Opinion

Why brands need to revamp their data analytics strategy now

The time is coming for brands to change their mindset regarding personalisation, and maybe jettison some of the 'data' in 'data analytics', writes Brett Gronow, founder and executive chairman at Systema AI.

Creating a timely, relevant and personalised customer experience is any marketer’s absolute apex. For more than a decade, AI, historical/third-party data and retargeting have been widely recognised as the most prevalent methods to achieve this. But the time is coming for brands to change their mindset regarding personalisation, and maybe jettison some of the ‘data’ in ‘data analytics’.

Depending on historical data is archaic

A combination of industry events is going to shake online brands still heavily relying on historical data and cookies to engage with consumers.

With Google’s planned end of third-party cookies next year, upcoming and tighter privacy regulations from the Australian government, and consumers’ growing and justified concerns about how their personal data is used online, there are more than enough reasons for marketers to begin challenging the status quo.

Beyond these events, inefficiencies tied to current data analytics and personalisation strategies have been thrust into the spotlight.

Most Australians expect brands to personalise their experience (71%), but the majority (77%) also say they are regularly being served with irrelevant content or product suggestions online.

Daily examples show how indifferent legacy personalisation fueled by historical data can be – the worst of all being recommendations for products we have already purchased or just viewed.

This indifference can be amplified by shifts in context and conditions – what was searched for in the last minute may change entirely in the next.

Sometimes, we don’t know what we’re looking for until it is in front of us.

The combinations of these shifts are infinite but the principle remains the same – making predictions based on historical data is not relevant.

Consumers’ behaviours are rarely linear, and people are generally hard to predict.

The anonymous majority

Online brands know very little about roughly 80-98% of shoppers visiting their websites, suggesting that data-based personalisation only works for a small portion of their overall audience.

In order to address the anonymous majority, the industry needs to change its mindset about the way we leverage data and algorithms, not only looking at the past, but also considering what’s happening in the present.

In-store staff don’t present you with recommendations based on historical shopping behaviour alone, they seek to understand what you’re shopping for at that moment and tailor their recommendations based on your current intent.

Transposing this intent-centric, real-time approach to anticipate present needs will become instrumental to the future of personalisation.

Many in the industry are also urging brands to work harder at collecting first-party data and establish loyalty with consumers before third-party cookies disappear – effectively making those visitors anonymous.

And they are right, first-party data will continue to be vital as well, but that alone won’t serve as a penultimate solution.

First-party data will help enhance a customer’s journey and experience, provided they are browsing the website while logged in, which in the majority of cases doesn’t happen before the check out process begins.

In addition, given consumers’ frustration with the way brands handle their data, it is likely that they will still be limited in their propensity to hand personal information over, even if brands keep first-party data requirements to a minimum.

Back in 2020, 94% of Australians claimed they were uncomfortable with how their personal information is collected and shared online, suggesting that brands will also have to factor in a much stronger focus on privacy when defining their customer experience and personalisation strategies in the future.

To anticipate 2023’s death knell for third-party cookies, leading brands have begun ditching historical data and scaled back their retargeting strategy, reimagining their approach to analytics to reach that anonymous cohort.

In Singapore and Hong Kong, New Balance has already reaped the benefits of this new kind of personalisation, increasing its conversion rate by 22% in the first month.

Creating a tailored shopping experience for anonymous shoppers shifts the paradigm and allows marketers to bolster their digital strategy – collecting and leveraging first-party data for those that log in, and effectively engaging with those who remain logged out.

Revisiting mainline data strategies may have marketers worried about the challenges ahead, but it also presents a unique opportunity to transcend archaic practices, and introduce new ones for better, more ethical and sensible personalisation – ones that won’t leave consumers with a sense of exploitation online.

Brett Gronow

Brett Gronow, founder and executive chairman at Systema AI

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