What Predictive Marketing is and How it Can Help Retailers
Predictive models allow you to make your existing execution systems far more personalized and effective.
– [Darius] Retail Tech Podcast over at Shoptalk 16 with Amit Bivas from Optimove. So Amit, thank you very much for taking time to talk to me. Can you tell me about what Optimove does?
– [Amit] Thanks, Darius, for having me for this interview. Yeah, I’m happy to talk a bit about Optimove. So Optimove is a customer marketing cloud, and what we do is we help businesses grow through their existing customer base. So if I roughly take B2C marketing and divide it into two, so one is acquisition marketing, driving new blood into the system if you will, and then the second end is retention marketing, making sure that that blood pumps within the system for as long as possible. So we’re a best-in-breed solution in that sense and we help businesses invest in their existing customers as a growth engine of the company.
– Okay. So who is your typical customer?
– Our typical customer is any B2C brand with a focus on retailers, which probably matured on the basic segmentation, right? So they’re managing probably five, six different segments in terms of customer marketing, and now they want to take it up a notch, right? So they want to manage tens or hundreds of different segments, take personalization to a new level. So Optimove enables those kinds of companies to communicate with their customers in, let’s say, like in an emotional-intelligent fashion. So talking with them, having that X factor, making them feel that fuzzy feeling where they’re able, you know, to get engagement full-on.
– Okay. So how do customers actually use Optimove? Is it like a software platform they have to integrate into their own, like, website or backend or…
– So that’s a good question. So Optimove, we’re looking at it as a box, so from one side it integrates or connects to your database. So we’ll have a database-to-database connection and we’ll extract on a daily basis all of the data that’s on a single-customer level, all the granular raw data, and then obviously we’ll do our manipulations on it and build our predictive models on top of that data, and then on the other side, it connects to your existing execution systems. Any type of marketing execution system that communicates on a one-to-one level we’d connect with. So that would be your email service provider, your Bronto, for instance, or your Silverpop, or we’ll connect with your SMS provider, we’ll connect with your mobile app so we can launch push notifications. Any one of those channels that, you know, it communicates on a one-to-one level, Facebook custom audiences, Google Display Network, it could, you know, be fed with cookie IDs and then you know exactly who’s receiving that ad. So we’ve connected all of those channels and orchestrated them. So we’d feed them with what communication to serve to which customer. Does that make sense?
– Yes. So I’m just trying to understand more as to like how the customer actually uses it in a day-to-day basis. Is it, like the merchandising team or the marketing team? Who’s using the software?
– That’s a great question. I’m sorry for all the fluff that I didn’t get to that until this point. So the idea is… It’s a marketing technology. So the marketing team would use it and today we see more and more independent CRM teams. So it’s the CRM team or the marketing team, whomever is in charge of communicating with existing customers. So relationship management, all that stuff, so those are the people that are going to drive Optimove.
– Okay. So I’m a marketing person at the company. I go to work in the morning, I open up Optimove, like, you know, my own account into your web interface probably, and then I do what?
– So first off, what you’re going to do is you’re going to look at, you know, all of the different segmentation, the results of the predictions. So the future-value predictions, the term predictions, the reactivation predictions, conversion predictions, all of that, and then from there you’re going to take action items on what type of marketing action to start running. So the part that probably you’d use 80% of your time on is the retention calendar, which is built like… Its y-axis is target groups, segments that the marketer builds on his own, and the x-axis is a calendar, dates, and then where a certain target group meets a certain date, that’s the campaign. Right? So…
– So then I schedule a campaign for that date?
– Exactly, exactly. And then what’s cool about it is that these groups are refreshed on a daily basis. So today a certain customer can belong to group A, I don’t know, which could be new customers in their first 14 days that showed interest in lingerie, didn’t purchase, and are predicted to be high-value customers. Let’s say that’s the target the marketer built, and then their campaign is a discount on lingerie because they’re likely to purchase when they browse that. So we want to push them to action, and then, you know, as new customers, always your goal is going to be to bring them back to their second purchase, right?
– So that’s, for example, one group and one campaign. And then what happens is that on a daily basis different customers are attributed to different target groups. So it’s updated on a daily basis. So that leads me to what this is, you know, today the trending term is “customer journeys.” So in a way, we’re talking about infinite customer journeys, because it’s the memory of the system, right? So we build those target groups, which in a way are states in the customer journey. So regardless of how he got there, he’s going to get a certain treatment, right? And then he’s going to get to another phase and get another treatment. So it’s a memory of the system, so regardless of how you got to a certain… So it’s not a journey because regardless of how you got to a certain phase, that’s the treatment you’re going to get. And then hypothetically, you can build an endless number of customer journeys, infinite customer journeys.
