WHAT IT MEANS TO BE DIGITAL FIRSTknowmoresellmore.com/sites/default/files/Digital First_AllianceData.pdfto the average consumer • Digital First consumers are 54% more likely to use

DIGITALFIRST

WHAT IT MEANS TO BE

Connecting to the Digital First consumer and their

changing needs

2©2019 Alliance Data

DIGITALFIRST

UNDERSTANDING

CONSUMERS

Alliance Data’s Analytics & Insights Institute launched

a multi-phase study, The Great Divide, uncovering

consumers’ expectations from brands in marketing

and communications. The study also examined what

brands believe their consumers want from them.

Through this work, we began to investigate how digital

engagement can shape and change consumers’ needs

and expectations.

A distinct “digital” demographicThe data revealed that Digital First consumers are a distinct consumer segment — one that defies traditional demographic expectations. Their use of technology significantly changes how they communicate and connect with brands. They also have higher expectations than the average consumer.


Digital FirstAll consumers

Simplicity-related needs were rated even more important, online and off

Simplicity-related needs were rated the most important

SIMPLICITY

Believe personalization is very important and are generally satisfied with how brands are executing

Are not finding as much value in brands’ personalization efforts

PERSONALIZATION

Control-related needs were rated even more important

Want more control over their inboxes, including frequency and content

CONTROL

The basics matter even more to Digital First consumersThe Great Divide studied consumers’ perceptions of 31 different needs, and their impressions of how brands were meeting those needs. Three clear themes emerged for all consumers, but were more important to Digital First: simplicity, personalization, and control.


The Digital First consumerDigital First consumers are different from the average consumer in how they choose to engage with brands. They also tend to shop more frequently, making them an important target segment.

WHAT WE’LL COVER:

See page 5 See page 10 See page 18

Changing the rules of (brand) engagement

The channels Digital First consumers prioritize Digital First consumers have clear preferences for the channels they use to stay connected to brands—and clear expectations for how and what brands should be delivering in those channels.

Digital First consumers’ evolving view of storesDespite shopping in store just as much as the average consumer, the store is not a primary way Digital First consumers stay connected to the brand. Their view of the store is evolving, and it appears very purpose-driven.


THE DIGITAL FIRST CONSUMER


All consumers are digital at some level:• 91% of consumers have internet access

• 77% of consumers have a smartphone

• 75% of consumers shop online

Everybody is digital. Not everybody is Digital First.

Almost all consumers are digital at some level today. A smaller group, about 34% of the US population, is Digital First: preferring to engage with brands over digital channels, and shopping online frequently.

Digitally proficient:• Engage their favorite retailer via website, email, app, text, social, or online display ads

• Shop online a couple of times a year or more

Digital First:• Their preferred, primary way

to engage their favorite retailer is via website, email, app, text, social, or online display ads

• Shop online once per month or more; they are still shopping in stores as well

100% 64% 34%


A valuable target

Digital First consumers shop more frequently, have deeper connections to their favorite retailers, and are more open to trying new technology than the average consumer.

Shop in store multiple times per month

43%

Shop online multiple times per month

71% Claim to have a “love” relationship with their favorite retailer

68 %

Are open to trying out new retail technology just because they like it or find it interesting

63%


*Survey included Gen Z respondents at least 18 years old and up

Digital First consumers span all generations

Consumers across ALL generations are Digital First, including more than a quarter of baby boomers. As the younger generations mature, we expect the Digital First segment to continue growing.

Percentages of Digital First by generation

Millennials1981–1996

41%

Baby boomers1946–1964

27%

Gen Z1997–2000

38%

Gen X1965–1980

34%


TAKE ACTION:Identify YOUR Digital First consumersTo segment Digital First consumers, brands must be able to find them in their own customer data.

