Podcast | What Customer First Means in Retail Media
David Ciancio (00:12): Welcome everyone to this dunnhumby podcast series, which is all about the importance of putting your customers first, whatever retail setting you operate in. My name is David Ciancio, and together with my colleague, Dave Clements, we host a series of these bite size podcasts, with experts from the retail and data world. And we explore the importance of putting customers first with practical examples, techniques and lessons for retailers and for brands.
Today we’re speaking with one of my favorite dunnhumby people, Richard Dawson. Richard heads up our customer engagement and media propositions consulting globally. He brings deep experience, not only in media, but also in loyalty. So welcome Richard.
Richard Dawson (00:59): Hi, David. Delighted to be talking to you. Thanks for having me on.
David Ciancio (01:04): Well, thank you. I enjoy learning from you so much. It’s always one of my favorite conversations. Thanks again for doing this.
Richard Dawson (01:11): Pleasure is mine.
David Ciancio (01:13): Richard, let’s start by talking about what customer first means to you, and then more about how this definition applies to media.
Living in a world of communications, content and media
Richard Dawson (01:24): Sure, David. Good question. Good place to start. So I think when we are really thinking about customer first, it is literally that. So putting ourselves in the shoes of customers and really thinking about what it is that they need as they’re going about the day to day process of shopping with you. So, what are their needs, whether they need help, whether they need rewarding maybe, or inspiration throughout the shopping experience. And often when we’re talking about the world of communications and media, we are talking about interactions and offers and content that really sort of acknowledge and recognise customers and that are relevant to their needs. And more often than not, that means that they’re personalised particularly these days. So we have great capability to be able to personalise the experience. The more we can do that, the more customer first we can be.
David Ciancio (02:16): I’m very glad that you used the word content. You mentioned also offers and communications, but content to me means that not all communications have to give discounts or coupons for example, is that right?
Richard Dawson (02:32): Absolutely right. Yeah. So, whilst the world of personalisation has really been applied to offers, increasingly we are just seeing ways in which we can help customers in the day to day business of shopping. So whether it’s building shopping lists or understanding what the most relevant promotions may be for them or inspiring them with ideas and suggestions and all these things, we can use an understanding of customers to create engaging messages and content in a personalised way that can help build engagement with them, without necessarily always having to make the conversation about discount or about price. And actually if we can do that and we can build a positive experience, then we can have an impact on the overall value equation. So maybe we can even think about how much we need to invest in price because the customer has such a great experience.
David Ciancio (03:27): Sure. Those things that you mentioned again, particularly the concept of helping customers, seem to me to be even more important in this COVID and post-COVID world, right? Because shoppers are looking for ways to make the experience easier. You said shopping list, you said recommenders, promotions that are relevant for me, for example. I think those are great words and great concepts.
Loyalty is more than just a card or the app
Richard Dawson (03:54): Yeah, 100%. I’ve seen that apply more broadly as well. So retailers focusing on easy convenience, seamless checkout processes, particularly payment solutions as well. So, retailers are really thinking about the whole world of loyalty and payment and ecommerce together. And that really is what the experience is about for customers. And the more that we can make that relevant and customer first in the way that we think about it, in the principles that we apply to managing that experience, then the more we can deliver value to customers and engage them in the brand. So hopefully they’ll shop with us or choose to shop with us more than competitors.
David Ciancio (04:35): That’s so well said, this concept, that loyalty is something much bigger than just that proposition or just the card or just the app. And then of course media is, I think, the way that we talk to customers and listen to customers.
Richard Dawson (04:51): Yeah, for sure David. But as well through all your experience in really helping to have a customer first ethos throughout the entire business and how you can change a whole business around the customer. It’s not just the channels that we’re talking about today, but I think there’s an increasing understanding that if you want to make your media business work, then it needs to be customer first.
David Ciancio (05:15): You mentioned that ethos and we’re using the word customer first. So let’s talk about why such this customer first in ethos approach is so important.
