Data-driven marketing & hybrid retail sales models

Simon, you are the founder and CEO of the digitalization agency BrandUp Factory and successfully support lifestyle and e-commerce clients in the online and offline environment.  What challenges do your customers face and how do you support them?

Basically, we are noticing that the competitive pressure in the digitalization environment is constantly increasing. The innovative power and speed with which new companies are positioning themselves in the digital environment means that holistic and data-driven strategies are needed to operate e-commerce successfully.

We pick up customers at different points in their journey. Some have already gained their own experience, while others are still more at home in the offline world and have not dealt much with e-commerce and online presence.  They face the challenge of growing their business in a highly competitive environment and developing an effective digitization strategy. This is where we help them. For example, we have worked with Katadyn (outdoor equipment provider) to develop their own B2C and also B2B store, including omnichannel marketing strategy, and are working together on their platform strategy to gain new share in the European and international market. Here and also with other customers, we benefit from a symbiosis of inventory planning and data-driven marketing. By knowing the inventory levels, we can target marketing measures even more precisely and combine them with e-mail marketing, for example.

What other challenges do you face?

Many companies face the challenge that they do not know their customers precisely. Or they manage their activities according to assumptions about the customers, but these are not backed up by data. Here, there is often a discrepancy between the assumption and the data showing who the customer actually is. By analyzing this carefully and changing the marketing measures accordingly, you can quickly achieve an impact here. This was the case with our client Elkline - a sustainable fashion provider in the outdoor sector. With our target group analysis, we were able to determine the customer lifetime value even more precisely. After our analysis, we first turned the Google Ads account inside out and made ad campaigns smarter. Because we look after customers holistically and have an all-round view of the data, we can also switch off specific channels altogether in order to use the budget profitably elsewhere. We can now also combine online store behavior with email marketing behavior and use the data for an effective marketing strategy.

Doesn't every company have corresponding customer data available by now?

Of course, many companies already work with CRM systems and use customer data. In the meantime, almost everything is technically possible in data-driven marketing. The extensive tool landscape allows one to work data-driven even without much prior knowledge. The challenges lie in the ideas and rules for implementing a data-driven digital strategy. In order to make sense of data, you first have to create a foundation and get the data clean - create rules. That is often the hardest step. From my experience in developing apps and creating customer contracts, I can say that data quality is often neglected. Item numbers differ from each other, product descriptions are insufficiently formulated or the content from free text fields cannot be utilized due to a lack of auto-completion. It becomes particularly critical when several systems have to be combined, for example, subcontractors in insurance companies that have to grow together.

Only when companies have clean data and systems that talk to each other can data-driven measures be implemented with real leverage.

For example, we created smarter ad campaigns for our customer Elkine by using weather data to drive ads for rain jackets. In regions where rain is forecast, budgets are automatically increased. This would not be feasible manually and only works with data automation.

From data cleansing, you also get an insight about your customers. This helps to determine customer lifetime value. If you don't use these insights, you miss real opportunities. In the case of our customer Klean Kanteen, for example, the brand actually saw itself more as a lifestyle brand and staged itself accordingly. However, a look at the data - in this case in the form of customer photos of the products - showed a hard core of so-called preppers holding bottles over fire! Only if I know the customers and where they are in relation to my own brand, dynamic segmentations and churn risk predictions are possible. So we don't waste money with misplaced ads, but pick up customers exactly where they are.

Keyword autocomplete: Does it help to increase data quality?

It does not only help with data quality. The more customers have to do, the more likely they are to bounce. Customers are becoming more and more comfortable and shortcuts like Paypal Express and Google Pay help to lead them to purchase. If we look at the prime example of Amazon, it's pretty clear that customers buy there for convenience. Even though the online store isn't actually very nice, millions of shoppers get involved with it. The purchase is completed so quickly that Amazon customers don't even have a chance to think twice. If you want to have a chance of surviving in the e-commerce environment, you should also make buying as convenient as possible for your customers.

