Marketing
Don’t let inflation be the Grinch who steals Christmas
Here is a three-step plan that can help make a retailer's marketing strategy merry and bright.
September 29, 2022 by Courtney Hilbert — Sr. Director, Analytics, Merkle
Unlike the spirit of Santa Claus looming large each December, inflation isn't a myth.
The realness of inflation is with us when we fill up our tanks, buy weekly groceries, or weigh the purchase of a new, well, anything. Consumers are experiencing inverse pressures as prices leapfrog over last year's, and savings plummet below 2008 levels.
Echoes of the Great Recession of the early 2000's taunt retailers as we pivot strategies to adapt to the headwinds of a rapidly changing consumer mindset. And although "hope is not a strategy," your strategies can have hope.
Yes, Virginia, inflation is real — but this three-step plan can help make your marketing strategy merry and bright.
1. Show me the data. For decades, the increasing use of data in decisioning has separated brands into two buckets: growing and contracting. No longer can data-driven decisions be a luxury. Understanding your customer through data is paramount for optimizing pricing efforts and delivering the optimal product lineup going into the highly competitive holiday season. Every person in this country is experiencing the impact of rising prices and increased demand — and yet the level of inflation-induced stress is directly related to the unique mix of your customer's life stage, geography, and income. Using consistent data points or metrics can help retail marketers decide which products, offers, and content will work at a hyper-local level. For example, the Inflation Resilience Measure highlights those communities — at a generational level — with greater and lesser resilience, helping to inform segmentation and personalization with the lens of inflation impacts.
2. It's all about segmentation, darling. Knowing your customers' behavior is one thing, but effectively and efficiently delivering optimized offers and experiences happens through segmentation. Marketers have leveraged segmentation for decades to profile and better understand their customers. Brands who have instituted data-driven segments target like-minded customers with customized offers, products, and content to ensure the highest probability of conversion and constancy. Coupling enterprise segmentation with the layered influences of geography and inflationary pressures will enable retail marketers to economically direct content to the ideal audiences ready to purchase by identifying customers who will be more engaged with discounts versus those who will be price elastic.
3. Test, baby, test. Having a disciplined test-and-learn practice is fundamental to responding to the inflationary impacts that influence your customer and preparing for the holiday shopping season. Whether at the grocery check-out or on the nightly news, each of your customers is hyper-aware of the state of the economy. Through an agile test-and-learn practice, retailers can fuel the back half of the year with optimized offers, products, and prices targeted to unique audiences. For example, marketers can use testing to learn if an upper-income millennial in Columbus, Ohio will respond to a buy-one, get-one jeans offer the same as a lower-income millennial in Columbus, Georgia, or if a new premium beer will resonate with a moderate-income Gen Xer in El Paso, Texas as it does with a similarly incomed Gen Xer in Indianapolis, Indiana. Execution of product launches and promotions throughout the third and fourth quarters of 2022 requires ongoing adaptability and agility to ensure each offer, product, and promotion lands with the most favorable microsegment. Effective price and promotion sensitivity testing is fueled through cross-functional collaboration to ensure seamless execution for the consumer across all channels. If the testing discipline is not currently a part of your organization, connect with analytic leaders in your brand and with your agency partners to quickly ramp up a team to ensure that you're able to adjust to the evolving inflationary burden.
Inflation is a Grinch, but as a thoughtful brand leader you can be Cindy Lou Who and save the holiday season. By leveraging data, customer segmentation, and testing, you can overcome the obstacle of Grinch-like inflation and watch the heart of your brand grow three sizes, securing a happy holiday and fueling success into 2023.
About Courtney Hilbert
Within analytical consulting, she provides thought partnership, guidance and insight to drive growth and customer nurture through the application of data in personal communication as well as strategic measurement and analytic roadmap development – incorporating both macro and micro economic trends with the goal of fueling consistent, data driven insights to drive action.