Putting the right message in front of a customer at the right time
Richard Dawson (05:29): For sure. So I think if you take this back to first principles of building successful engagement from a retailer point of view, to how a retailer engages with its customers. If it understands the things that customers need and it builds propositions that engage with those priority customer needs, and customers are going to want to shop with a retailer. If you are not really understanding what’s important to customers, then you are maybe building more transactional relationships and maybe you are building that one time visit, or you have a basic basket, but you are not really going to be building sustainable long term loyalty. That’s really about understanding the depth of your customers as individuals, as groups and really sort of trying to understand what will engage them and make them tip.
David Ciancio (06:15): And you’d say one at a time when you talk about engaging them. Yes?
Richard Dawson (06:20): Well, certainly from where I sit within the business, then yeah. It’s all about how much we can really build a granular understanding using data attributes of those individual customer motivations, and needs across the end to end shopper journey. And they’re making sure that we are putting the right message in front of a customer at the right time to really help them in that particular moment, depending on what they’re trying to do. So, maybe they’re browsing before a shopping trip. Maybe they’re looking to build a basket online, maybe they’re choosing what time to go to store.
They might have a particular mission in mind. They might be really thinking about what they’re going to cook for their family for this evening. The more we can understand the context of the decision around the purchase of the product, the more we can create that relevant interaction with the customer. And then hopefully we just deliver a great experience for them and that builds long time loyalty over time. So one more item in the basket. One more visit as I think you’ve said many times before David.
David Ciancio (07:25): Well, and you’re then describing also this is about helping customers make choices quickly, and simply. It’s really helping them cut through clutter. I think that we ask customers to do an awful lot. And by that, I mean, when you consider that a typical retail grocery store, for example, might have as many as 3000 items on promotion a week and 400 of those on an end display, and then another 200 of those featured in an advert or to a flyer if they do that. Just imagine how difficult that is for a customer to sort through all of that. So we mean by personalisation, I think you’re saying to simplify relevance means, help me know which of those promotions are most important for me sort those out for me. Right. Make it easier.
Richard Dawson (08:22): Yeah, 100%. I mean, you’re absolutely right. It’s pretty crazy. Isn’t it? If you think what we’re asking customers to do, because they have busy lives, it’s not like they’re just thinking about coming shopping with a particular retailer. So there’s already an awful lot going on, and then we’re just parting more and more information on top. I think particularly if you think about the increase in customers shopping online and particularly through mobile devices as well, we’ve seen huge growth in customers shopping on mobile through the pandemic as well. You have that tiny piece of real estate the mobile phone screen that you are trying to place the most… the whole store on that screen. And actually, if you can’t be relevant in what you’re suggesting to customers in terms of the products, then they might buy that sort of fit the mission or fit what they’re trying to do, then is really difficult for cut customers.
So I think helping customers to navigate choice at speed really is the essence of personalisation. And like you say, to cut through that clutter and really help them. We know that retailers that can do that successfully are winning. So we can see that in the results. And we also hear from customers as well. So customers who don’t experience a personalised shopping experience are actually starting to influence their choice of where they shop. So, there are studies that show that sort of 50% of customers are starting to think, well if the experience is not personalised for me, I just may choose to go and shop elsewhere. So it’s having an impact on the bottom line. It’s not just a kind of a nice to have these days in the world of retail particularly grocery retail.
David Ciancio (10:01): Let’s continue that thought a little bit. So we talked about the customer benefits for choice speed and relevancy in terms of what matters to me. You said, I agree with you, “That retailers who do this well are winning and then it affects the bottom line.” So there’s a payoff or a win for the retailer. Yeah?
Unlocking revenue streams
Richard Dawson (10:21): Yeah, 100%. I think the more you can deliver the experience that customers are looking for, then the more you are driving those incremental visits, the incremental items in the basket, and you’re building loyalty over time. I mean, that’s how you grow customer value. It’s all about helping customers to, choosing to turn left to your store rather than right to competitors. So I think for the retailer, there’s real benefit in building front margin, if you like. So growing sales, incremental value. And obviously when we are talking about media, then there’s a huge opportunity for them to unlock additional high margin revenue streams by engaging advertisers to help fund that customer experience.