How are you or your customers experiencing the shift from local retail to e-commerce and how should brands position themselves?

We know both sides, as we specialize in e-commerce and at the same time have a lot of contact with brick-and-mortar retail. We draw a lot of insights from the B2C stores we operate, but our customer Elkline also has its own brick-and-mortar stores. 

Of course, we experience that e-commerce has increased strongly. Especially after the lockdowns, online demand for Klean Kanteen and Katadyn rose sharply; ultimately, you can also see the trend in the full paper containers on the streets. Stationary retail, on the other hand, has suffered extremely. Retail is shifting more to e-commerce, which can also be seen in the growing search queries. Nevertheless, an online store is not always the solution, as competitive pressure is also increasing. The gold-rush atmosphere we experienced just a few years ago is definitely over now. In the meantime, it is possible to set up an e-commerce store without any prior knowledge, which also increases the pressure in the marketing mix and you can no longer just blindly spend ad budgets. So we also advise our customers to question exactly which channels to use. We also see a great opportunity in the symbiosis of online and offline retail and do not see the two sales channels in competition with each other. Offline even benefits from online.

To what extent can local retail benefit from online stores?

We have completely different key figures and volumes in online sales than in stationary retail. So insights from big data can be used for small stores. We use these insights to recommend products to retailers that they should put in the store, based on 10.000 pieces of data obtained from the online store. 

In addition, smaller retailers benefit from larger ones nearby, this is true online and offline. When larger stores play out advertising, it benefits smaller stores nearby. The better products and brands are presented online on platforms, the greater the chance that customers will come to the store because they are interested in the product and want to test or touch it. The customer journey therefore includes online and offline touchpoints.

What then is the customer journey like for hybrid brands as opposed to e-commerce companies?

In a hybrid sales model, there are other options than in pure e-commerce: You can think differently about the entire customer journey. For example, if sizes are not available in stores, voucher codes could be issued for the online store. In an ideal world, the retailer would then also receive stationary commissions, thus picking up even the last digital grouch in stationary retail. 

One could even go so far as to have the products only be displayed in the store for "experience" and then be shipped online. A sensible way of linking online and offline is also online advertising for regional offers, for which local stores often have no budget at all.

During the first lockdown, for example, we launched the "Support your local Dealer" campaign for Elkline, in which we allocated online sales to individual stores via codes and thus also supported stationary retail with e-commerce.

It sounds like you see the future more in the hybrid model. Where do you think the retail industry is headed?

I think the future of retail lies in a combination of online and offline, for example in the hybrid sales model. When you think about mobility concepts of the future, there is also the question of how people will shop in car-free city centers, for example, if the shopping bags are no longer loaded into the car. In my opinion, the hybrid model makes sense in the context of changing inner cities. Stationary retail offers other opportunities to experience the value of products. That's not possible online today - not even in the emerging metaverse. 

As long as we are not able to experience products haptically online, the position of stationary retail will retain its relevance - provided it is rethought. Perhaps in the future, products will also be delivered to our homes by drones.

What should brands do now to position themselves well for the future?

Brands should ask themselves now where they want to be in five to ten years. You have to get involved in hybrid models and take care of your online business. It's important to take partners with you, for example B2B stores that give you recommendations as a retailer. I also recommend building a community around your own brand and setting up a newsletter for retailers, for example, with product recommendations based on the evaluations of the online stores. Why should brick-and-mortar retail and e-commerce also work against each other! 

And above all, despite the technological possibilities in data-driven marketing, the brand should never be neglected. For example, we deliberately refrain from targeting shopping cart abandoners for Elkline, even though it would be a good performance lever. But it just doesn't fit the brand. The prerequisite for sustainable success is to stay close to the brand. Ultimately, the brand and its values are what differentiate you from other providers in the eyes of the customer. If you no longer live up to that, you become interchangeable.

For more information on solutions for a hybrid sales model, click here:

Google Maps solutions for retail and e-commerce