Australia Cross-Channel Marketing Report 2013

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1 Australia Cross-Channel Marketing Report 2013 A report on consistent and integrated messaging across channels, and the ability to build dialogues and relationships in real-time.

2 Contents Introduction 1 Foreword 1 Executive summary 3 Key findings 4 Navigating the change: Engaging today s empowered consumers 4 Resource stretched marketers are struggling to translate readily 6 available data into insights that improve campaign effectiveness and demonstrate clear ROI Barriers 8 Impact on ROI 8 Aspiring marketers are committed to improving 9 their skills for a cross-channel future Case study 10 Fusion Retail Brands 10 Conclusion 12 Methodology 14 2 Australia Cross-Channel Marketing Report

3 Introduction Foreword The rise in consumer channels and the shrinking of budgets has marketers being pulled in opposite directions.there are now more ways than ever before to engage and communicate with consumers, and customers are demanding more from a brand in exchange for their dollars and loyalty. Marketing teams need to do more with less: less staff; less time; less resource and tools; and tighter budgets. So how can marketers get it right? The answer we consistently hear back from the industry is that we need to work smarter not harder. We need to streamline the marketing approach, be more selective about when, where and how we communicate with customers. And, in today s digital world, we need to do everything in real-time. A brand s marketing strategy and approach needs to be scalable, responsive and adaptable at a moment s notice. Marketing is no longer just a push tactic. It s a dialogue. It s the journey to build long-term relationships with your customer. The issue is; this doesn t always match with corporate expectations. How do you measure the value of a relationship? What s the ROI? How can you leverage the information you already have? The overwhelming majority of marketers are required to justify their investment to executives and this can mean that budget is diverted to the tactics which are easiest to measure, rather than the ones that deliver the greatest value. So the process of monitoring, measuring and benchmarking is becoming a top priority for heads of marketing. This is compounded by the fact that companies are flooded by data and, due to a lack of skills, resources and time, marketers often struggle to efficiently make use of this data and draw out actionable insights. A survey by Avanade 1 found that 56 % of managers and executives are overwhelmed by the amount of data their company manages, and 62 % of C-level executives whose time is considered the most valuable in organisations say they are being frequently interrupted by irrelevant incoming data. According to IDC 2, the world s volume of data doubles every 18 months. The industry is at a crossroads of redefining the relationship between customers and brands. We ve seen an explosion of new channels, devices and data that have changed the dynamic between brand and consumer. To evolve, brands need to place the customer at the centre of all their communications. 1 The Business Impact of Big Data, Avanade, November Extracting Value form Chaos, IDC Digital Universe Study, June Australia Cross-Channel Marketing Report

4 Foreword To paint a clear picture of the challenges marketers face in today s digitally social world, Experian Marketing Services commissioned research to examine how marketers are faring in the midst of this customer revolution and to what extent they are using data effectively to inform their strategies over the long term. It highlights the gaps along the path to successful customer engagement and sheds light on what might be happening behind the scenes to fuel these challenges. For many, a cross-channel approach is seen as an optimal solution when looking at the way brands approach their data and use it to inform their interactions with customers. However, there is significant confusion in the marketplace on where multi-channel marketing stops and cross-channel marketing begins. Indeed this is a journey. It s about moving from static messages across multiple channels to a conversation tailored and targeted based on real-time customer actions and behaviours. Where multi-channel marketing is pre-determined and static, cross-channel is flexible and response-based. The need for both the art and science of marketing communications has never been greater. It s time to blend data and engagement with creatively delivering successful campaigns in a way that is meaningful to customers. This whitepaper investigates the role of cross-channel and the barriers to adoption seen in the marketplace. It explores how brands are changing their behaviour to keep up with today s customer by putting the right message into the hands of the right consumer through the right channel at the right time and having the right measurement plans in place to be effective. Dave Audley Head of Consulting, Experian Marketing Services 2 Australia Cross-Channel Marketing Report