– Right, right. So you obviously have to integrate to the historical data as well, right? So you look at what a specific customer, for example, has done with a company. Like, for example, if you have like a profile of the customer you can build on that, or if not, then how do you do… Do you have, like, a tracking, or retargeting method as well in there?
– Sort of. Without knowing the actual technology.
– Yeah, okay. No, that makes sense. What’s the difference…So you probably have customers that just do e-commerce, and then you have customers that have omnichannel stores as well. How do you handle each one, and then what’s, like, the biggest difference?
– So that’s a great question. I say that the biggest difference is data. So obviously e-comm has much more rich data, right? You can track browsing data, you can see transactional data, you can see all of that and it’s always identified. So once you log in you know who’s the actual person that did that, and even if he didn’t log in and he logged in in the past, so using the tracking you are able to know what he does even when he’s not identified. In brick-and-mortar, it’s tougher. We have beacons today and we have loyalty programs today that enable tracking, you know, enable generating that data, but it’s still short in comparison to online data. So that’s the biggest difference, and another difference is the targeting. So you have much more real-time capabilities to target online rather than offline. So offline, yeah, with beacons you could, you know, run a push notification when someone’s close to some section of the store. Real-time, you can do whatever… I mean, online, sorry, you can do whatever. You can target him through email, through real-time push notifications, and also offline. So there’s, like, in-shop marketing and out-shop marketing. Bringing them into the shop. So once again, I’d say in online the data is richer and the marketing execution channels, relevant execution channels, are more rich. However, we can definitely work on Personalization 2.0, let’s call this, with brick-and-mortar, and we have more than a handful of customers that do that.
– Okay. So, I mean, when I talk about, like, omnichannel, I’m thinking somebody already has a store. They have more than just online. So they probably have more data than just an online retailer, because they don’t… Online retail is just focused on the website, the onmichannel retailer has a website, but they also have data coming from their individual stores. So the challenge is, how do you match and analyze the data from a customer that went to their website in the morning and then may be in the store in the afternoon or may come back on the weekend, and make sense of that so it becomes actionable?
– So once again you’re asking a great question. So that is a big challenge because what usually happens is it’s… The challenge is connecting the offline customer, the brick-and-mortar customer, with the online customer. There are ways to do that today. A lot of the duping and all that stuff, understanding… Removing duplicate contacts and creating one unique customer identifier that’s both online and offline. It’s a tough process, which mostly is building, like, a data warehouse which is… Unite for the whole brand, offline, online, as you said, omnichannel. So in that sense… It’s a big project, which we also offer. It’s not our core capability, but we also offer that, but there are a lot of companies out there that know how to do that and that’s their, you know, that’s their bread and butter.
– Yeah, I think we’re just at the beginning of this entire cycle where ultimately there will be seamless experiences and technologies that retailers are going to use to, you know, really track everything all together.
– Definitely. Definitely we’re seeing that. We’ve been around since 2009, when it was quite rare, you know, all of this personalization. People would say, “Yeah, you know, personalization is ‘Dear F name, L name,'” you know? So we’re seeing how this space is emerging and we’re seeing how things are, you know… Today, communicating, we’re talking about these millennials and these new type of consumers. So communicating with them is much tougher than back in the day. F name, L name doesn’t work anymore, right? So you need to talk with them in the fashion of what they’re doing and be very gentle with them because their attention span is so, so, so, you know, short that if you’re not on-the-spot, boom, you’re burnt. So that’s the biggest challenge and I think the technologies at Optimove helped do that, and as you said, it’s only just the tip of the iceberg. This whole, you know, data marketing space is definitely going to grow tenfold in the next, probably, couple years.
– Okay. So is Optimove a SaaS model?
– Yes, yes. Optimove is a SaaS model. The way we price is on a monthly basis, a monthly licensing fee, which is a function of the paying portion of the database. So the KPI is unique monthly purchasers, and then we have brackets and we charge based on that.
– Okay. Now, do you have any, like, live omnichannel customers that you can talk about?
– So we have a few, maybe we can talk about in this sense about La Perla.
– So La Perla is an omnichannel.
– Where are they based out of?
– They’re headquartered in Italy. They’re a retailer for women lingerie and elite swimwear and that type of fashion for women, and they’re headquartered out of Italy, but they are spread out across the globe.
– So they have stores?
– They have stores and then they have online. So what usually happens is we connect with their data. We mostly work with their online side, but we also are able to enrich their data with data that they send in from the offline stores.
– Okay, so they’ve been a customer for a while now?
