Decoding the digital consumer: data, experimentation and AI
Companies can take advantage of the latest technology and tools to pinpoint niches and drive growth, provided their culture supports it
In 30 Seconds
As organisations strive to adapt to the digital age, they encounter a triad of transformational forces: data overload, digital consumer behaviour, and the meteoric rise of AI.
The proliferation of digital media allows firms to tailor their marketing to specific segments, ensuring they can capture and retain consumer attention amid a sea of information.
Panellists offer a roadmap for leaders eager to transform complexity into strategic opportunity.
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How can organisations develop agility and resilience in an increasingly complex context? Digital proliferation, huge amounts of data on consumer behaviour and the rise of artificial intelligence – it can all feel quite overwhelming.
“Multiple things are happening at the same time,” agrees Anja Lambrecht, Professor of Marketing at London Business School. “The amount of data companies have access to has exploded!”
On the plus side, this means brands are now able use targeting to gain a greater understanding of their customers and serve them products that are relevant to them. “It really is about understanding customer segments and niches.” Classic marketing aims, in other words, but with exciting new tools in the box.
In this Think Ahead podcast, Anja discusses how companies can take advantage of the latest technology with Greg Crawford, Chief Economist at the fashion platform Zalando and Professor of Economics at the University of Zurich.
Zalando has more than 50 million active customers, with differing tastes, and a vast number of products – 87,000 T-shirts, to give an example. “We have information about our consumers, but they’re also very busy,” says Greg. “Attention is a real challenge. We want to show them the fashion that’s relevant for them, and we want to give them a convenient payment experience and delivery experience.”
Naturally, the company is harnessing artificial intelligence to determine which items to show where on the platform to optimise sales. “GenAI is really changing the way companies like ours start to think about solving problems,” he says.
“GenAI is really changing the way companies like ours start to think about solving problems”
The landscape is changing all the time, in companies’ favour. As well as the data on granular consumer needs, they can also experiment to figure out what individual consumers respond to. For example, they can run an A/B test to see if you respond to, say, a 10% discount or a 15% discount offer. Firms can also use AI in unsexy but extremely useful ways to increase efficiency – to speed up coding, for example.
Complement AI with other methods and you’re onto a winner. Using structural models allows you to discern from millions of consumers’ data how attractive an item of clothing is. “The cool thing is you can combine these tools to benchmark against each other and get trustworthy insights and scale,” says Greg.
It’s also possible to get an idea of what’s likely to prove popular next – to see which of the products you have coming down the line will be hits. Beyond that, you can use data from an established market to make assumptions about a less established market
Digital has also enabled new brands with limited budgets to reach out through new media to specific segments – running a TikTok campaign to specific groups for a new craft beer or cosmetics instead of paying a huge amount for a TV ad that most viewers will ignore. “For entrepreneurs and young brands, this offers a huge opportunity to launch and grow,” Anja points out.
For firms seeking competitive advantage, these tools are invaluable for growth. As ever, leadership is critically important. Moving to a data-driven way of decision making isn’t just about having the right technical skills within the firm, you need to be able to communicate findings skillfully to the commercial leaders who are making the decisions.
Instilling a data- and test-driven culture is crucial, therefore. Consider what you’re evaluating and which tasks you’re prioritising. “The key part is to know which tools can help you make good decisions,” Anja stresses.
Greg agrees: “These tools are an unbelievable capability that can provide an innovation engine for the company. It superpowers business decision-making.”