5 Introduction Executive summary To maintain relevance, organisations need to consistently and intelligently connect with their customers in a dynamic, complex, ever-changing world. Responsibility now falls to the marketer to ensure customer interactions with their brand are meaningful and consistent. Many are turning to a cross-channel approach to put the customer at the heart of their marketing strategy and maximise every interaction opportunity. Yet, the results of this survey show there is a real lack of understanding of cross-channel marketing. In such a fast-paced industry, what is the cost of the lack of understanding around a concept that has been earmarked as the way forward? What challenges do marketers face as a result? What is the impact on their campaigns, budgets and most importantly, ROI? To better understand the current landscape and the challenges marketers face, Experian Marketing Services partnered with Econsultancy to commission research surveying nearly 200 Australian marketers both client-side and supply-side. It seeks to delve into how marketers are using existing data, information and resources to inform their strategies and how they are approaching crosschannel marketing to help them work smarter, not harder. The research revealed that many organisations are finding today s landscape incredibly difficult to navigate. It s flooded with marketing messages that are often scattered and irrelevant to customers, derived from conflicting strategies around customisation and segmentation. Unsurprisingly, these efforts coupled with the misunderstanding around cross-channel marketing is fuelling the strategic challenges marketers are also experiencing: nearly half of respondents (48%) say they take a short-term campaignspecific approach to cross-channel marketing, while 57% of respondents cited the lack of a clear or well-defined strategy as the number one barrier to driving effectively co-ordinated campaigns. This has a ripple effect into the other elements of a marketing campaign including use of data, customer engagement, measurement and ROI. The research shows that brands are struggling to derive informative insights from their data and many lack the appropriate skills and technology to be truly effective. Further, companies are often structured in a way that creates silos and makes sharing data across the business difficult. Few businesses said they share customer engagement insights with all employees. This can make it harder for marketers to demonstrate the benefits of a data-driven approach. Likewise, it s clear that challenges exist in being able to appropriately measure the impact of individual customer communication touch points and, therefore, provide a clear ROI of marketing activity. One of the first steps to this is using metrics that focus on customer equity, such as average basket size, visit frequency or annual spend. But it can t stop there. The need for a long-term strategy is imperative to be able to show marketing s bottom line contributions and continuously improve efficiency. Despite the barriers and challenges, there are encouraging signs within the industry to adopt a cross-channel marketing approach. More than half of businesses are looking to appropriately train their staff and just under half plan to increase investment in new technology in the next year. This commitment to developing strategies, capabilities and increasing investment in resources will help marketers catch up to the rapidly changing consumer environment. Note of acknowledgement Experian Marketing Services would like to acknowledge the contributions of Dave Audley, Head of Consulting, Experian Marketing Services; Marcus Tewksbury, Global Vice President of Product Strategy, Experian Marketing Services; and Don Grover, CEO, Fusion Retail Brands, for their insights for this whitepaper. 3 Australia Cross-Channel Marketing Report

6 Key Findings Navigating the change: Engaging today s empowered consumers Today s customer landscape has significantly changed. Consumers are bombarded by more messages than ever across a wider range of channels. Consequently, consumers have become in charge of brand engagement setting the stakes higher for organisations big and small. Against this backdrop, marketers have realised their traditional methods of customer engagement are falling short. The proliferation of channels and increase in brand messaging is making it harder to cut through the noise. 76% of respondents think it s becoming harder for marketing communications to be heard by customers. It s not surprising. Customers don t see a brand by channel. In fact, they don t see channels at all. They have a number of ways to find information, source and buy products or services and they move seamlessly in and out of channels multiple times per day. To the customer, brands should be just as seamless. Marketers clearly recognise the changing behaviour of customers and are trying to respond. Integrated campaigns and messaging are vital in today s customercentric world, but they aren t always easy to get right. On average, only 51% of marketers say they run marketing campaigns across multiple channels with an integrated message, creative and offer. One fifth, (22%) said that over 80% of their campaigns are integrated. For others, building better engagement with customers is about being more specific. 82% of respondents say they are becoming more selective in the channels they use to communicate with customers and 70% of Australian marketers say they use customer segmentation to create personalised communications. Figure 1: Typically, what percentage of your/your clients marketing campaigns run across multiple channels with an integrated message, creative and offer? 30% 25% 20% 15% 0 20% (18%) 21 40% (22%) 41 60% (22%) 61 80% (15%) % (22%) 10% 5% 0% 4 Australia Cross-Channel Marketing Report

7 Key Findings Half of respondents say they provided personalised marketing based on demographic data, while a similar amount (49%) provide personalised offers based on purchasing or empty cart activity, and 45% provide it based on known preference. What s surprising is that 16% report they don t use any tailored marketing communications at all. These methods are important in any marketing strategy, but using them in insolation can leave the door open for missed opportunities. A customer s path to purchase isn t always predictable or preferred it s driven by convenience. It s a complex environment that requires brands to place the customer at the heart of their strategy. Cross-channel marketing is one way to do this and is increasing in popularity among marketers but the path to adoption isn t always clear cut. Cross-channel confusion. Cross-channel marketing is in the limelight. Marketers worldwide have been exploring cross-channel as a solution to the new ways to create a dialogue with customers. But, with so many methods available to organisations, marketers are struggling to make sense of crosschannel. This research found only 14% of Australian marketers feel they clearly understand the distinction between cross-channel and multi-channel marketing 63% feel they somewhat understand the difference. This lack of understanding goes deeper than marketers may realise 57% of respondents chose the multi-channel marketing definition when asked about cross-channel. How can brands develop effective long-term strategies when there is so much uncertainty about what cross-channel is? Marcus Tewksbury, Global Vice President of Product Strategy at Experian Marketing Services says: Over the past five years, virtually all consumers have had to become experts at filtering content and managing the huge flows of information we are inundated with. I refer to this as consumer Darwinism we ve all been forced to evolve. As a result, marketers have had to embrace a new cross-channel imperative when they think about how their consumers interact with their brand. It shifts the marketing dialogue to be more customer focused, determining the right message for the right customer, and where and how they should receive it. 5 Australia Cross-Channel Marketing Report

