Last week I had the pleasure of attending Fashion Digital New York (FDNY). Run by the inimitable Sandy Hussain, the 3 day conference brought together over 80 speakers and 500 attendees from the worlds of fashion and tech to share learnings and best practices across retail and debate what the ‘future of commerce’ might look like.
For those of you unable to attend in person – and for those that turned up at midday a little worse for wear following the cocktail parties the night before – I thought I would share 3 of my top takeaways from the event – one for each day!
1. Social commerce is capturing a large amount of mindshare.
And at Fashion Digital it was Pinterest that took centre stage.
Pinterest’s ‘Buy Button’ is making shopping on the social platform easier than ever.
With the average person in the US now spending 1.72 hours per day on social networks it is unsurprising that the focus social marketing was given at FDNY was significant. And rightfully so. In fact, 8% of marketing budgets are already spent on social media and this is expected to grow to 22% in the next 5 years.
What did surprise me though was how much attention Pinterest was given – above both Facebook and Instagram. You could argue that this had something to do with the fact this was a fashion event (where leveraging the right imagery lies at the heart of a successful shopping experience) or that it was the recent launch of Pinterest’s “Buyable Pins” which are enabling retailers to finally start monetizing the platform.
But, from what I learnt on the day, I would say it is quite simply the fact that this is a platform that has proven itself to be geared towards the ecommerce world and social users with a shopping mindset. As Rachel Goodman (Pinterest’s Partner Manager) shared in one of the panels:
Pinterest is the #2 driver to ecommerce sites behind Facebook
but has the highest AOV of any social channel
Rachel Goodman, Pinterest
Rachel went on to share some of the latest stats on the platform too:
- Pinterest has 100m active users. 55% US.
- 70% of users are female though the proportion of male signups are growing.
- 50% of adult women in US are on Pinterest.
- 87% of all active Pinners have bought something they found on pinterest.
- 1/3 of Pinterest users have $100k+ household income meaning they have higher purchasing power than users on other platforms. (This probably accounts for the AOV stat above.)
For those of you new to marketing on Pinterest, here are some best practices Rachel shared with the audience on the day too:
- Look at your PDPs and ask yourself: Is this easy to pin? Do the pinned images still contain working links?
- Don’t be obsessed with followers. Focus more on viewers.
- Look at how far content is reaching. Monthly average viewers is the important metric.
- Look at the value of a pin. A re-pin is 1.4x more likely to lead to a purchase so optimize for that.
- Focus on descriptions and don’t feel the need to limit length, i.e this isn’t Twitter!
Clearly there’s an opportunity here for retailers. How large it becomes is still yet to be determined but given that 80% of Pinterest’s activity is on mobile (hence buyable pins was mobile first) and mobile sales in the US are still less than half of online sales, we can certainly expect it to grow.
If you don’t have a Pinterest page, it doesn’t mean you’re not on Pinterest. It just means you’re not joining the conversation.
Deb Berman, Curalate
2. Challenges with attribution still abound.
Attribution is discussed during Customer Acquistion panel
With ecommerce marketing spend expected to hit $230 billion in 2015 and the number of channels competing for your attention growing all the time, it’s vital to have a clear attribution model in place to determine where you focus your efforts and marketing dollar.
One of the things I found most interesting at Fashion Digital is that there seems to be widespread variation in the metrics retailers are using to model success, with no consensus on which data points they should be focusing on above others.
It’s clear that with the number of easy-to-use analytics tools now available that the challenge is no longer one of ‘how do I capture the data’ but rather ‘what data should I be looking at’, which of course brings a whole new set of challenges.
Many of the talks discussed the importance of looking at visitors by source, broken down into detailed segments; CPA (Cost per acquisition), CTRs (Click thru rates) and conversion rates – all of which are fundamental drivers of growth. But the one metric that I was glad to hear gaining more adoption was the CAC:LTV ratio.
For those of you unfamiliar with the ratio it refers to the relation between Customer Acquisition Cost (CAC) and Lifetime Value (LTV) of the customer and lies at the heart of profitable growth.
Put simply: LTV is the total revenue you receive from a customer throughout their lifetime as your customer, whilst CAC is the total revenue required to acquire the customer. It’s a measure of ROI and long-term business health and as a general rule of thumb states you want to be aiming for a ratio in excess of 3:1 LTV to CAC. Less than 1:1 and you’re basically on the road to bankruptcy.
We used to use conversion as our metric but now it’s LTV.
Brian Berger, Mack Weldon
There have been some great articles on how to calculate the CAC:LTV ratio in ecommerce so if you’re not already focused on the metric I highly recommend you explore it in more detail.
The Kiss Metrics Infographic is an excellent guide to this metric
In the meantime here are a couple of great examples of how retailers are increasing their LTV:
Subscription: Using a subscription model – if you want to encourage the steady and predictable revenue that a healthy CAC:LTV ratio implies then there really isn’t a business model more fitting than subscription. Quite simply, you are guaranteeing recurring revenue (therefore lowering the need and cost of customer acquisition) and, generally, at a higher price (increasing average order value) – all of which, means a positive CAC:LTV. RocksBox are a great example of a company that have not only achieved this but built a business focussed on it.
