Data-driven E-commerce Marketing in 2017: Complete Introduction

You’re an e-commerce marketer. Running your shop is a demanding task. The number of plates to spin every day is significant. Conversions, social media, refunds, loyalty cards, and many more. Years in business taught you some best practices, but you’re always looking for the new ways to grow and market your business. If you’re feeling a bit uncertain about using data in your e-commerce store in a turbulent 2017, you’ve come to the right place. This post will be the first in the series of many related to data-driven e-commerce marketing.

The state of e-commerce in 2017

E-commerce is in the eye of a business hurricane. Let’s understand the state of the matters before we dive deeper1.

data-driven e-commerce marketing data driven ecommerce infographic

In this post, we’ll help you understand why data-driven e-commerce marketing is no longer an afterthought for e-commerce marketing managers. You’ll also learn how you can get the most out of it. You’ll strengthen your understanding of the marketplace, so that you can navigate it in a more confident way. In order to account for the full spectrum of changes, we have broken down the overview of data-driven marketing into 4 parts. Let’s start.

data driven ecommerce marketing customers competition technology strategy

Data-driven e-commerce marketing: from customers to strategy

Customers

Omnichannel shopping behavior is an emerging reality

People fragment their online activity over a variety of marketing channels and mediums. Long online sessions in a handful of channels are broken into many microsessions in across many channels, often executed from different devices.

Consumers behave ever more spontaneously, with short attention spans, and short bursts of action – Erich Joachimsthaler, Ph.D., founder and CEO of Vivaldi Partners Group

The sample e-commerce journey for ski equipment purchase could progress as follows:

  • a person may be struck by an inspiration for a ski trip browsing a friend’s Alps trip pictures on a PC in the evening,
  • next morning, on her way to work, she searches Google for ski trip ideas in Europe,
  • during a lunch break, she browses Instagram with the hashtag #skiing,
  • she finds an inspiring picture of a ski equipment for beginners,
  • she brows the Instagram page of the ski equipment manufacturer,
  • two days later, she reads the product reviews, visits the price comparison page and makes a purchase.

Customers execute such journeys around your e-commerce business every day. If you don’t want to lose them, you should devise a strong omnichannel strategy.

What is omnichannel?

Omnichannel marketing engages prospects across all touchpoints in a helpful way. It does not just mean to be present in various channels. It means being there and engage customers in a way that moves them closer to the purchase. Omnichannel is the marketing version of the whole is greater than the sum of its parts with regards to the channels.

There are four categories of micro-moments2:

  • I want to know
    • research of products and services
  • I want to go
    • navigation and planning
  • I want to buy
    • purchases and deals
  • I want to do
    • how-to

We live in a multi-screen world. A large variety of devices gives rise to the device specialization for various tasks. Shoppers prefer to use one screen over another when conducting a certain activity. The chart below3 shows the distribution of these various activities.

* no data

Mobile channel is important, but it should not be a single focus of your e-commerce business. The purchase process comprises of many different stages and about half of them are performed on other screens. For example, MasterCard reports that 8 out of 10 consumers globally use a computer, mobile device, or in-store technology when shopping. The orchestra approach to channel performance is confirmed by Deloitte, which reports in nearly $1 trillion – or 28% – of in-store sales in the U.S. in 2014, purchasers used mobile devices before or during shopping trips4. A comScore study found that nearly 80% of local searches on mobile devices turned into purchases5.

Omnichannel grabs a lot of attention these days, but not many companies are actually operating in this way.

Companies talk about it, but in reality, they’re not omnichannel at all, not even close to it – Don Peppers, author and co-founding partner of the Peppers & Rogers Group

The reason is that omnichannel requires companies to change how they organize themselves. They need to break the channel silo of PPC, SEO, Social etc, and focus on the conversion journey instead. In addition, omnichannel approach only works with a truly data-driven approach to marketing. If you want to know which channels work, you need to measure them well.

It’s worth it though. A well-oiled omnichannel orchestra can get e-commerce business exposure to the most engaged and hence profitable customers.

e-commerce marketing data-driven data growth ecommerce

The true omnichannel strategies are few and far between, but that’s the direction that data-driven marketers are moving in, as shown in the the Econsultancy report. Customer journey analysis tops the list of methods used to improve conversion rates.

data-driven e-commerce marketing data driven ecommerce

Expectation of personalized communication

Marketing personalization in e-commerce is a process that makes interaction between the brand and the customer relevant to the context of the latter.

