On Up Next in Commerce we’re always looking for what’s, well, up next. How should brands be thinking about their omnichannel strategies? What are some of the new platforms or channels top brands are testing out? How is the ecommerce and retail landscape evolving? With 2021 coming to a close, it’s time to look a little closer at all of those question and try to answer them for brands looking ahead to 2022.
On this episode, I was excited to welcome back Caila Schwartz, the senior manager of consumer insights and strategy at Salesforce, and we dug into some of the stats, data, and insights her team has gathered in order to give some tips and advice to brands that want to get ahead and stay ahead in 2022. We talked about supply chains, loyalty programs, and had a debriefing on the iOS update that’s causing brands across the board to shift their marketing strategies in more ways than one. There are tons of great nuggets in this one so enjoy, and cheers to a great 2022!
Main Takeaways:
- The Battle For First-Party Data: Loyalty programs and social will be key to get first-party data because they are the best ways to engage one-to-one with the consumers. It’s about a give and take between the consumer and the retailer, so the innovators in the space that can create unique ways to engage will ultimately win out.
- Growth Spurts: In 2021, growth was much more modest than in the past and there were fewer promotional campaigns and discounts than in years past. The supply chain issues and the economic issues around the world have played a role in this change, and the trends may not necessarily reverse in 2022. As a result, consumers are impacted and brands have to find ways to pivot to make sure that consumers are getting the best possible experience.
- iOS Update TLDR: Apple’s update in late 2021 has flipped email marketing on its head and brands have to adjust. If your marketing strategy is built around or includes open rates, then you should be rethinking and refocusing on click-thru rates instead. To get more results in that area, you have to level up your actual emails and create better, more engaging content.
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
Key Quotes:
“The battle for first-party data will be in full effect. And so brands and retailers, and really any organization, needs to be thinking about how they’re going to collect first-party data and not only collect it, but then store it in a way that they can actually use it for actionable insights and as well as providing a great seamless experience across all consumer touch points.”
“You’re not going to get a ton of data off of these social media platforms… it is more about that entire journey. We know that the customer journey has around nine touchpoints between discovery and purchase. So that’s nine different ways that the consumer’s interacting with your brand. And many of those ways you’re not even aware of and social, we found is a very important tool across three points of the consumer or customer journey from discovery research and then post purchase process. So when we think about the role that that social plays, it’s not going to be your primary mode of first-party data collection, but it’s merging that data with the data that you do have to understand your consumer, understand their wants and needs.”
“We know that today the modern consumer expects so much more out of a loyalty program. So it’s not just about collecting points. It’s about experiences. It’s about new and unique ways that you can deliver what the consumer expects out of that relationship. And so I think we’ll see more loyalty programs headed into market, but the ones that will survive and do really well are the ones that are innovative and find innovative ways to engage their customers and collect that data. And it really is about it’s a two way street, right? If the consumer is giving that data up, it really is up to the brand and the retailer to compensate that consumer for the data and any additional data that you ask or prompt them for. Again, it’s about a give and take between the consumer and the brand and retailer.”
“The supply chain has really been in a difficult spot since the beginning of the pandemic in 2020. It hasn’t gotten better. I don’t anticipate it’s going to alleviate itself for a while. And we saw the inventory crisis really hit retailers this year. We saw over cyber week — which is the point where we see the greatest increase in new SKUs coming to market — we actually saw a 5% decline globally. So there were far fewer skews. And as a result, consumers saw far fewer promotions. So the actual number of campaigns or promotional discounts that were being offered to consumers was less this year as well as the average discount rate was actually a lot less aggressive than it has been in years past… So the consumers weren’t getting as great of discounts, prices were higher, and just because holiday is over, I don’t foresee those challenges going away anytime soon. So I anticipate that consumers will still continue to feel the rub of those economic issues. And retailers and brands will still have to deal with inventory crises from a consumer perspective. Even though they’re technically spending more money, they’re actually placing fewer orders and buying fewer items.”
“When manufacturing moved overseas, it really was a risk-reward analysis where the reward outweighed the risk. And that was many, many years ago at this point. Now that’s not the case. It’s riskier to have your supply chain so far away or your manufacturing so far away. We’re seeing why that’s the case right now.”
“One of the things that we’re recommending is don’t build your marketing automation strategy on open rates. Open rates really aren’t a great metric regardless. Click-through rates are really what you should be focusing on. So if any part of your marketing automation includes open rates as a trigger or if it’s part of your overall scoring strategy, I would definitely change that now. That is definitely step one. And the next component is really going to be, how do you improve engagement within the email itself? So thinking about how you can embed forms or click-throughs, what type of engagement or content can you provide in the actual body of the email that will make readers click or tap or engage? That’s really going to be critical for improving those click-through rates. And this new reality that Apple is forcing on marketers.”
