility.”

Australian retailer Petbarn found itself at the pointy end of the pandemic-driven ecommerce boom last year and needing to create new distribution channels. Previously the pet care company had generated 95 percent of sales in-store. It was one year into a digital transformation, using Magento as its ecommerce engine, when COVID-19 hit, in-store traffic dropped as lockdowns came into force, and customers went online.

“Our online sales tripled almost overnight, but we didn’t have the fulfillment network to handle the sudden increase in demand for deliveries,” says George Wahby, CEO of parent company Greencross.

Petbarn pivoted to use its 250 stores as fulfilment centres, offering same-day delivery to customers via a staged rollout – a strategy that now contributes a “significant” and rapidly growing share of online revenue.

2. Test-and-learn experimentation

Agility, informed by customer insight, is highly desirable among organisations looking to regain control and predictability in the current climate. According to Rigby, a combination of agile, test-and-learn experiments online informing offline channel strategies is proving to be an effective strategy for some.

But marketers need access to flexible content management systems, personalisation and targeting tools to enable them to deliver. And only one in five executives consider their organisation to be “very strong” when it comes to quickly gaining accurate insights, according to the 2021 Digital Trends report.

Experiments in digital channels are helping Petbarn gain valuable knowledge about how to motivate customers to spend more.

A test-and-learn approach using Adobe Target to optimise the online shopping experience with new digital customers led to a 43 percent increase in sales among first-time online shoppers, with learnings rolled out to in-store customers as well.

“Before Target, we always had theories and assumptions, but we never had proof,” says Wahby. “Now the numbers speak for themselves. We’re constantly trying new ideas and tracking the results – and we see every test as an opportunity to learn.”

3. Unified data management in the cloud

The omnichannel success some brands have found reflects a raft of pandemic-driven changes to customer behaviour. According to Adobe data, one in two say their existing customers exhibited new buying behaviours, including changes to average basket sizes and new product interests.

To quickly understand, satisfy and start to predict these new customer needs, organisations need to “break down internal silos and unite all departments to provide a consistent, high-quality experience,” argues customer experience consultant Blake Morgan.

“That comes from unifying data and using consistent technology across the entire organisation.”

Customer experience leaders – so-called because of their organisation’s longstanding commitment to strategic, experience-driven technology investments – are ahead of the curve. Two in three CX leaders now either exclusively use a cloud-based platform to unify their marketing data or a cloud-based platform in concert with other solutions, the 2021 Digital Trends report revealed. They are reaping the rewards.

South-East Asian footwear and lifestyle retail group Transmarco is among those brands benefitting from a unified approach to data management during the pandemic.

The group has launched a range of lifestyle products, face masks and other items to meet the changing needs of customers in Singapore, Malaysia and Indonesia during COVID-19.

An integrated view of data from its Microsoft ERP and Magento Commerce, its cloud-based omnichannel ecommerce platform, enabled staff to see real-time stock availability in stores and online, get a single view of orders across 800 distribution points, and improve personalisation and product recommendations.

As a result, the group saw transactions triple, basket size grow 30 percent, and conversion increase by 2.5 percent despite the pandemic.

4. Easing friction points in the new customer journey

The ability to map newly forged, often digital customer journeys, identify friction points. According to John Broome, CEO of the Australian Association of National Advertisers, an action based on customer insights at each point to improve conversion will be crucial to improving marketing performance and predictability in 2021.

CX leaders are twice as likely as other brands to have a good understanding of friction points, purchase drivers, customer mindset and retention, according to the 2021 Digital Trends report.

Fintech Hay is one example of an organisation that is collating data from unified, cloud-based technology across the customer experience, including its mobile app and website, to identify and improve friction points in the customer journey.

In one instance, Hay used Adobe Analytics to measure the onboarding funnel and identify areas for improvement, resulting in a 256 percent lift in conversions in just one week.

Broome says brands will also benefit from utilising the skills of holistic marketers, who have additional levers to pull when it comes to taking the right action to improve results.

“Marketers who understand brand proposition, insight generation, new product development, pricing and distribution, as well as communications, will be valuable in this process,” Broome says.

“It will require a reskilling, either of data analysts and digital marketing specialists or traditionally-trained marketers, to combine one skill set with the other to improve the customer experience,” he adds.

5. Ensemble modelling including real-time customer data

While marketing and sales forecasting models based on past customer behaviour may be less accurate in the current crisis, there are several ways organisations can build out new models to regain some of that predictability, according to data experts.

Options include looking at patterns of behaviour in other countries at similar points during their experience of the pandemic, as well as real-time customer data.

“When a pandemic hits, familiar past patterns become irrelevant, whereas analogous events may hold more predictive power,” argues Cesar Brea and colleagues from Bain & Co’s Advanced Analytics practice.

Bain recommends marketers should learn from hurricane forecasters and engage in ensemble modelling, which can then be fine-tuned with AB testing. One example for forecasting sales for a new product launched in the pandemic might include data from other products in the same family, moving annual sales, and similar-store performance.

“Ensemble modeling combines predictions from different models to suggest a point estimate, or a reasonable range, when the underlying data for any single model is unstable,” Bain suggests.

“Hurricane forecasters plot the paths predicted by several models together on a chart so that users get a good sense of the storm path’s central tendency. Sales through e-commerce channels, online search patterns, smartphone mobility data, and social-media sentiment analysis can all provide useful signals of consumer momentum.”

6. Focus on your most loyal customers

One unexpected impact of the pandemic was a noticeable fall in customer loyalty and retention rates, sparked by factors including supply chain issues, varying states of ecommerce readiness, and disrupted distribution paths.

Three in four consumers tried new brands, places to shop or methods of shopping during the pandemic, with product availability the number one reason consumers sought out new retailers or products, followed by better prices and promotions.

“Customers had to find brands they could engage with that were digitally ready,” Rigby says. “That’s an opportunity for new brands.”

For one in three brands, it also led to a drop in product or brand loyalty, according to the 2021 Digital Trends Report.

According to Michael Barnard, general manager of customer lifecycle management firm <u>Customology</u>, segmentation and personalisation are essential to maintaining loyalty during the pandemic, as well as trading out of it, particularly for sectors that have been shut down.

“Choose who you talk to and how you talk to them,” says Barnard. “Focus on the 20 percent that generates most of the revenue, because I would want them to come back as soon as I can start trading again.”

Ultimately, as markets emerge from pandemic-shaped behaviours, those organisations that can create opportunity amid the chaos by understanding and delivering a customer experience the new digital consumer wants will be best-placed to prosper.