E-commerce customers expect to be communicated to in a personalized way, because it saves them time. They’re easily alienated with offers that have nothing to do with their needs. Personalization is a by-product of a well-made omnichannel marketing:

With personalization, you pay attention to what the consumer is looking for and then match them with the most relevant products or content. When personalization is done right, the consumer may not even notice, but the benefit is a more relevant experience that cuts through the clutter. The benefit to the retailer or website is increased revenue or engagement. It’s really a win-win for everyone – Dan Darnell, VP of product and marketing at Baynote

Marketing personalization in as a part of data-driven e-commerce marketing can be understood on three levels: acquisition personalization, on-site personalization, relationship personalization.

Acquisition personalization helps e-commerce business get correct messages in the correct moments of the buying cycle.

On-site personalization helps e-commerces maximize the chance that once a visitor reaches the page, they’ll convert. This is best achieved by composing e-mail drip campaigns that resume the progress of a given customer on a conversion journey. Most e-commerce businesses do not invest in on-site personalization tools, which results in very high bounce rate6.

This kind of personalization is about customizing the on-site experience so that the process feels native to the context of a person. According to the study by Accenture, based on the surveys from 2000 U.S. and U.K. customers, 73% of consumers said they prefer to do business with retailers who use personal information to make their shopping experience more relevant.

 A personalized web experience is something that most have become accustomed to; whether it is from a curated news feed, targeted flash sales, or even designing your own product directly on a site. We’ve truly entered an interactive economy – Rachel Brooks, the founder of Citizen Made

Relationship personalization deals with the problem of the best post-sale follow-up mix so that customer lifetime value is maximized. 64% of the U.S. and U.K. customers surveyed in the Accenture study said they’re open to receiving text messages with personalized offers based on the previous purchase history. Another report based on 2042 U.S. consumers 18 and older7 finds that 80% of consumers are fond of receiving e-mail recommendations with products based based on their previous purchases.

The topic of personalization always maps quickly to the issue of privacy. In the aforementioned Accenture study, about 88% of respondents said that companies should give them flexibility to control how their data is being used.

On the company side, executing on the personalization trend will demand a lot of organizational changes. Personalization runs on the past data, so the only way to fully embrace personalization is to have top quality customer data and get the most out of it. However, the data architectures at e-commerce companies are often not ready. Low data quality and data silos make it really hard to have a clear picture of the customer, which disables true personalization. Marketers seem to agree with this notion, as shown in the Econsultancy report.

data-driven e-commerce marketing data driven ecommerce

Mobile users convert more frequently

Mobile traffic has been widely treated as a research traffic for a very long time. Low mobile conversion rates supported this view. However, this is changing.

First of all, mobile e-commerce conversion rates are on the rise. Research by Wolfgang Digital based on 80 million website sessions and data related to €230 million worth of online revenue shows a strong correlation between percentages of mobile traffic and high website conversion rates8.

Second, as mentioned in the omnichannel section, mobile is enforcing its position as a consideration stage, as shown in the chart below (tablet and desktop generate over 58% of sessions). It’s partly fuelled by the increase in the number of devices. For example, the average British household holds on average 7.4 connected devices. These two facts tell why you cannot ignore mobile in your omnichannel mix. Mobile is our “Decision device.”9

data-driven e-commerce marketing data driven ecommerce

Two ways to act upon this information. First, your e-commerce website needs to be mobile friendly, in particular mobile research friendly. It also has to be fast. 40% of people will abandon your website if it takes more than 3 seconds to load10. Also, if your website isn’t responsive, you’ll be losing up to 70% of the users coming to your website.

Competition

Marketing technology stack is growing exponentially

E-commerce competition is growing fiercely. It spillovers to the competition for eyeballs, which means that for a given desired result, more and higher quality content effort needs to be invested. Another consequence is an exponentially growing marketing technology space.