Bio
Caila Schwartz is a Senior Manager, Strategy and Insights, Retail and Consumer Goods at Salesforce. Prior to this role, Caila served as a Senior Strategic Marketing Data Analyst for Demandware. She has a Bachelor’s from Wellesley College and is based in Charleston, South Carolina.
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
—
Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce. I’m your host, Stephanie Postles, CEO at Mission.org. And today we have Caila Schwartz joining the show, who’s a senior manager of consumer insights and strategy at Salesforce. Caila, welcome back, because you’ve already been here before.
Caila:
Thank you for having me again.
Stephanie:
Yeah. Super stoked to have you back. So today I heard we’re talking all about 2022, which is great because I haven’t done that yet. I haven’t gotten to do pull out the crystal ball and see how we can be thinking about helping brands, and what they should be thinking about. So I’m glad you’re here. And I would love to kind of hear first what’s top-of-mind, like what’s the most important thing you all are thinking about for next year?
Caila:
Yeah, absolutely. Well, there is so much going on, and every year there’s a whole new set of challenges. 2022 is not going to be any different, but I think one of the biggest challenges that brands and retailers are going to have… Oh, I’m so sorry.
Stephanie:
No worries. Turn [crosstalk]. You can just start back over again with one of the biggest challenges.
Caila:
Okay. One of the biggest challenges, I think that brands and retailers are going to face in 2022 is all around the cookieless internet. This has been talked about throughout the entire 2021, but this will truly be a reality in 2022 because we know that Google is officially sunsetting cookies in the new year. And so really what this means is that the battle for first party data will be in full effect. And so brands and retailers, and really any organization needs to be thinking about how they’re going to collect first party data and not only collect it, but then store it in a way that they can actually use it for actionable insights, as well as providing a great seamless experience across all consumer touchpoints. So one of the things that, in terms of data collection strategies, that will be really important are loyalty programs.
Caila:
We also think that social will play a really huge role in the battle for first party data, because we know that consumers are more social than ever these days. And it’s really going to come down to organic social engagement as well as influencer marketing. And then going back to the old standby emails, as well as SMS, push notifications, really that one to one relationship with your consumer, how you’re going to build that and how you’re going to encourage consumers to give you their data in order for you to provide a great experience for them.
Stephanie:
Yeah. We’ve heard a lot of people talking about that on the show. I mean, when it comes to thinking about social media, how would you kind of pull them through to even get deeper data and insights? Like what are some mechanisms maybe that you’ve seen? Because when I think about Instagram or Facebook, or wherever, you can kind of get a bit of our first party data, but not as much as maybe if you had their email or phone number, but how do you think about kind of what does the ideal state look like to really have that access?
Caila:
Yeah, well, you’re not going to get a ton of data off of the social media platforms. They are going to hold that quite close to the chest, but it is more about that entire journey. We know that the customer journey has around nine touch points, but between discovery and purchase, so that’s nine different ways that the consumers interacting with your brand. And many of those ways you’re not even aware of. And social, we found, is a very important tool across three points of the consumer or customer journey from discovery, research, and then post purchase process, including service. So when we think about the role that social plays, it’s not going to be your primary mode of first party data collection, but it’s merging that data with the data that you do have to understand your consumer, understand their wants and needs.
Caila:
And then it’s also really important to think about how you’re going to provide that in-channel experience, not just from a marketing perspective, but commerce and service as well. So if you’re providing service in channel, how you’re merging those records back to your own data in order to maintain that consistent experience and keep your records clean and updated, it’s going to be critical. So it really is about having that one source of truth about the customer. We know that this is really hard to do. Marketers, commerce executives, everyone struggles with having a lot of different data sources in a lot of different places. And they’re not talking to each other. So this is going to be top-of-mind, I think, for nearly every executive out there going forward.
Stephanie:
Yeah. I completely agree. When it comes to, I mean, getting first party data, is there any cool things that you’ve seen brands or companies doing where you’re like, “Oh, that’s an interesting way to try and get that first party data, and get that relationship going,” maybe in a more unique way than others are doing it.
Caila:
Yeah, well, yeah. I think the biggest opportunity right now is through that traditional loyalty program. And I say traditional because loyalty programs have been around forever, but we know that today the modern consumer expects so much more out of a loyalty program. So it’s not just about collecting points, right? It’s about experiences. It’s about new and unique ways that you can deliver what the consumer expects out of that relationship.