– They’ve been a customer for the past couple years, yes. They’re having great results using Optimove, they’re able to understand their customers better and cater to their wants and needs better. So the level of segmentation they’re seeing through Optimove is great, and they’re able… Once again we’re talking about that millennial customer, that customer 2 or even 3 or 5.0. So that level of understanding is essential to communicate with them in that fashion. So definitely.
– So, do you also pull in external data or is it just internal data that you use? Like, you know, social network data, things like that.
– So we extract first-party data. Now if a certain retailer, you know, uses data enrichment tools… So we’re happy to take that from his database, but, you know, our belief is in… And that’s what we see over time, that first-party data is more than enough. All of those enrichments is important, I’m not saying that it’s not, it does have a place, but a good baseline, a good starting point is first-party data. And it’s rich enough to feed a great volume of personalization.
– Okay. What does a typical implementation cycle look like?
– It’s a good question. So usually it’s going to… Onboarding takes somewhere between two weeks to five weeks…
– Depending on how ready the customer is, usually.
– How ready and how responsive they are, because end of the day, the plugin to their database requires a lot of, you know, IT resources in that sense. So if they’re cooperative it could take, you know, a week usually. Those guys, the IT guys, I’m sorry for saying this, yeah, but they’re not as cooperative as we’d like them to be but…
– Because they have, like, a million top priorities, I think, probably, yeah.
– Right. It’s always a question of prioritization. Like Yahoo’s CEO said back in the day, “Prioritize ruthlessly, otherwise you’re not going to get things done.” But yeah, it’s about prioritization, and we get it done. We have over 180 brands working with us, so…
– So it could be as quick as a week?
– It could be potentially as quick as a week. Usually, it doesn’t happen.
– Okay. So let’s say a safe bet is two to four weeks.
– Exactly. Exactly.
– And then after that is there a training?
– There is a training. So complementary with the software, we have Customer Success Management services. So our team of CSMs will walk the brand that works with us through how to use the software, and, you know, some best practices and stuff like that, and on top of that we have also Strategic Services, which is in a way like professional services on how to manage, on a strategic sense, your CRM using Optimove.
– Okay. Great. So here’s another question, it’s like a general question I ask all the people that I interview. If you were to explain where you see the future of retail being, in like one specific tool, or technology, or capability, what would that be? I know it’s a tough one, but…
– It’s not a tough one. We actually wrote a lot of content about it. So what I’d say is personalize or vaporize.
– Okay. Okay, that’s a good one. Yeah, it is.
– That’s the tag line we tend to use.
– You have to talk to individuals. Not to groups anymore.
– Targeting swatches doesn’t work anymore. You want to talk to the person, you want to communicate with them in an emotional-intelligent fashion and then that’s the only way to get them engaged. Competition is fierce. If you won’t personalize and you won’t talk to the person, his language, and communicate with them in the fashion of what he did and what he wants, he’s going to, you know, bounce to the competition. It’s that easy.
– And do you see retailers actually, I guess, agreeing with that?
– Definitely, definitely. It’s going there and we work with a lot of industries other than retail, but we’re seeing that in retail they’re starting to embrace on this and we’re seeing how using such technologies is a competitive edge.
– Okay. If you were a retailer yourself, what would be, like, you know, the most important thing in your life right now? I mean as far as like making sure that you’re getting… Is it, like, you know, getting the right technology, getting the right products, or reaching the customers in the right way? I mean what’s the…
– Now that’s a tough question. I’d answer this way. I’d say that it very much depends on the stage the company is at. So when you’re just launching, obviously, you want to invest more into customer acquisition, right? You want to have customers, you’re starting from scratch. So then strategically, my initiative would be to beef up my customer base. Get customers. Then at some point there’s a tipping point where you want to start, you know, balancing it towards customer marketing. Investing in your existing customer base and start to personalize in order to get repeat business. So first of all, I’d say that the answer depends on where the company is at. First of all, you want to build your customer base, then you want to, you know, invest in and make sure… Always you need to invest in acquisition, right? But at some point, you want to start investing in retention and in personalized customer marketing in order to, you know, make sure that you’re ROI-positive on your acquisition costs.
– Great answer to a tough question.
– Thank you.
– So we’re coming up on time here. I wanted to thank you again for giving me this time and I think there’s some really valuable information and insight, and if anybody wanted to follow up with you or get in touch, what do you recommend as far as contact information?
– So first of all, thanks for a great interview. I enjoyed the good questions. In terms of contacting us you can look at our website, optimove.com, and you can… More than welcome to contact me personally. It’s Amit. A, M for mother, I, T for Tom, underscore, B for Bob, @optimove.com.
– Awesome. Thank you so much, Amit, and best of luck.
– Thanks, Darius. Thank you.