The supply of content moves up the creativity and volume threshold required to be noticed. But that’s about it. Content levels have been growing since millennia, and we still contemplate Aristotle. If your e-commerce business grabs the heart of the customer with an authentic creative, you have nothing to worry about. The problem here is that not many marketers actually measure if content marketing really works.

data-driven e-commerce marketing data driven ecommerce

When it comes to marketing technology tools though, it’s a bit different. Data-driven e-commerce marketing has many moving parts, so it requires appropriate toolkit to go smoothly. However, the number of marketing tools is growing exponentially and it exceeds the number of jobs to be made in e-commerce marketing. There are two consequences.

First, it’s easy to get distracted with shiny new objects and waste time trying them. Customer happiness is something that emerges over a long-term satisfactory relationship. No tool can automatically make customers love you. In order to guard against the noise, e-commerce businesses need to proactively manage their data-driven e-commerce marketing stack. In particular, have a clear intent and justification for adopting new tools, and don’t forget review the old ones on a regular basis.

Second, some tools do not go well together and should not be integrated. The best marketing integrations are these where the net result of two tools combined is larger than their operating independently. In order to ensure that integrations bring more value than they consume, attach every single integration to a particular KPI. We’ll show you how to do it in the next posts. Do not fall into the trap of integrating tools just because you can do it easily. To paraphrase a saying Warren Buffett, if you spend time integrating tools you don’t need, soon you’ll have to disintegrate things you need. Since 2011, the number of marketing tools increased twenty fold11.

data-driven e-commerce marketing data driven ecommerce technology tools stack

 

Technology

Automation of customer service with chatbots

One in seven people in the world utilize either Facebook Messenger or Whatsapp. Messaging is one of the most frequent activities people perform on mobile. That’s a huge opportunity for relationship building for brands. Messenger bots are computer programs with artificial intelligence modules that can turn this option into a viable touchpoint in the omnichannel net.

Chatbots can impact every stage of the marketing funnel. In the awareness stage, chatbots can make people realize the need for a particular product. It can be particularly useful for flash sales or seasonal products. Animation below shows how chatbots can become useful in the awareness stage of the customer journey12

data-driven e-commerce marketing data driven ecommerce

Research stage often takes the largest chunk of the shoppers’ time. It’s in this stage that they compare various products, fill in the knowledge gaps that stop them from making a good decision. By engaging in a conversation with the shopper, chatbots can save shoppers some time and present them the top products for consideration. That’s what the online fashion network Adoro is doing, as shown below13.

Once the customers understand what they want and narrow down their choices, they begin to consider various options. Chatbots can be relevant once the customer decides to go on to the conversion stage too. For example, Lancome has recently partnered with Snapchat to utilize a Snapchat story to provide users with a visual shopping experiences which directs them further to an e-commerce checkout page embedded into Snapchat14.

data-driven e-commerce marketing data driven ecommerce

Chatbots aren’t redundant for the post-purchase stage either. Gathering feedback, resolving problems, and building loyalty are all examples of standard tasks chatbots are facing up to these days.

However, chatbots aren’t the silver bullet for e-commerce. Their effectiveness boils down to the relevance of the messaging chain, in particular the introductory messages. Since they’re more personalized, their success depends on the understanding of the customer needs in a given micromoment. That makes chatbots practically the same as any other marketing channel.

Strategy

Advertising is undergoing a seismic shift15

Yearly growth of online advertising increased from 20% to 22% in 2017.

The main growth driver is mobile advertising, which accounted for $37 billion in U.S. internet advertising in 2016. Advertisers allocate the minority (28%) of their budgets to the mobile ads.

Internet ad spend is exceeding the TV advertising spend for the first time ever. Sheer majority (85%) of online ad budgets is flowing to Facebook and Google.

About 600 million people worldwide use ad blockers. Desktop ad blockers are most often blocked in Germany (28% of users) and Canada (24%). Mobile ads are frequently blocked in India (28%) and Indonesia (58%).

Data is driving a key role in exposing the inefficiency of advertising. Ad platforms provide tools to monitor and improve ad performance.

New ad formats are becoming available. Examples include targeted pins from Pinterest, contextual ads from Facebook, in-app ads with dynamic creative, skippable videos, and more.

Embracing data is seen as a key to increase revenue

In its marketing & analytics report16 published in February 2017, Google says:

In today’s digital world, the future is bright for marketing leaders who build a culture of growth that uses data and testing to improve customer experience day by day.