Caila:
And so I think we’ll see more loyalty programs headed into market, but the ones that will survive and do really well are the ones that are innovative, and find innovative ways to engage their customers and collect that data. And it really is about… It’s a two-way street, right? If the consumer’s giving that data up, it really is up to the brand and the retailer to compensate that consumer for the data and any additional data that you ask or prompt them for. Again, it’s about a give and take between the consumer and the brand and retailer. And so I think that the clear winners in that space will be really, really innovative.
Stephanie:
Yeah. We just had The North Face on the show and they were talking about their loyalty program, and how they were basically reinventing the entire thing and testing a bunch of pieces within it. So they’re like, “Yeah, we’re going to maybe give away this experience,” or maybe rentals, like for snowboarding and skiing, and just testing each piece to be like, “How many people actually show up and want to get these rentals or want to sign up for this experience.” And it was cool to see how they’re essentially flipping the entire program on its head and seeing how they should rebuild it from scratch, which is awesome to hear about.
Caila:
Yeah. And I’m seeing so many more retailers and brands out there rethinking their loyalty program. And I think one of the best examples of a loyalty program that I think speaks to the market or their audience really well is the Sephora loyalty program. It’s been around for a really long time, but what’s unique., what they did really well right out of the gate was that they understood that their audience craved that community aspect. And so they’ve built their program around that community. And the beauty community in particular is really strong. And we know that Gen Zers are at the cusp of all of the changes and innovation happening there, and they really capitalize on that.
Caila:
And so we see that their consumers are so engaged and I think it in part due to that really great loyalty program that they kicked off. So I think it’s a challenge, right? Because you can’t set it and leave it. It has to constantly breathe and grow. And it really is a special beast. And it also does come down to who you serve and what’s your audience, and understanding if you do cater to that Gen Z audience, they’re going to be interested in something completely different than a baby boomer or a Gen X. And so understanding those differences as well was really critical.
Stephanie:
Yeah. I mean, especially thinking about like maybe having different loyalty programs to go to different customer segments and how to keep all those running at the same time, and the messaging going out. I mean, if you hit that, I mean, that feels like the end goal. That’s winning right there. If you can have that many different things going on and have the right messaging, and track the data all in one place,
Caila:
That’s how, yeah. Goals. It’s going to be a lot of work, but that’s why having that one source of truth on the customer record is going to be really important going forward.
Stephanie:
Yeah, Cool. Okay. What else should we be thinking about in 2022? I mean, you guys have insights into all these amazing brands that you work with. So what else are you kind of seeing as coming down the pick right now?
Caila:
Yeah, that’s a good question. I think we left off the holiday season in a very interesting place. So growth was not aggressive as what we saw in 2020. So in 2020 we saw off the charts growth for digital commerce. 2021 holiday was much more modest. We expected that. It really is a numbers game. We didn’t expect to see that massive growth as we did in 2020. But something that we did see, which was really prevalent this year was just the economic issues that are playing a part in the overall consumer behavior, as well as how retailers and brands are responding in real time. And really the main issue right now is the supply chain. The supply chain has really been in a difficult spot since the beginning of the pandemic, in 2020, hasn’t gotten better.
Caila:
I don’t anticipate it’s going to alleviate itself for a while. And we saw the inventory crisis really hit retailers this year. We saw over Cyber Week, which is the point where we see the greatest increase in new skews coming to market. We actually saw 5% decline globally. So there were far fewer skews. And as a result, consumers saw far less or far fewer promotions. So the actual number of campaigns or promotional discounts that were being offered to consumers was less this year or fewer, as well as the average discount rate was actually a lot less aggressive than it has been in years past. So it was around 8%, 10% lower than in previous years. So the consumers weren’t getting as great of discounts, prices were higher.
Caila:
I don’t see, just because holiday is over. I don’t foresee those challenges going away anytime soon. So I anticipate that consumers will still continue to feel the rub of those economic issues. And retailers and brands will still have to deal with inventory crises. From a consumer perspective, even though they’re technically spending more money, they’re actually placing fewer orders and buying fewer items. So if these trends continue, I see that also affecting the consumer in that regard as well. So it’s going to be an interesting year from a supply chain perspective, and how brands of retailers move to mitigate those issues will certainly be front-of-mind, I think, for most people in the industry.
Stephanie:
Yeah. So what do you think companies should do when it comes to supply chain? What’s your personal opinion on how a company should be thinking about this, this year?
Caila:
Yeah. A lot of people disagree with me on this, but I really think that suppliers, manufacturers need to be thinking about how they can move their manufacturing closer to the source of demand, moving it closer to the United States or other major demand sources I think is really going to be critical. It’s also better for the environment overall to shorten that supply chain process. And so I think that is really what the industry needs to be thinking about in 2022. And people will disagree. There’s a lot of processes built up overseas to support manufacturing there, but I don’t foresee this resolving itself anytime soon. And I think it would be great to bring manufacturing closer to demand.