8 Key Findings Resource stretched marketers are struggling to translate readily available data into insights that improve campaign effectiveness It s clear marketers are still feeling their way when it comes to using data to inform cross-channel marketing activity. Nearly half of marketers do not have confidence in the online cross-channel customer experience they are providing, with 49% describing their efforts as okay and 21% going so far as to describe their efforts as poor. Taking a closer look into what might be driving these perceptions; respondents indicated that existing business silos and lack of knowledge sharing within the business was preventing them from improving their work and informing their cross-channel strategy, with 23% admitting to using data badly. By not sharing information and insights drawn from all customer touch points across the organisation, businesses can miss out on identifying their best customer one who is already engaged with the brand. For a brand, identifying the characteristics of the best customer and searching for other best customers is key to long-term success. However, with only 14% of respondents saying all employees had access to customer engagement insights, it is clear this information is not being shared to support wider business objectives only 54% of organisations say they share these insights with the executive team and only 39% and 20% share insights with the sales and customer services teams. Figure 2: Typically, how would you describe the online cross channel customer experience delivered by your organisation/clients to customers? 60% 50% 40% 30% Excellent (2%) Good (24%) Okay (49%) Poor (21%) Very poor (3%) 20% 10% 0% 6 Australia Cross-Channel Marketing Report

9 Key Findings And, while 74% of marketers have access to customer engagement insights, many are not correctly leveraging the insights. Only 58% of respondents say they collected data and then used it to inform changes to the same campaign. This means messages are scattered, confusing and often irrelevant to customers. It follows the old model of focusing on channels and content before customer. This process needs to be flipped on its head. All campaigns should begin with the customer, then move through lifecycle, content and finally channel. Figure 3: Within your organisation (or client organisations), who has access to customer engagement insights? 80% 70% 60% 50% 40% 30% Marketing (74%) The executive team (54%) Sales (39%) Customer services (20%) All employees (14%) No one has access (1%) 20% 10% 0% Marcus Tewksbury, Global Vice President of Product Strategy at Experian Marketing Services says: Marketers often overlook the first step. Sure, the eventual goal is total optimisation of communications across marketing channels, but what needs to be implemented first is a cross-channel listening strategy. There are myriad sources of customer data that you can collect and use to optimise your customers experiences based on how they are already interacting with your brand across multiple channels. By leveraging ALL these inputs, you ll be able to better understand the relationships individual customers have with your brand in ways that simply weren t possible before. The end result is to understand how your customers act online and offline and by listening to this, you will gain greater insight into how they prefer to engage with your brand, which is the golden key: a customer-centric approach. 7 Australia Cross-Channel Marketing Report

10 Key Findings Barriers These challenges on the use of customer data make cross-channel adoption and effectiveness particularly difficult. The research revealed that marketers lack the confidence to precisely attribute a particular sales transaction to one channel or one point of engagement. When asked what the single most challenging crosschannel marketing issue for their organisation was, respondents indicated response attribution (29%) and budget allocation (27%) were the toughest, followed by campaign coordination and targeted messaging (each 17%). As the number of customer touch points increases and the customer journey becomes more complex, this will be an on-going challenge for brands to identify their most successful points of engagement and determine the most appropriate allocation of marketing resources. Key Findings Impact on ROI The identified lack of understanding and long-term strategic view can lead to fragmented marketing efforts that often do not reach their full potential or deliver clear returns on either financial ROI or increased brand engagement. As a result, marketers are struggling to correctly attribute sales to campaigns and measure success. Consequently, many are still focused on more traditional and shortterm metrics: 90% primarily measure sales and 50% measure customer retention. Only 46% measure customer engagement, the true value of cross-channel marketing. Without a clear understanding of where to correctly attribute the success of specific marketing efforts, marketers will continue to have challenges with budget allocation. There are several models and simple formulae to help correctly attribute sales: first interaction, last interaction and position-based interaction assigning attribution based on the position of a touch point along the path to purchase. Alternatively, marketers can take a linear view and treat all touch points equally. Marketers are learning that attribution does not always need to be a complex process, particularly for those who are just starting to explore cross-channel marketing. Realising this will give marketers the confidence to evaluate their campaign efforts more effectively. 8 Australia Cross-Channel Marketing Report

