Why Brands Need to Improve Relevancy of Their Offers
Here’s a statistic from a new report that will get brands’ attention: 92% of companies believe the offers they send to consumers are relevant, but only 33% of offers are considered relevant by consumers.
That’s according to a study — “The State of Offer Relevancy 2021: Bridge The Relevancy Gap With Optimization and Automation” — from Formation, a company that utilizes artificial intelligence (AI) and machine learning (ML) to help brands grow their businesses, and market researcher Forrester Consulting. What does it mean? Brands are at risk of losing revenue and customers at a time when consumer spending is surging, because half of U.S. customers have left brands if competitors better met their needs, according to the study.
The bar for relevance and value dramatically rose with the acceleration of digital commerce experiences consumers had during COVID-19, the study found. This has intensified the need for greater relevance as companies re-engage customers and re-establish relationships in both online and offline channels. The research shows that while there is great opportunity for brands, many are falling behind in creating relevancy for their customers. The study also found:
• Just 5% of consumers say e-mail offers are well-timed to their needs.
• 83% of consumers say they will buy from brands that send relevant offers.
Business-to-consumer (B2C) companies are entering an era when acquisition costs are increasing due to data privacy laws, cookie deprecation and the removal of Identifier for Advertisers (IDFA), according to the study. This makes first-party data strategies even more critical for brands, as it enables them to create deeper customer engagement and ultimately grow customer lifetime value (LTV) to offset the growing acquisition costs. However, it’s clear that many brands are falling behind in how they use first-party data to create relevant offers and loyalty programs, the study said.
“The world of loyalty is fundamentally changing, and companies that don’t improve how they engage with current customers will lose market share and, ultimately, revenue,” said Christian Selchau-Hansen, CEO of San Francisco-based Formation. “This is precisely why it is critical for brands to improve the relevancy of their offers, enabling them to capitalize on the surge of consumer purchasing that is coming as the world re-opens for business.”
The study said that optimized offers and loyalty represent the next frontier for business growth, and savvy brands will leverage technology to sustain and accelerate post-pandemic growth through customer engagement. In fact, 71% of brands say they plan to invest in optimization technology in order to quickly create tailored offers for customers that will drive deeper engagement, according to the study.