Seven out of 10 consumers don’t think the offers they receive from brands are relevant, and half of US customers have left brands if competitors better met their needs—putting brands at risk of losing revenue and customers at a time when consumer spending is surging, finds new research from machine learning-powered offer optimization firm Formation.
The firm’s new research study, The State of Offer Relevancy 2021: Bridge The Relevancy Gap With Optimization and Automation, in partnership with Forrester Research, reveals a significant gap between the offers brand send and what consumers want.
The bar for relevance and value dramatically rose with the acceleration of digital commerce experiences consumers had during COVID-19
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:
- 92 percent of companies believe the offers they send are relevant, but only 33% of offers are considered relevant by consumers
- Just 5 percent of consumers say email offers are well-timed to their needs
- 83 percent of consumers say they will buy from brands that send relevant offers
“We as retailers and brands must build capabilities, journeys, and offers that put the people we’re serving at our center through a deep and empathic understanding of what they value and need,” said Justin Weinstein, senior director of customer experience at supermarket chain Giant Eagle, in a news release.
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 IDFA. 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 & loyalty programs.
“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 Formation.ai, in the release. “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.”
Dynamic offer optimization: The next frontier of business growth
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 percent of brands say they plan to invest in offer optimization technology moving forward, in order to quickly create tailored offers for customers that will drive deeper engagement.
Brands must have a renewed focus on what matters most to customers and implement technology tools like Formation.ai’s dynamic offer optimization platform to keep pace with rapidly evolving consumer expectations and to leverage automation to achieve greater operational efficiency, drive increased sales and enhance customer satisfaction.
Fielded in April of 2021, the survey polled some 252 North America-based decision-makers responsible for strategy or execution of loyalty initiatives and 1,000 U.S.-based adults. The survey and associated research were designed to understand the perspective of loyalty executives and to learn more about consumer attitudes and viewpoints about loyalty offers and digital marketing campaigns.