The digital marketing playbook for ecommerce businesses is very effective. The same playbook has been less effective for brick-and-mortar retailers, despite the fact that shopper conversion (conversion of visit to actual purchase) is actually 4-8x higher for brick-and-mortar retailers.
What’s missing for real-world retailers is something like the cookie and the pixel to better understand consumer actions and deliver relevant advertising. Pixels are blocks of code placed in website code that “fire” when a user visits a page. Cookies store info about website visits and preferences. Together, they are responsible for detailed data on customer actions that can be used to drive highly-targeted, and effective, digital marketing.
Offline retailers don’t have cookies or pixels to understand consumer behavior, but they are already collecting much of what they need to adapt digital marketing to drive traffic to physical locations. It just needs to be put to work.
The offline ‘cookie’
Most stores are now equipped with on-premise systems that are collecting customer data. This includes their point-of-sale system (POS), loyalty programs, and WiFi marketing platforms.
Point-of-sale systems record customer transactions. Many now allow customers to email receipts rather than print receipts, creating a record of purchase history and visits. This doesn’t cover all customers since some still pay with cash, and in some types of businesses, like restaurants, it won’t include data on people in a group if they aren’t the one paying the check.
Loyalty programs track customer purchases in exchange for discounts and rewards. They are very effective at measuring customer visits and purchases, but participation is typically below 30%, even in successful loyalty programs, so the majority of customers aren’t included.
WiFi systems track customer visits by recognizing mobile devices that enter a signal area. When customers exchange an email address for free WiFi, the retailer is able to measure customer visit behavior. The mobile device in many ways functions like a real-world pixel and the WiFi access point like a real-world cookie.
Combining data from these systems allows offline merchants to use the digital marketing playbook just as effectively as ecommerce businesses.
Adapting the digital playbook for offline retail
Re-target active shoppers
Only 15 to 30% of people who go into a retail store actually make a purchase. That means there’s a huge opportunity to get in front of people who shop but don’t buy while the consideration window is still open. In ecommerce this is easy. Anyone who leaves the site or abandons a cart can be retargeted with relevant offers for the items they showed interest in.
But if you operate a brick-and-mortar store, how do you identify people who have walked in but not bought anything?
Using the in-store data sources we’ve described, you can compare visit and purchase data to identify customers who have walked in but not purchased. You can then isolate that list to create an audience, targeting them online with tailored messages or offers.
Bring back lost customers
A huge opportunity overlooked by a lot of retail marketers is lost, or lapsed, customers. These are people who have been regular customers that, for some reason, stop coming. For many retail categories, the lost customer rate is as high as 60-70%. Ecommerce businesses spend aggressively to win back lost customers because it’s very effective, and easy to manage when you’re able to track visits.
The challenge for businesses with physical locations is identifying lapsed customers. Unless the customer is a loyalty club member, there is no easy way to know when someone doesn’t come back, or how valuable a customer they were.
Using in-store systems the way a website uses a pixel allows you to track both visits and transactions. Segmenting customers by visit history and lifetime value is a useful way to manage reactivation campaigns. Simply pulling a list of customers who haven’t been in for 1-2x the average visit cycle lets you isolate a lapsed customer list that can be targeted through digital advertising.
And the results are clear. A popular West Coast coffee chain recently ran a campaign retargeting lost customers. Over 13,000 responded to the campaign by returning for a visit during the first month alone. They saw a return on ad spend of 6:1!
Attract new customers
Lookalike audiences have become a go-to method for effective digital marketing. The theory is simple—use your most valuable, engaged customers as a seed audience to target new customers who share similar interests and behaviors. This approach has been proven to outperform more generic targeting based on demographics or other online signals.
Online businesses have a rich set of customer data that allows them to zoom in on particularly valuable customer segments. Offline businesses don’t have the same advantage, and typically have only a small portion of their customers represented in their customer database.
Using the in-store data sources we’ve described, retailers can amass visit and purchase information on a much broader set of their customers. Stack ranking customers by visit frequency or lifetime value lets you distill audience characteristics even further for higher performing seed audiences. Suppressing exposure to current customers makes this approach even more effective at attracting net new customers.
In-store data fuels the digital marketing engine
Businesses that want to drive traffic to real-world stores have had to rely on digital approximations to run their ad campaigns. But online engagement isn’t the same as in-store success. Performance can be improved by using in-store results as the ultimate measure of success.
Much of this information is already available through point-of-sale systems, loyalty programs and WiFi data. Putting this information to work allows retail marketers to get the most from the digital marketing playbook.
For more on how to adapt the digital marketing playbook for brick-and-mortar, download our guide.