Retail’s digital marketing lessons lie in Notonthehighstreet and Moonpig, not Topshop, says RedEye

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By: Andy Stockwell, chief commercial officer, RedEye  

Stockwell: success of digital retail originators
cannot be underestimated

The frenzied bidding wars for ownership of Topshop and Debenhams have made headlines over the past few weeks,…but another traditional retail story was also emerging in the sidelines. This was the news that two of the UK’s biggest pioneers of online selling, 15-year old online gifts retailer Notonthehighstreet and 21-year old greetings card e-tailer Moonpig announced their own takeover and flotation news, with projections of £150 million and £400 million respectively. It is a tale of two halves which showcases how early investment in innovation, technology and data can future-proof retail businesses.

As the pandemic continues to drive online shopping, and the bricks and mortar legacies of some of the UK’s high street stalwarts hang in the balance, the continued success of digital retail originators such as Moonpig, Notonthehighstreet and Topshop’s new owner ASOS cannot be underestimated. And there are a myriad of actionable lessons that brands and retail marketers can take from their approaches to help them to navigate the new marketing challenges that retailers will encounter in 2021 and beyond.  

Our own survey of 200 UK marketers commissioned to uncover the state of their 2020 marketing budget allocations and spending plans for this year has given us compelling evidence that the retail digital revolution is not only here to stay, but crucially, joining the revolution is no longer an option for businesses that want to thrive in 2021’s e-commerce landscape. In fact, 65% of the businesses we spoke to said they plan to invest more in digital this year, with retail marketers saying they will specifically invest 17% more into marketing technology, and 11% more into content marketing. Based on our research, it appears that this widespread intent to invest more into enhancing digital capabilities is the result of a now pressing pandemic business challenge for retailers across all sectors – customer retention. 

Crack the customer retention conundrum 

Based on Moonpig and Notonthehighstreet’s barnstorming performances and the number of digital brands that saw record breaking numbers of new customers in 2020, you might be forgiven for expecting this trend to continue – at least for the digital frontrunners. But our survey shows there has been a 31% increase in worries over customer retention from 2020 to 2021, making customer retention the most vitally important challenge that businesses are losing sleep over. This statistic points to the fact that retailers are locked in a race to keep hold of the new found customers they have gained over multiple lockdowns – usually shoppers who might look a bit different to their existing customer base. The indisputable truth is that in the current climate, your customers are now literally one click away from your competitors. As more people learn and get used to new ways of digitally engaging with brands, businesses will need to improve their customer retention strategies because shoppers will not simply revert back to pre-pandemic behaviours.  

The most effective way to do this is to adopt a customer-centric approach to marketing that ensures that both new and existing customers are accurately segmented based on their most recent purchasing and browsing behaviours, and this data is used to send relevant communications based on what stage they are at on the customer journey. And this is not limited to promotion of new products and offers. Notonthehighstreet gave its customers an option to opt out of Mother’s Day focused emails last year, in recognition of the fact that it may be a difficult and emotional time for some customers. This considered approach resonated with so many customers that it is back again for Mother’s Day 2021. The brand was so in-tune with the behaviour of its customers that it was able to implement a thoughtful customer retention strategy to reduce high churn rates or lack of engagement with Mother’s Day communications. An approach that is no doubt keeping current customers happy and winning over some new ones.  

Connect behaviourial data with customer choice  

We have seen a massive increase in the visibility and use of marketing automation within businesses, and it is encouraging to see that the value of data charged marketing automation is now being understood and recognised by retailers. The increase in digital means brands have access to more data than ever, but it’s not about how much data you have. It’s about ensuring you use that data effectively to drive better customer experiences. Making the connection between customer data and choice through the use of AI and Predictive Analysis has been earmarked as the next stepping stones to engage, convert and retain customers to continue to drive up their Lifetime Value. This is why it’s heartening to see that 42% of our marketers are ahead of the curve and will be allocating budget for technology to help them better understand their data this year. 

One of the biggest benefits of using customer behavourial data is that it will help to inform the frequency and flow of effective lifecycle communications that ensure the right touch points are in place for a smoother customer experience. 

It could be argued that a desire to offer more customer choice based on insights from customer behavorial data was one of the key reasons behind Asos’ acquisition of  Topshop and Topman. At the time of the announcement, Chief executive Nick Beighton said: “The acquisition of these iconic British brands is a hugely exciting moment for Asos and our customers and will help accelerate our multi-brand platform strategy.” He goes further to state that as the drivers of both brands’ recent online growth (due to pandemic mandated store closures), the deal made “perfect sense” for Asos at every level. And judging by the reaction of some shoppers who claim they haven’t shopped in a physical Topshop/Topman shop for years, Asos has made a smart business decision by connecting their customer data with a bigger range of customer choice. 

Build digital foundations to stand the test of time

Digital retail exploded in 2020 and looks set to continue in 2021 so brands will need to build the right technology foundations to help them survive in a digitally-focused world. Even those brands who have had digital traditionally at their core need to be prepared to continually innovate to keep up to pace with changing consumer behaviours and expectations. This thinking is so embedded in Notonthehighstreet’s ethos that in August 2019, months before any of us had heard about COVID-19, its incoming CEO Claire Davenport stated that the key business priorities for the year ahead included “continuing to invest in the tech platform and focus efforts on creating a step change in the partner and customer experience”. This approach might be a more difficult balancing act for bricks and mortar players, but it is not impossible, as demonstrated by Next. In spite of its heritage as a catologue retailer, the brand managed to rally its online business against all odds and became one of the unexpected winners of the tough Christmas 2020 trading period.

Brand digital transformations were supercharged in 2020 due to necessity, from Deliveroo and Morrison’s partnership to MAC’s virtual make up assistants, but it has also highlighted the need for businesses to invest more into improving their employees’ digital skills set. A recent LinkedIn study  found that digital marketing is among the fastest growing sectors for new jobs in the UK, with a 143% increase in those hired for ecommerce-related roles during the pandemic and a 118% rise in digital content freelance roles. Social media and digital marketing roles also grew by 52% in 2020. It is important for businesses to factor in the digital skills of their workforce as part of their investment into the technology and systems that will support continued business growth in a digital world.  

Conclusion 

For retail businesses planning to use this year’s marketing budget to increase their data and tech investments and tackle 2021’s customer retention conundrum, there are obvious options for the cut, such as events. The budget pivot could be a complete overhaul of legacy technology systems or a commitment to empower your workforce with more digital know-how. But the most enduring lesson is that flexibility and adaptability will be core business traits that all retailers will need to embrace in order to cope with any new virus variants, legislative changes or indeed customer behaviour changes as we wait for the as yet undefined  ‘new normal’ to emerge.