Today, the ability to glean and learn from data-driven customer insights is a critical arena in which market leaders build competitive advantage and grow their customer base.
Looking ahead to 2025, fashion executives believe integrating digital processes throughout their organisations will be among their top-five areas for digitisation, as reported in BoF and McKinsey & Co.’s The State of Fashion 2023 Report. Such technologies will enable companies to better monitor their analytics and consumer behaviour, win deeper levels of customer loyalty, establish data-driven strategies and decision-making, and expand into new markets.
Privacy regulations and technological changes have reduced effectiveness and driven up costs, meaning that brands now spend more than three times the amount to acquire each customer than in 2013. As a result, brands and retailers need to double down on the areas of growth in their digital marketing and e-commerce strategies that are working, innovate the customer experience and more effectively interrogate what consumers expect from their e-commerce journey.
Founded in 2011, data and technology company Good Growth uses proprietary data models to help global businesses understand why customers fail to buy along the purchase journey, to improve brand and marketing effectiveness and digital sales channels performance. The goal is to implement change to deliver more profitable growth. The company has more than 40 proprietary e-commerce analytics models and an innovative technology platform that views legacy technology as an asset for growth.
Its industry benchmarks have been built over 10 years of client work, previously collaborating with the likes of The Economist, MyTheresa and Diageo. Each partnership seeks to further understand the scale of available growth and possible routes to success for clients within their market.
Now, BoF sits down with Good Growth’s CEO and co-founder, James Hammersley, for his insight on how the consumer journey in e-commerce is evolving, the marketing opportunities in data insight and how Good Growth seeks to improve brand and retailers’ consumer purchase journey.
How is the customer journey evolving and what opportunities is it creating?
The idea that customers come in and buy early in their engagement with a brand is rarely true. Even with an average order value of less than £100, customers will often engage with a brand more than 10 to 12 times over a six-week period, prior to purchase.
With one fashion brand we worked with, we found that the frequency of engagement and the length of time to purchase was far higher over a longer period than they had previously reported. However, when we have worked with luxury brands with high-end price points, we’ve discovered a similar pattern of behaviour – particularly for new customers to the brand.
Such a considered decision making process creates a whole series of opportunities around thinking creatively about the role of different channels, what information you want to communicate during those early stages of engagement, and how you segment your customers.
What is the most effective way to leverage different marketing channels to drive conversion?
Our research has revealed that the choice of channel to engage with brands is varied and multiple — customers engage through up to five different channels prior to purchase. The most effective way of leveraging different marketing channels is to understand their role — and to change the customer experience to reflect that information customers want to engage with.
Brands regularly miss the opportunity to listen to their customers — so they have to increase marketing investments to drive their target revenue. If you listen to customers, understand what they want and respond quickly and appropriately, in experience, marketing investments can be lowered by between 10 to 15 percent whilst ensuring the same outcome.
What marketing channel mix is creating the most compelling results for digital commerce?
As a fashion brand today, you’re probably going to be leveraging a minimum of five different channels and they are going to be codependent. For instance, a brand can’t improve its affiliate marketing if it hasn’t got an effective social media strategy. It’s an intimate, interdependent relationship.
Our research has revealed that up to 83 percent of all fashion sales include a social engagement, but less than 1 percent of those brands consider that engagement in their reporting of the customer journey.
There is still so much for brands to connect and piece together. However – if you get it right – you beat your competitors.
Here, success is about being early in the engagement across the board. Consider your performance metrics for first-time buyers, whether they are engaging through Instagram, Snap, or another channel. The metrics you use will differ from the ones you consider across customers who visit directly, via affiliate marketing or via email.
No matter where it takes place, the most effective lifetime customer value strategies prioritise the first-time purchase. But, if you can’t systematically address and understand the reasons for performance for first-time buyers, it’s hard to maximise lifetime value.
How can brands and retailers begin innovating their digital strategies with legacy technology systems?
One of the challenges facing fashion today is that a lot of the systems are working on legacy technology. If you are the chief marketing officer of a global fashion brand, and you want to launch a new innovation — for example, a new delivery proposition or gender neutral sizing guide — and that takes six months to innovate, you are going to lose your first mover advantage. That is simply too long a lead time.
No matter where it takes place, the most effective lifetime customer value strategies prioritise the first-time purchase.
Often the creativity of the commercial and marketing teams is thwarted or constrained by the ability of the technology to build and deliver highly personalised, experimental innovations. A lot of work we do is around how to make legacy technology work more effectively. Ironically, the huge value of legacy technology is that it works — even though it might not be as cool as you want to be, it takes orders and so has a huge value. For fashion brands, separating out the maintenance of your legacy technology from your innovation agenda.
How does Good Growth support fashion businesses with data reporting and analytics?
Most brands we meet are ambitious to do more. We seek to arm chief marketing officers with better data to engage their board or their chief financial officers more effectively, communicating findings that show where they need to invest, the changes they should make to their investment profile and how to grow profitability.
The real challenge of that historically has been the pace of change. If you look at some of the most innovative fashion brands in the world, they are investing 1.5 to 2 percent of their revenue in digital technology, which is a huge commitment and, often, the risk of change is considerable. Breaking that dynamic is where our platform comes in.
What is a key opportunity for consumer engagement in the future?
Considering the evolution of direct-to-consumer is an interesting opportunity. For example, Rolex has gone out to the market and bought retailer [Bucherer] — but it doesn’t need reach or support with brand visibility. I suspect this investment is to do with a strategic desire to own customer relationships, and to understand the drivers of purchase and innovation.
Rolex could have launched a DTC shop themselves and sold directly to customers, but then you would miss out on some of the richness and insight into how customers think about other categories — and how they think about engaging with brands.
What will be interesting to watch evolve is the degree of confidence that brands exhibit in owning their customer relationships — and using those relationships to innovate and grow their businesses.
This is a sponsored feature paid for by Good Growth as part of a BoF partnership.