11 Key Findings Aspiring marketers are committed to improving their skills for a cross-channel future What is promising about the research results is the clear aspiration and commitment to cross-channel marketing. Marketers are genuinely interested in adopting crosschannel marketing. 42% of respondents plan to increase investment in cross-channel technology in the next two years. Furthermore, 61% plan to focus on training their team to enable them to overcome the barriers that are preventing effective cross-channel marketing activity, and 57% will put a greater focus on defining cross-channel strategies over the next 12 months. The commitment is clear, marketers are aware of current gaps in knowledge and skills and the impact this is having on strategy and results. Figure 4: Do you/your clients plan to increase investment in cross channel marketing technology within the next two years? Don t know/not relevant (29%) No (29%) Yes (42%) 9 Australia Cross-Channel Marketing Report

12 Key Findings Figure 5: Over the next 12 months, how do you/your clients plan to overcome the barriers that are preventing effective cross channel marketing activity? 80% 70% 60% 50% 40% 30% 20% 10% Internal education/upskilling the marketing team (61%) Greater focus on defining cross channel strategy (57%) Increased investment in new technology (39%) Integrate marketing teams (32%) Internal education/upskilling senior management (30%) Increased budget (26%) Agency/supplier review (18%) Increased staff headcount (14%) Development of specialised marketing intelligence unit (13%) Other (2%) 0% 10 Australia Cross-Channel Marketing Report

13 Case Study Fusion Retail Brands In 2011, Fusion Retail Brands was experiencing declining sales due to tough market conditions. It identified an opportunity to enhance sales and increase loyalty by implementing one of the most sophisticated segmentation and loyalty programs in Australia. Fusion Retail Brands and Experian together developed a combined marketing and loyalty program to provide a deep view of customers, drawing on behavioural insights and data. This is achieved through a fully automated single cross-channel platform, which uses actionable insights from the data to enhance efficiency of marketing campaigns. This cross-channel view now enables Fusion Retail Brands to segment the 2.3 million customers of its loyalty arm, Fusion Rewards. This means customers are engaged with timely, tailored content across several platforms. The program has already been successful in engaging customers and driving traffic to its online and offline stores for sales conversion. Since December 2012, there has been an average uplift in sales revenue for the Fusion group of 12% year-on-year, with some months showing increases as much as 25%. Don Grover, CEO of Fusion Retail Brands comments: Getting the communications content right so it s relevant and specific to our customers preferences has been the key to enhancing sales and customer loyalty. It s about knowing our customer on several platforms including in-store, online and on mobile and evolving our communications so that it s meaningful and targeted. Good content helps drive customers in-store where they can have face-to-face conversations with our staff, try on our products and take up offers. This is what we do best. 11 Australia Cross-Channel Marketing Report

14 Conclusion This research sought to understand how Australian marketers are working to put the customer at the heart of their marketing strategies, how they make sense of their customer data and what challenges they face in the evolution to cross-channel marketing. It shows many are struggling to understand crosschannel and are therefore slow to adapt their business and marketing strategy to a long-term plan. There is a hesitation among marketers to change their approach from traditional models that focus first on channel, to new models centred on the customer. The main reason for this is the challenge marketers face around response attribution. Built around multiple touch points and ongoing relationship development, Australian marketers are finding they cannot pinpoint one channel or one action that led to conversion in a cross-channel program. This is compounded by the fact that most marketers are still measuring traditional outcomes sales and retention when the true value of cross-channel also lies in customer engagement, satisfaction and loyalty. Yet, to be successful, organisations need to first take a look within. Marketers must leverage the strong customer data they already have and look at how it can be shared across the business. They should ensure they have the right skills and the right technology to analyse this data and use it to inform their strategy in real-time. They need to listen to what this data tells them and tailor their activity to ensure the right message hits the right customer through the right channel at the right time. All of this takes time and the journey will vary depending on organisational size, industry and existing communication channels. But marketers are clearly on the cusp of changing their behaviour; some have already made great headway and are seeing early wins. The industry is at the crossroads of a customer revolution where consumers sit in the centre of a hyper-connected world that s in constant change. For marketers to compete and remain relevant, they need to move in pace. Cross-channel is the way forward and requires strategic, long-term planning and new ways of thinking. 12 Australia Cross-Channel Marketing Report

15 13 Australia Cross-Channel Marketing Report

16 Methodology This report is based on a survey of nearly 200 Australian businesses to an online survey carried out during May and June Respondents included both client-side (in-house) and supply-side respondents (i.e. those working for agencies, consultancies or technology companies related to digital marketing and ecommerce) within the Australian marketplace only. Information about the survey, including the link, was ed to Econsultancy s user base. The incentive for respondents to take part in the research was access to a complimentary copy of this report. Experian Marketing Services Econsultancy would like to thank those who took the time to complete the questionnaire. Experian Marketing Services Level 6, 549 St Kilda Rd Melbourne VIC 3004 T E info@au.experian.com W Copyright Experian 2013

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