RocksBox subscription membership options encourage shoppers
to increase their LTV by offering incentives for longer memberships
Customer service using customer experience marketing: One way to improve LTV is to give each customer the perfect product and perfect experience in getting it. But, companies, like people, make mistakes. In this case, customer service isn’t just an exercise in protecting your precious LTV metric but can also be used to actively increase it. In fact, a recent report shows that 42% of B2C customers have purchased more after a good customer service experience, with 24% continuing to seek out a company two or more years after a good experience. To provide the type of positive encounter that will generate these reactions make sure your customer support is available across multiple channels (on-site, telephone, social and, where applicable, in person) and minimize waiting times.
3. Website personalization is the hot topic of the day. But everyone seems to have a different idea of what it means.
Personalization & relevance in email is like teenage sex…Everyone is talking about it but nobody is doing it
Skip Fidura, dotmailer
Skip Fidura outlines the impact personalization can have.
Drawing from some compelling stats, Skip did a great job of making the case for personalization as a key component for any email marketing strategy:
Personalization increases click through rates by 60% and increases conversion by 25%
“Personalized emails deliver 6x higher transaction rates, but 70% of brands fail to use them”
According to dotmailer, these are some of the most impactful things retailers can do to personalize their emails:
The great thing here is that the task of personalizing email is not a fundamentally difficult one. With personalization technology now within the reach of every retailer coupled with the CRM environment that most retailers operate in, data is available on customer engagement, preferences and transactions.
- Use the recipient’s first name: personalizing the salutation is becoming commonplace but what about the subject line or even within the content of the messaging?
- Take advantage of special occasions and themes and present the most relevant content and products related to the event. From Cyber Monday to Mother’s Day the retail calendar is full of these merchandising and sales opportunities.
- Leverage visitors’ browsing and buying behavior to recommend products most relevant for them (as this is implicit data the whole process can be automated with the right tools, saving significant time)
- Request information from the first visit, gradually building out user profiles with more questions at key interactions. The more you can learn about your customers the more targeted you can be.
Nosto client Wakakuu used personalized recommendations
in their Halloween email to further engage customers
Of course, email is only one channel that can benefit from increased relevance. Throughout the event a number of retailers spoke about how they were using personalization to drive increases in performance across advertising channels, onsite and in-store.
Nosto’s very own Jan Soerensen spoke on a panel with Alison Sebens from Yumi Kim, Meaghan Rose from Rocksbox and Ruth Hartman at Le Tote, where it became clear that personalization is no longer an option in commerce – many shoppers are now expecting it from brands and will quickly lose interest if treated as ‘just another customer’.
Panel, featuring Nosto’s Jan Soerensen, discuss the importance of personalization
The same point was echoed in Westfield CMO Beth Ann Kaminkow’s excellent talk on the reinvention of the shopping center experience :
“People are looking for more choices in less time with more personalization”
Beth Ann Kaminkow, Westfield
The point here is that personalization is not just about increasing conversion and AOV (though of course these are ultimately what justifies the ROI), but about providing a connected and highly targeted customer experience throughout the shopping journey. In today’s omnichannel world, this isn’t always easy but we are making some great strides. We’re getting close to that holy grail of ‘a single view of the customer’ and while we get there brands are getting better and better at leveraging data from one channel to provide more relevant experiences in the next.
Volcom’s personalized Facebook advertising in action.
Fashion retailer Yumi Kim, who I personally thought were one of the most exciting brands to speak at FDNY, greets returning visitors to their site with a personalized recommendation entitled “Our most loved by you” and bolsters that with additional product recommendations throughout their store making it highly relevant for each user, who then converted 132% better.
Yumi Kim’s “Our Most Loved By You Section” gives
each customer a personalized view of their store
Ultimately, the best way to approach personalization is in relation to your goals or any problems you are trying to solve. In very simple terms, if you’re looking at improving the quality of traffic to your store – a key component in maximising the CAC:LTV ratio we discussed above – then you need to look at how you can personalize your customer acquisition channels, e.g. through personalized advertising on Facebook. If it’s improving conversion and the onsite experience then personalized product recommendations will play a key role. If it’s around retention and upsell (the 2 key components of LTV) then you need to focus on personalizing your emails. And finally if it’s about driving performance in-store then you need to look
at how you can harness the data from all these channels within the store to deliver true omnichannel personalization.
For those of you wanting to dig deeper into how you can use personalization within fashion retail, we recently published a great little ebook on the topic which you can download for free below.
Of course, I wasn’t able to attend all the talks and panel discussions so would love to hear from others that attended as to what you felt were some of the most interesting learnings from the event. Feel free to chime and share links to any of the presentations in the comments sections below too.