So if you can do that in a way that is customer first, then that is ultimately sustainable. So if you are going to unlock that incremental revenue, the revenue stream from advertisers, then the media has to be attractive to them. And actually it’s only attractive to them if it’s relevant to customers and will perform. So you have to build this sort of connected environment based around customer first principles.
David Ciancio (11:36): Sure.
Richard Dawson (11:37): In order to unlock that revenue stream.
David Ciancio (11:39): You used the word advertisers. And I like that. It’s kind of a subtle shift in mindset and terminology, isn’t it? For a retailer and a brand to not think of themselves as suppliers, but moreover, to think of themselves as advertisers who are trying to reach an audience of consumers. Yeah.
Richard Dawson (12:02): Yeah, 100%. I mean, there’s been a real sort of shift, I think in the way that advertisers see the value or potential value of retail media as well. So I mean, obviously a lot of engagement in the past has been around promotional support to promotions in store and tied up in the trade side. But if you think about some of the pressures that advertises face as well, so there’s an incredible focus on accountability for marketing spent from an advertising point of view.
So they’re asking their agencies to do zero based budgeting and account for every penny that’s spent. So really, the ability to be able to measure the impact of media is really important for them. But also, I think the big opportunity the retail media provides is they can be standing on the shoulder or next to customers as they’re going through this end to end shopping journey from whether they’re browsing, the shopping list at home, or on an iPad, on an Apple. Whether they’re around the store, sort of the media that’s available there, right up to the point of purchase.
We know that being able to influence customers at the point of purchase, whether that’s physical in store or digital online is absolutely vital. The ability now for advertisers to be present with customers in a relevant and personalised way. So buyers of their brand or people that… customers that may like to try their brand, is a huge win for advertisers. So that’s the opportunity that exists.
David Ciancio (13:45): And I was just going to add that. I also very much like the concept around meeting shoppers, meeting customers, wherever they are in space and time. So you’ve talked about…. And by that, I mean, and I think you do too, the channels regardless of their… if they’re online or if they’re in a store and that’s a bit of a mindset shift for both retailers and brands as well. If I build on the question just a little, so we’ve talked now about benefits for customers, benefits for retailers, for the brands, for the consumer package goods. You’ve mentioned a few. One is the measurability, the accountability, if you will of retail media.
Richard Dawson (14:28): Yeah, that’s right. I think the real difference here is that by knowing the customers that we are targeting or that advertisers are able to target, and then also be able to look at what they then go on to purchase using loyalty card data, and increasingly attaching that to other data sources as well. Then we can create that closed loop measurement, which is really valuable. So, advertisers and their agencies are no longer just reliant on looking at click through rates as metrics. But they’re actually able to look at incremental value and therefore create a really clear view of return on ad spend, which is ultimately the metric that they’re looking to manage. And I think, retail media traditionally has been difficult to buy into. So it’s-
David Ciancio (15:22): Right.
Richard Dawson (15:22): It’s hard. A lot of retailers have set up businesses channel by channel and it’s been bitty and there’s been a sort of real blur, I guess, between or mainly been around trade spend. But I think as the technology arises, and understanding of the opportunity arises our ability to personalise the experience increases and create that environment for advertisers to buy in a seamless frictionless way, then obviously these become really meaningful channels almost in retail media as a channel for advertisers and their agencies to think about buying into alongside other traditional broadcaster channels, for instance. The scale is there through the reduction in friction. And that again, serves to increase the opportunity I think.
David Ciancio (16:14): As long as we’ve known each other, Richard. I don’t think I’ve ever told you that I actually headed up advertising for a retailer for a few years. And remember that the metrics that I was accountable for were such things as impressions or eyeballs, but never at that time in the world was I accountable for conversion; who actually made purchases and whether or not the advertising was effective.