A study by The Economist based on the survey of 499 CMOs and senior marketing executives revealed that 86% of the respondents believe they’ll own full end-to-end customer experience by 202017. Although marketers have access to valuable tools, they struggle to confidently assess the impact of these tools on particular business outcomes. That’s why increasing revenue tops the list of primary marketing objectives for 2017, a significant increase since last year.

The way organisations can achieve this goal is by embracing data. It’s imperative that they know their data, keep it clean, organize it18 and derive value from it with a correct process.

Data is becoming as a decision-making tool and alters the company marketing processes

Companies realize that utilizing data for growth in a correct process is a way to guard themselves against a turbulent and competitive environment and grab the low-hanging fruits of growth.

First of all, 84% of respondents asked in a 2016 Econsultancy survey say that analytics provides valuable recommendations that drive change in their businesses. However, only a small fraction of data proves useful.

data-driven e-commerce marketing data driven ecommerce

In addition, appropriate handling of data demands significant resources. That’s the luxury that not all marketing teams, especially at smaller e-commerces, can afford.

Second, e-commerce companies realize that data can compound value, but only if used in a systematic process. No value can be derived from data if it’s sitting somewhere in the database untouched. Appreciation of the data-driven marketing process leads many companies to adopt the agile approach to marketing. Since data is generated on a regular basis, iterative process such as agile guarantees distilling insights on a regular basis.

Data-driven marketing attribution in e-commerce is still challenging

Data-driven attribution poses two serious challenges for the e-commerces: measurement and organizational.

Measurement challenge is to assess how every touchpoint along the user’s journey contributed to the conversion decision, both causally (how much it convinced a person to move forward) as well monetarily.

Data-driven attribution is the meritocratic way of picking the marketing channel mix. That implies breaking the channel silos in the company and maybe getting rid of the channels that have low conversion potential. Some employeed may not be very excited about this.

Data-driven attribution is the backbone of an ideal omnichannel strategy. Lack of or wrong attribution measurement makes it almost impossible to execute this strategy in the e-commerce shops.

Summary

A lot is happening in e-commerce. The only strategic invariant you can adopt in your company in order to stay competitive is to get the most out of marketing data.

If you’re convinced that managing e-commerce business requires a sophisticated data engine, there are two things you have to do: (1) get the right data and (2) use it in the correct way.

How to get the right data? You can’t manually gather data of course. The best way to get high quality data is to get high quality products to fetch this data for you and make them present it to you in an understandable and actionable way. In the next post, we will help you understand the factors to consider when picking data-driven marketing tools for e-commerce growth.

How to use data in the right way? Data is generated all the time, and so are the data-based insights that are waiting to be mined. The best process of data-driven growth has a short cycle (preferably weekly or bimonthly) and 4 steps: creating hypotheses, gathering data, formulating conclusions and implementing changes. This process will be covered in more details in the future lessons.

References

  1. Data source: Report by BigComerce
  2. Harvard Business Review: “Micro-moments and the shopper journey”, 2015.
  3. Annalect: “#Generationtech: Millenials & Technology,” 2015 in: Harvard Business Review: “Micro-moments and the shopper journey,” 2015.
  4. Deloitte: “Navigating the Digital Divide,” 2015
  5. comScore: “Local Search Study,” 2014.
  6. Bounce rate is a proportion of people who leave the site without performing any action
  7. The online survey was performed by Harris Poll sponsored by digital marketing technology and services provider Listrak
  8. Wolfgang Digital: “E-commerce KPI study,” 2016
  9. This phrase was used in the E-commerce KPI study by Wolfgang Digital. See the full report here.
  10. Kissmetrics: “How Loading Time Affects Your Bottom Line,” 2011
  11. Image sourced from Yotpo
  12. Source: Yotpo
  13. Source: Yotpo
  14. Source: Yotpo
  15. Data in this section were taken from the American Marketing Association
  16. Google Surveys: “Dealing With Data: Today’s Marketing Analytics Challenges and Opportunities,” 2017.
  17. The Economist Intelligence Unit: “The path to 2020: Marketers seize the customer experience,” 2016.
  18. In other words, integrate data from various sources into one customer data warehouse.