A news headline from June 2015 reads: “Why investors can’t stop investing in predictive analytics.” This makes me scratch my head, because in my view, most predictive platforms promise negligible increases in conversion. I wonder: Why not just ask the non-buying shopper what she wants to buy next and why?
But the tide is turning, and some retailers who profess to be “customer-centric” realize that expensive predictive platforms using past-history browse, CRM, purchase and other data sets, while improving, are still merely ‘guesses’ at future purchase intent. And, even worse, they often irritate shoppers when un-requested retargeting emails and ads plead for a second chance to sell them something.
The solution is simple: Capture future purchase intent by letting shoppers set their own criteria for future marketing communications.
To do this, retailers are adding permission-based Intelligent Alerting at various levels of their sites: Product, Category, Wish Lists, Saved-Searches and other. The user experience can be as simple as a “Get Alerts” buttons next to Add to Cart.” And the options for email and SMS alerts can offer opt-ins for price changes, new items, new reviews and back-in-stock (even for size and color at apparel sites).
Amazon realizes the potential in alerting on back-in-stock and recently added back-in-stock alerting. IHL reported last month that out-of-stocks represent $634 billion in lost revenues in the “Ghost Economy” of the retail industry. The same report reports that overstocks represent a $492 billion hit to the top line.
In looking at this space through my consulting work, I recently reviewed results metrics based on 65 million matches and email alerts via shopper-specified intentions at leading sites in home improvement and decor, apparel, sporting goods, and other categories. Sites included World Market and Neiman Marcus Last Call. The data found that opt-in email alerts have open rates of up to 60% and alert-to-conversion rates of up to 20%. Some retailers report capturing up to $1 million a day in future purchase intent. And, while some retailers initially may be concerned about a drop in conversions when alerting is offered, the data saw almost zero lost sales at these sites.
In addition to customer-centricity, other reasons retailers are adding intelligent alerting is because of the rise in ad-blocking, the addition of ‘Buy’ buttons at Google and social networks, and declining email opt-ins for generic email blasts. With Apple’s increased support of ad blocking and recent research showing a rapid increase in desktop and mobile users interested in ad-blocking, retargeting via display advertising is being choked at the browser or app level. The ‘Buy’ buttons in search results and social ads mean retailers lose in developing a direct marketing relationship with customers and now have to pay third-party networks to reach shoppers who’ve viewed their products and offers. Also, when retailers switch from generic email blasts requiring extensive rules-based predictive programming to personalized emails based on opt-in criteria, subscriptions can increase by up to 40X.
Kim Garretson is the Principal at RealizingInnovation, a consultancy working with startups, retailers, brands and agencies on next-generation marketing technologies. He is an advisor to TrackIf, the digital agency VML and PublishThis. Previously he co-founded the boutique digital retail consulting firm Ovative/Group. He also was an executive in Best Buy’s Strategy and Innovation area as liaison to the venture capital industry, and he also co-founded two other digital agencies now owned by Interpublic Group and Publicis.