Commerce's New Connections

Commerce’s New Connections Leveraging Social Networking and The Internet of Things to Drive Personalization and Engagement

Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL

Competition for Consumer Attention Continues to

Grow…


500/Day 5,000/Day

Image Courtesy: Wikipedia Image Courtesy: Wikipedia


30,000 marketing messages per day

Today consumers encounter almost

-Yankelovich Consumer Research

Image Courtesy: Wikipedia

Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL

Spray & Pray Marketing

Hence the Fate of Most Marketing Messages…

1 – Silverpop e-Mail Marketing Benchmarks Study

2 – Clickz

83% Retail e-Mail Open Rate1

Unopened…

One-to-One Personalization





2 – Clickz

97% Retail e-Mail Click-Through Rate1

Ignored…






2 – Clickz

66% "unsubscribed from e-mail

that I had opted into because it wasn't relevant”2

or Worse.



And Meaningful Loyalty Remains Elusive

Source: – Colloquy

$48 Billion loyalty rewards distributed annually

36% Effective in earning repeat shopping visits

$32B essentially

wasted


So…What’s Missing?

PERSONALIZATION


59% believe personalized offers have a

noticeable influence on their spend - Infosys



40% buy more from retailers that personalize the shopping experience consistently across all channels - eTailing Group


78% are more likely to be repeat customers of retailers with

targeted, personalized offers

- Infosys


Retailers See That Personalization Can Pay Big

Potential Value of New Marketing Opportunities

Better Targeting via More

Detailed Customer Preferences

Real-time Personalized Offers

58%

50%

39%

47%

Highly Valuable Somewhat Valuable Source: Retail Systems Research

97% find value in both

improved targeting and

personalization


75% of Netflix views come from personalized recommendations --McKinsey & Co


Image Courtesy: Aurelijus Valeiša

35% of purchases on Amazon are the result of personal recommendations --McKinsey & Co


Loyalty Program Data

Acxiom Data

Purchases

Website Clickstream

Abandoned Shopping Carts

Service Requests

Returns

e-Mail Opens, Clicks

The Good News? Marketers Have More CRM Data than Ever Before



Acxiom Data

Purchases

Website Clickstream

Abandoned Shopping Carts

Service Requests

Returns


The Problem? More CRM Data Has Not Led to More Insight

27% strongly agree that their

company knows who their best customers are

Only

4% strongly agree that they are proficient at target

marketing across channels

Only

?

Source: Retail Systems Research


Traditional CRM Segments Added Value in their Day

Image Courtesy: XDesktopWallpapers.com

Donald F. Draper Creative Director

Sterling Cooper Draper Pryce 1271 Sixth Avenue New York, New York 10000 Klondike 5-5356


Traditional CRM Segments Added Value Even 5 Years Ago

Image Courtesy: Alpha Coders

Geographic • Demographic • Lifestyle • Purchase Behavior


However, Traditional Segments Are No Longer Enough

71% of leading retailers indicate that fragmenting customer segments make it harder to reach their customers Source: Retail Systems Research

They Tell Us Whom/Where to Target, But Three Key Questions Remain Unanswered…


What Motivates Them?


1



How Do We Engage Them? 2


Image Courtesy: Charles Starrett

What Do They Want?

“Any customer can have a car painted any color that he wants so long as it is black”

Self-Fulfilling Assortments

3


The Balance of Power has Shifted


Retail, Upside Down

“Sell What We Have” Has Become…


Retail, Upside Down

Sell What We Have “Sell What They Want”


Image Courtesy: Gabriel Saldana

Strategic Actions by Best-in-Class Retailers

Product strategies based on deeper customer segmentation

Coordinate product placement with customer behavior

Establish quantifiable methodologies for measuring customer activity

Increase online ad relevance with search criteria

36%

29%

24%

24%

Source: Aberdeen Group

Top


Linking Assortments and Offers to Customer Data is Mandatory

Analysts All Agree…

Image Courtesy: Rick Harris

The best way retailers can deliver a unique, exceptional shopping experience is to personalize brand

interactions to individual shoppers and groups that share similar preferences and/or demands.

“ ”


CONNECTIONS hold the key to customer relevance

PEOPLE MACHINES


Degrees of Separation

1.9B PEOPLE

Source: We Are Social

4 Social

140B CONNECTIONS

Source: Facebook


Private traits and attributes are predictable from digital records of human behaviour

Going Beyond Likes


Going Beyond Likes

The Cambridge Study Revealed that People Who Like Onion Rings have Above Average Intelligence…


Going Beyond Likes

…and that People Who Like The “Sliding on Floors with Socks” Facebook Page Typically Do Not Use Drugs


Image Courtesy: picstopin

Many People Like Alcohol (and boy do we talk about it on social media!)

But Few People ‘Alcohol’

Discovering Passions Hiding in Plain Sight


The $64K Question

How Do We Monetize These Insights?


Kraft Dips into Data to Uncover Advocates



BEFORE the Shortage • CRM-Driven Consumer Analysis

• Occasional Usage (1-3x/year)

• Slow Growth Product

• Being Milked for Profits

AFTER the Shortage • Added Social Data to CRM Analysis

• Heavy Usage Among Advocates

• 10% Buyers = 40% Sales, 50% Profits

• Lots of Growth Headroom

• New Marketing Approach

Source: Advertising Age

Sales Share Ad Efficiency


Walmart Labs: Social Sells More Stuff

Semantic analysis of a huge data store of real-time social

media streams to inform marketing and commerce

The Social Genome Project


FRIENDS

MENTIONS

FAN PAGES

PROFILES

EVENTS

CRM

Worth Its Salt for Walmart?

OMG! I love salt!!!!

02:12 PM • May 05, 2010

@Natasha95

----

----

----

- C

ON

TE

XT

---

----

----

-


Walmart.com searches informed by

the Social Genome see

10-15% higher

conversion rates

Image Courtesy: HDWpapers.com



Acxiom Data

Purchases

Website Clickstream

Abandoned Baskets

Service Requests

Returns


Consensus: Social Insights Lead to More Targeted Segments

Loves J.K Rowling Novels Guilty Pleasure: Downton Abbey

Practices Yoga Drives a Prius

Dodger Fan Climbs Mountains

Sagittarius Vegetarian

52% of marketers credit social data

with helping them identify new business opportunities

46% indicate social analytics help

define customer personas and market in ways that resonate

Source: eConsultancy 2013 Source: eConsultancy 2013

?


The Next Frontier in Personalization?


The Rise of the Machines


The Internet

of Things “Equipping all objects

in the world with minuscule identifying devices or machine-readable identifiers”


1000 devices connected to

the internet in 1984

,

Image Courtesy: NXE Wallpapers

Source: Cisco


Image Courtesy: MovieWallpapers.com

12B devices connected to the internet today Source: Cisco


50B devices connected to the internet in 2020 Source: Cisco


The Connected Home

By 2022 the average household with two

teenage kids will own

Internet connected devices Source: Reuters 50


220M Smart connected cars will be sold by 2020 --GSMA

The Connected Auto


The Connected Human

Fitness Activity Trackers grew

in 2013 and analysts expect

in 2014

Source: Canalys 300% 9M


zettabytes Source: Tibco

2.8

Imagine the Possibilities


connections in our daily lives

With the growing number of

we will all become more in tune

with our data and expect more relevance

from retailers and brands


Retailers and Brands Must Be Prepared to Complete The Trust Equation

Personal Data + Respect

Trust = Tailored Offers, Deals & Interactions

Thank You

Education

Commerce's New Connections