4 minute read
Millennials are expected to spend $65 billion on consumer packaged goods (CPG) over the next decade, putting them among the most important customer segments for retailers going forward. The challenge for retailers is that Millennials have very different shopping habits from the generations previous to them. Event-driven marketing has emerged as an effective way for retailers to connect with Millennials and has been shown to increase sales response rates by 32%.
What is Event-Driven Marketing?
EDM refers to basing marketing communication on “relevant and identified changes in a customer’s individual needs.” Rather than basing campaigns on sales goals, EDM looks at how changes in a consumer’s lifestyle or behavior (also known as events) can provide businesses with insights into the types of products and services that are most relevant to that particular customer. From simple events such as renewing an annual subscription to significant ones like having a first child, there are a number of life events that have a predictable impact on both consumers and businesses. By tracking events, marketers can establish a more intimate understanding of customer needs and wants at a given moment.
Event-driven marketing is particularly useful for connecting with Millennial consumers because as young adults they are currently, or are on the verge of, going through many of the biggest changes of their lives and as such represent the greatest value for EDM.
As you can perhaps imagine, one of the biggest proponents of EDM are banks, because they have more transactional data than anyone else. But there are a number of retailers leveraging the power of EDM as well, such as Cabela’s, who used lead scoring based on purchase history, zip code, and preferred products to quadruple the rate of responses to its catalogue mailings.
Resonate with Millennials
The first advantage of event-driven marketing is that it aligns well with the style of communication that resonates with Millennials. Event-driven marketing emphasizes unique and relevant communication, both of which appeal to Millennial shoppers.
Rather than attempting to predict what Millennials will buy or trying to push certain products onto consumers, EDM leverages transactional data and purchasing cues to determine exactly the right time to communicate a particular message. Retailers can use this strategy to target shoppers when their motivation to buy is at its peak, and ultimately increase the probability of conversion. EDM captures the difference between retailers “pushing” products onto customers and shoppers “pulling” the relevant promotions into use. Essentially, it’s about customers buying from retailers – rather than retailers selling to customers. Ultimately, the goal of pull marketing is to build brand awareness and foster demand, which in-turn drives sales.
Another reason why it makes sense to use event-driven marketing to attract Millennial consumers is because they have more events to go through than older generations. Their first salary job, first house, marriage, first child, etc. Millennials are going through these life changes as we speak.
But how does this help retailers connect with Millennial consumers? Retailers can assign customers an ID number and attach it to a piece of identifying information (such as an email address or credit card number) that every purchase is associated to. With this data you can track how certain purchases signal changes in behavior and lifecycle, and as such, represent a host of new purchasing opportunities. Perhaps you’ve heard the story of how Target figured out a girl was pregnant before her dad did? Well that’s the idea here. For Target, their predictive model looked at how buying certain lotions, supplements, and other products signaled becoming pregnant.
But events don’t just have to be as significant as getting pregnant in order to be valuable. Retailers can combine these large events with simple day-to-day occurrences, known as triggers, to create a more in-depth understanding of customers and increase shopper engagement. Triggers can be rather simple like an automatic thank you email when a customer signs up for your newsletter or something more sophisticated such as an automatic abandoned cart email. According to Forrester Research, trigger based email marketing campaigns can generate 4x more revenue and 18x higher profits.
Despite being proven to be more effective than typical segmentation, one challenge of implementing EDM is that data is only valuable for a relatively short window. Triggers are only useful for about 24-hours and even significant events need to be addressed within 5-30 days.
EDM is also a constant and continuous practice. That’s because behavioural and lifecycle events do not occur all at once, but rather incrementally over a period of time. This affords retailers a window of opportunity during which consumers are highly receptive to targeted messaging. Effective implementation of EDM helps to place you at the top of the consideration set when that customer reaches the point of actually making a purchase.
One effective method for implementing EDM that has emerged is known as lead scoring. With lead scoring, a retailer identifies desirable actions (events) and assigns each of these actions a score, when a prospect accumulates a threshold score they enter automated drip programs and marketing campaigns that use targeted messaging. Consumers go through several events over the course of their day-to-day life, yet only a small handful of which will actually be of value to a particular retailer. Lead scoring allows retailers to weigh the significance (or insignificance) of various events and determine when a particular prospect has intent to buy.
Effectively employing EDM isn’t a walk in the park. It typically requires cross-divisional collaboration so that event-based data is continually being recorded and made available. Likewise, your marketing team needs to ensure that materials with targeted messaging are immediately available to leverage the full power of EDM and maximize the probability of conversion. Retailers that can implement it well see some fairly substantial benefits: 96% of consumers consider their contact with EDM messaging to be positive (compared to the usual 16%) – that kind of increase is nothing to sneeze at.
P.S. Enjoy this post? You’ll love 3 Ways Millennials Are Shaping The Payment Industry