Customer Data Is the Next Competitive Battleground: 5 Trends Shaping the Future of Digital Marketing

As the world grows more digitally savvy, brands must leverage technology across devices and channels to build more direct, intimate relationships with their customers. Gathering and activating customer data is the key to unlocking these successful consumer experiences, but not all brands are seizing the opportunity. Here are five data-driven trends that will shape the future — and expose the widening gap between companies capitalizing on the promise of first-party data and those failing to realize its full potential.

First-Party Data Is Transforming Retail

These are challenging times for brick and mortar. Store closures are mounting, hundreds of U.S. shopping malls are expected to shutter, and giants like Amazon and Walmart continue upping the ante, promoting customer loyalty with incentives like free shipping, subscriptions, voice shopping and original content.

Success in this marketplace is driven by personalization, and personalization is driven by first-party data — and that in itself is why we’ll see legacy retailers embrace it with increasing urgency and dedication. Amazon’s acquisition of Whole Foods shows that this isn’t an exclusively online phenomenon, either: Jeff Bezos’ big offline bet creates more opportunities to interact with more shoppers, filling in the gaps on what people actually consume and strengthening the data set that Amazon uses to personalize the entire retail experience.

Brands Are Using Customer Data to Reinvent Themselves as Identity Companies

Strong identity graphs (databases that house all known identifiers correlating with individual customers) underpin the most successful businesses of the digital era. The reason Amazon dominates retail isn’t just because of its product offerings, but because it knows what its customers want via copious insight collected within its own sprawling ecosystem.

Walmart is responding by ramping up its data initiatives to build its own identity asset and drive brand value. But the trend goes beyond retail.

The newest crop of Silicon Valley upstarts achieved success by focusing on customer identity in a diverse array of niche markets, from grooming (Dollar Shave Club) to hospitality (Airbnb), music (Spotify), even optometry (Warby Parker). Brands positioned to win will follow their lead and make the ‘identity’, the foundation of their business.

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Controlling Customer Data Is Becoming a Mission-Critical Priority for Marketers

Facebook and Google are the pioneers of known-user marketing at scale. But for all the power they give marketers to tailor and target their messaging, these walled gardens also hold onto the resulting customer data, leaving brands unable to integrate that insight into a broader strategy.

Watch out for an increasing number of identity-driven marketers to invest in customer data assets that they alone own and control. They’ll deliver targeted ads at known customers, personalize sites for 1:1 engagements, measure marketing performance and close the loop on attribution.

And, they won’t have to share their data with anyone — unless, of course, they choose to. Speaking of which…

Customer Data Is Driving Corporate Collaboration

To compete with Facebook, Google and Amazon — goliaths with limitless supplies of customer data they control and exploit for continued growth and marketplace domination — brands need new tactics to compensate for their lack of data sets and shortfall of resources to go it alone.

In the months ahead, we’ll see more companies form strategic alliances to forge mutually-beneficial data assets that inform smarter strategies to meet customer needs, create more valuable engagements and open new revenue streams.

By sharing first-party data in strategic and secure partnerships, brands can boost scale and the value of their identity asset, closing the gaps that separate them from the big players.

Think of the opportunities data-sharing opens up: a consumer packaged goods or beverage brand, quick-service restaurant, sports league or men’s lifestyle site may have data in various places, accessible in various ways, but working together, these brand partners can create larger, more valuable second-party data pools that get them a lot closer to a lot more customers.

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Brands Are Ditching Segmentation to Target a Demographic of One

Digital innovations like assisted self-service tools and attribute-based recommendations are proven to increase engagement and drive revenue. However, they target personas, not persons with unique histories and expectations. Advancing to truly individualized marketing begins with consolidating customer data from databases and partners into a single repository.

From there, brands must identify gaps in their ability to deliver true personalization throughout the customer journey, designing each digital touchpoint to both, use and collect customer data. They must also consider the kind of customer data that can be captured in one touchpoint for driving individualization in others.

Companies fully invested in all types of personalization will outsell competitors by at least 30%. However, precious few brands are capitalizing on individualization’s potential: a recent Sailthru survey found that just 33% of marketers can predict the next actions a customer is likely to take, then customize experiences based on that forecast.

Brands who know their customers as well as they know themselves will be better able to withstand the rising competition from large tech players and their powers of intermediation. Brands who don’t know their customers won’t stick around long enough to see what else the future brings.

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