Richard Dawson (16:42): Yeah, 100% David. Well, you’ll understand better the most from that, just the mindset shift therefore. I mean, this opportunity is really making agencies rethink their models as well. So how can you gain that level of accountability across other channels? It just really helps you with decision making. I think it’s super clear to understand accountability by channel. You can see the additional benefit of having an anomaly channel, integrated approach to advertising as well. We know because we can measure it, we can use shopper data to measure that when you integrate… Yeah, you close the loop and you can understand that, when you interact with a customer in a personalised way across multiple channels, you get exponential benefits. We know we get a 30% conversion ratio when we are talking to a customer in a personalised way across three channel… three or four channels versus maybe 4%, if it’s channel by channel. So we can measure the difference, and again, that’s just part of the benefit and the accountability that advertisers are looking for.
David Ciancio (17:52): Yeah. So I love the benefits we’ve covered off for customers, for retailers, for advertisers. Let’s take just a minute and talk about now, how this all gets unlocked.
The Virtuous Flywheel
Richard Dawson (18:07): I mean, David, you’ve talked in the past a lot about this flywheel as well. And I think that’s really what we’re trying to help retailers to see the opportunity around and to get spinning. Because those benefits for the customer, for the retailer and for the CPG are really interlinked. So unless you are being customer first in your approach, and you’re doing the right thing for those three groups, then your flywheel gets a little bit stuck. But if you are unlocking ways in which advertisers can invest into the customer experience in a personalised and relevant way. If I see a relevant ad or a sponsor product placement when I’m building my basket online, I’m going to put that product in my basket, if it’s personalised to me, if it’s relevant. I probably won’t if it’s not personalised.
So I then engage in that advertising, that’s doing a great job for the CPG. The CPG then thinks, well, hey, this media’s performing, I’m going to invest more. And the more the benefit the CPG gives back to the customer through the retailer. Again, the more the customer is engaged. So we can set up this sort of real positive cycle between personalisation and customer engagement and monetization from the advertiser point of view. And we want to get that flywheel spinning. And we know that if we set the business up in a customer first way, we can really make that flywheel spin and pull more advertising or more CPG contribution into the environment.
Yeah. I mean, I was going to say David from your experience, if it’s not performing for advertisers, then it’s going to be a one hit wonder, right. So you’re not going to create demand in the advertising market if it ain’t working for the advertisers. And that also means it won’t be working for customers either so. Again, it’s back to your point before it’s just noise and clutter.
David Ciancio (20:19): And that’s just what I was going to say. This idea the summarise of a better experience for customers, driving a better performance for advertiser investments and for the retailers. Means that there are just sharper more precise investments, which perform better in terms of the cost of communicating with, and listening to shoppers. Which means in turn that we’re creating a better experience. So it is that virtuous flywheel that we know from our experience working with our clients it works every time. In fact, I’ve never not seen it deliver superior results, better customer engagement, sales growth for brands and retailers. So every time this works.
Richard Dawson (21:08): Yep, 100%. It’s the end game. I think when you look at the opportunity as well, that’s what staggers me. So you think today about 5% of what vendors and CPGs spend across trade and shopper marketing is personalised. The rest of it is not personalised. We know the incremental benefits for all three parties through personalisation and all right, you’ve got… There’s some practice around expectations, around bat margin and trade spend and how that’s used in the business. It’s a bit of a gray area. But the opportunity to break through that with transparency and improve performance, by best at transferring some of those funds into personalisation is absolutely huge.
David Ciancio (21:57): Go, please again.
Richard Dawson (21:58): Go on. The opportunity is huge. And then you think, well, if we can create, reduce the friction and increase these opportunities for brand money to flow into this whole experience of engaging customers throughout the shopper journey, then all of a sudden you have much closer and better engagement from brands throughout the whole experience. It’s a huge challenge from a retailer point of view to get that all set up. So it’s structural from the top down. And there’s a lot of things need to put in place that-
David Ciancio (22:36): We think they need help. Right. It always mystifies me and what I was going to ask. It mystifies me that more retailers and brands haven’t caught onto this, that they’re not practicing this flywheel, this virtuous flywheel. Why do you think that is?