Stephanie:
Yeah. And I mean, companies like Hello Bello would agree. We just talked to them a few weeks ago and they have a plant here in Texas operating. And-
Caila:
That’s awesome.
Stephanie:
…it was interesting hearing how they were thinking about doing that, bringing it here, why it actually might be saving money in the long-term. And I was telling them, I’m like, “I think you all need to present a case study on what it looks like opening a plant here in Texas, and what were the decisions behind that, and how should a company be like weighing the pros and cons with it because they were super stoked about it. They’re like, “We can have 800 diapers pumping out a minute. We can change them at the drop the have we can implement new designs. We can check on everything. We’re given tours of our plant. And to me, I was like, “Well, that’s pretty inspirational.” And I think a lot of brands don’t know if that’s even possible, which… You’ve got celebrities showing you the way. Here we go, Kristen and Dax, go them.
Caila:
Exactly. And when manufacturing moved overseas, it really was a risk reward analysis where the reward outweighed the risk. And that was many, many years ago at this point now, that’s not the case. It’s riskier to have your supply chain so far away or you’re manufacturing far away. We’re seeing why that’s the case right now. And I think a lot of people are opposed to it because it’s not the norm, but we’ve talked to so many customers who you just mentioned who do have manufacturing here and really did well this year because they could make those quick changes. They didn’t have to rely on the supply chain coming overseas, the ports, all of that. To some degree, yes. There is still, , some material that would be shipped or parts, or things like that. But for the most part, they were in control and it was… They had a totally different experience this past year than other companies. So it is very interesting.
Stephanie:
Yeah. I Agree. Okay. Let’s sit on one more point. What should we be expecting this year? What should companies be thinking about? Your third biggest thing.
Caila:
So my third update is it’s a sneaky little change that Apple announced this fall and has completely implemented as of the end of November, which is the changes to their email privacy product. Sorry, I’ll start that over. Changes to their email privacy in regards to their mail app in particular. And so it really is two main things that this change does. It essentially, for consumers or Apple users that manage their email through iMail, whether or not it’s a Gmail account or whatever, Apple will automatically mark those emails as opened or read, even if they were never opened. So nearly all emails will look like they’ve been opened. And then the second part of it is that Apple will auto generate an email address for consumers that sign up for a new product or service. So there’s two real components here.
Caila:
It’s how that’s going to affect your marketing strategy, and also how that’s going to affect your customer data. If you have all of these email addresses floating around for one single customer. So when we think forward to 2022, how that’s going to affect your marketing strategy could be quite significant, especially if your marketing strategy is built around or includes open rates as a metric. So one of the things that we’re recommending is don’t build your marketing automation strategy on open rates, open rates really aren’t a great metric, even regardless, but click-through rates are really what you should be focusing on. So if any part of your marketing automation includes open rates as a trigger or opens as a trigger, or if it’s part of your overall scoring strategy, I would definitely change that now. That is definitely step one.
Caila:
And the next component is really going to be, “How do you improve engagement within the email itself?” So thinking about how you can embed forms, or click-throughs, like what type of engagement or content can you provide in the actual body of the email that will make readers click or tap, or engage. That’s really going to be critical for improving those click-through rates, and this new reality that Apple is forcing on marketers. So those are our two biggest recommendations. The other components really are around how you’re going to unify your data, which we’ve already talked about, especially in regards to the cookieless internet. But I think this update also is going to make that really important. So thinking about how you’re going to have that single source of truth for the customer, even if that customer has a bunch of different emails being generated for them. And so bringing it back to that unifying data, having that one source of truth is going to be a critical theme in 2022.
Stephanie:
Yep. Completely agree. Thanks for sharing that. That’s very helpful having the too long, don’t read version of it because I myself did not fully dive into it. So I very much appreciate that. Caila, thank you so much for coming on here and joining us again. Until next time, next year, when you join us again I’m sure, work in brands, stay on top of these trends, see what you all are researching and finding out like where should a company go?
Caila:
Yeah. Absolutely. Well, my recommendation is to start with our shopping index. It’s a quarterly benchmark, which we offer free on the salesforce.com website. It’s got a bunch of different eCommerce metrics that we’re tracking and you can break it down by country or vertical. We’ve got about 10 different KPIs that we follow there, and it’s trending over nine quarters, so there’s a lot of data in there. So I’d start there, and then there’s a lot of great follow up resources within there as well.
Stephanie:
Love it. All right. Thank so much.
Caila:
Thank you.
