For years, legacy Fortune 500 brands have monopolized product categories, controlled distribution and outspent aggressors in advertising. Today, the tables are starting to turn as direct-to-consumer websites, affordable shipping, and data are arming challenger brands to move into previously monopolized markets. While legacy brands are locked into traditional business models or struggle to get ahead with innovation, challenger brands are gaining traction. Ten years ago, footwear manufacturing companies competed with other footwear manufacturers. Today, companies like Nike or Adidas don’t only have to worry about each other, they also have to worry about an assortment of challenger brands, like Allbirds, that are biting off significant segments of their market.
1. Collect your own data
Data is power. Customer data can provide the insight necessary to grow a Kickstarter project into a serious industry disrupter. Customer data provides an array of business insight, from determining potential international markets to informing new product production. Challenger brands collect most of their data by driving direct-to-consumer sales through their own e-commerce experience. However, when selling elsewhere, they ensure that they have other sources of data collection. For example, successful challenger brands selling on Amazon will track the barcodes shipped to Amazon's fulfillment center and offer consumers a free 1-year warranty for activating those products online. Most importantly, customer data is critical for brands to track customer lifetime value, have a feedback loop to measure the impact of business changes, and to avoid risk. As we recently learned when Facebook announced the upcoming removal of third party audience segments, a reliance on third party data, from partners like Datalogix, is not favorable for your business.
2. Segment that data intelligently
One of the key benefits of owning your customer data is insight into the various customer groups your brand has. Segmenting customer data through tools such as Facebook’s Audience Insights or SocialCode’s Audience Intelligence Platform (AIP) provides brands a better understanding of the demographics and psychographics of each piece of their audience by breaking down audiences by intuitive segments like gender, life stage, interests, and offline shopping behaviors. SocialCode worked with a brand that was set on spending its digital advertising budget acquiring young active millennials, but upon taking a deeper look at the lifetime value of their customer data, the brand was surprised to see that women over the age of 55 with health problems were one of the most valuable and least tapped audiences. This audience segment provided a new scalable market for the brand to expand into, helping their business surpass its annual revenue goal.
3. Use audience insights to inform creative
Segmented customer data can provide more data than most brands know what to do with. Along with pushing this segmented audience data to Facebook or AdWords for activation and look-a-like modeling, one of the most powerful applications is also one of the simplest: using customer segments to inform content production. Who is in each of your customer segments and what about your product is most compelling to each of them? Perhaps your 22 to 28 year-old urban millennial males would be more compelled by ads calling out your home try-on program and your older audiences would be more drawn to ad copy that speaks to the quality of your manufacturing. Build iterative creative designed for testing, then test it against each of your segments until you figure out what exact value proposition drives conversions most efficiently for each of your brand’s customer segments. Compare results against your historic one-size-fits-all messaging as a benchmark. The results are often surprising for brands. Services and tech, like SocialCode’s SmartContent can help make this process seamless. Data-informed and audience-specific creative is the way to scale further into your top customer segments while simultaneously expanding effectively into new segments. These insights can even inform initiatives outside of digital like next year’s Super Bowl spot.
4. Enter new channels deliberately and strategically
Use customer data platforms to gauge the presence of your customers and similar customers on other distribution channels, like Amazon. Enter these channels deliberately with a strategy for extracting as much customer data as possible. For example, Amazon is becoming a greater necessity for effective new customer acquisition, but when selling on Amazon, there are strategies you can implement to prevent losing all of your customer data. First, your brand’s e-commerce site should always have the most compelling offer, so there is nobody jumping from your shopping cart for Amazon. Next, your distribution should be tracked and contained so that resellers don’t win the buy box for your own products. As some consumers will always opt for Amazon, it’s important that your brand has some strategy for CRM capture (like the free warranty activation) so that you at least have a sample of that customer segment data. Lastly, if your brand is handling shipping itself, ensure that customer shipping information is piped into your CRM system. Without limiting your brand to an e-commerce site, there are tactics for collecting customer data across channels. Find what works best for your business, then plug this customer data back into your segmentation process and continue the feedback loop.