Richard Dawson (22:56): Well, I guess a lot of retailers have… I mean, is no secret that there’s a huge opportunity out there in retail media, I think. And I think, particularly retailers who have significant market share have been looking to monetise their assets for some time. And we obviously started working with Tesco over a decade ago on just that. I think one of the challenges is that almost this version one point North, if you like, has followed a lot of the siloed thinking, right. I know there’s an opportunity out there as a retailer, but the cost of entry were quite high. So from a technology and a capability point of view, I’m talking five plus years ago.
So typically it’s outsourced to a third party channel vendor. So you’ve built up this ecosystem’s been built up where you have multiple channel vendors, all trying to talk to CPGs separately. So actually that doesn’t really work particularly well from a customer point of view because I have an inconsistent experience across channels. So I’m not seeing the same brands talking to me in the same way, or in an integrated way across channels. It doesn’t really work for CPGs because… and advertisers, because it’s difficult for them to buy in. They have to talk to five, six different channel owners. So it’s just bitty. They can’t plan from a customer point of view, to manage interactions with customers through the end-to-end shopper journey, which is how they want to structure their budgets, by the way.
David Ciancio (24:30): Sure.
Richard Dawson (24:31): I mean, their CPGs are organised themselves as well to be able to follow the shopper and that doesn’t necessarily mean planning in silo. I think one of the challenges for retailers is to manage that channel proliferation. If you like in a way that hasn’t been particularly customer first and try and build the right capability, which does focus on the customer and does link across channels, hazard its basis. A really deep understanding of customers through analytics, through science and allow advertisers to plan and buy campaigns across channels in a simple join up way.
David Ciancio (25:11): Which is why we think they need help in, starting with the data and then just kicking off the flywheel, and why you’re in the role you are, and heading up media propositions. Hey, and I have just one more question for you I think, as we come to time. And that is thinking about your experience, you’ve worked across many organisations with some very different kinds of operations, including oil companies and retailers and multi-formats and multi-brands et cetera. Do you think that customer first, particularly how media is more similar or very different when we look at all these different verticals and models?
Executing the Customer First principles
Richard Dawson (25:58): Do you know what? I think the principles are always the same. I don’t think there’s any particular industry where you can’t take the principles of just knowing your customers through analytics and insights, and then really, that discipline of understanding what matters most to customers in a linked up way. If you can help an organisation to organise in order to be able to deliver that experience. I think whatever the vertical, the principles, the ethos are the same and back to closed loop measurement as well. I think it applies across the board.
I think in grocery, the challenge is particular the complexity of the data, the need to manage across online and offline sales. The journeys themselves that you are trying to plan are sophisticated. They’re complex, people are doing things in different ways. It’s not the same as when you think about media in a pure play online environment. So I think the knowledge and the understanding, the executional ability to be able to hold to customer first principles as you execute in the grocery environment is a particular challenge. I think that’s where we obviously hope to help our clients out. So.
David Ciancio (27:26): Oh, great. But the principles are the same.
Richard Dawson (27:29): Yeah.
David Ciancio (27:30): As always, I’m grateful for the time to chat with you. I’ve learned so much again, and I’d like to ask you back, maybe I could talk about premium loyalty programs and other topic soon. For today-
Richard Dawson (27:47): I’d love to talk premium loyalty any time, David. Yeah, that’s always good.
David Ciancio (27:51): All right. Well, let’s do that. In the meantime, we’ll thank our audience for listening today, and we hope that you found this helpful in thinking about how your organisation can activate and practice customer first. So please join us next time as Richard and I explore topics like premium loyalty. Thank you again, Richard.
Richard Dawson (28:14): Thank you, David. Always a pleasure.
David Ciancio (28:16): Always a pleasure. Take care.