Capture your brand’s Digital First consumers. Look for those who:• Shop multiple channels or online frequently

• Subscribe to your email program

• Opt in to SMS messaging

• Follow the brand on social media

• Have downloaded the mobile app

1

Assess how your brand’s Digital First consumers are engaging:

Look at the percentage of your brand’s

Digital First consumers who are shopping

online, subscribing to your email program,

and downloading your mobile app, and

compare them to the average.

2

Determine key opportunity areas and gaps in your brand’s digital experiences:

After segmenting engagement rates for

Digital First consumers, identify the areas

with the most opportunity. Then, create

targeted strategies that meet their

specific needs.

3


THE CHANNELS DIGITAL FIRST CONSUMERS PRIORITIZE


When asked, “How do you keep up with retailers?” Digital First consumers selected:

73%

WebsiteCompared to

44% of all consumers

Compared to


Compared to


Compared to


35%

Mobile app

19%

Store

Digital First consumers prefer to stay connected to brands via digital channels. The website, email program, and mobile app are the top three ways they are engaging. Their adoption of these three channels significantly outpaces the average consumer.

48%

Email

Choosing digital channels first


73% of Digital First consumers look to the website to stay connected to a brand. 54% of them say it is their top way of staying connected. They are looking for simple, easy experiences, and nowhere is this more evident than their expectations of a brand’s website.

Digital First consumers expect simple, easy web experiences

Digital First consumers’ top expectations for a brand’s website:

*Online-only events defined as special/exclusive sales, early access, etc.

Digital First consumers are

70%more likely to engage with online-only events.*

Quickly and easily find information

91%

Another 86% also said an easy-to-navigate site was an important unmet need

Clear product descriptions and photos

88%

Only 58% are satisfied with how brands are delivering on this today

Easy-to-find customer service contact points

83%

Only 51% are satisfied with how brands are delivering on this today

Ratings and reviews from verified buyers

80%

Another 67% want user-uploaded photos within eviews and believe this is an important unmet need


Digital First consumers are looking for easy, simple, convenient experiences.

1Optimize the user experience by identifying friction points and bottlenecks within the site, ultimately improving site navigation and the utility of menus.

Establish benchmarks for the metrics that matter to your brand: page load time, page conversion rates, scrolls, click and search data, time spent on the site/page, bounce rates, and abandoned cart rate; implement a plan to optimize your areas of opportunity to maximize engagement and completed sales.

5

2Audit product photography and descriptions to ensure they are accurate, up to date, and include information critical to buying online, like weights, dimensions, and fit details.

3 Prominently promote all of the ways the consumers can contact the brand, including chat options, if available.

Partner with a review platform (ex: BazaarVoice) to maximize reviews on all applicable websites and garner the highest quality user-generated content to help inform and engage consumers looking for reliable, trustworthy advice.

4

TAKE ACTION:Provide a simple, easy web experience

Innovation insight:Cutting-edge brands are using artificial intelligence to constantly test and optimize their website layouts, content elements, and checkout processes without the intervention of human hands.


Deliver relevancy in their email inboxes

Digital First consumers want:

Digital First consumers know you have their data and they expect you to use it. 48% of Digital First consumers say they keep up with their favorite retailer via email. 20% say it is their top way of keeping up with their favorite retailer.

Personalized promotions:84% want sales, discounts, and promotions tailored to their interests and needs

Digital coupons:25% more likely to prefer digital coupons to paper compared to the average consumer

More control over email frequency:73% want control over the number of emails they receive

The ability to opt in to (or out of) specific content:71% want control over the kinds of content they receive

84%

25%

73%

71%


Make your communications stand out and cut through the clutter:

Optimize your Customer Relationship Management (CRM) tool and combine purchase data, browsing history, and prior email engagement data to target the right audience and tailor more personalized email content.

1

Develop and test email opt-in strategies for the frequency and specific topics of communications (e.g., style tips, categories of merchandise, lifestyle content); brands can also survey consumers to see what content they find most valuable and use that data to tailor their content strategies.

2

With their preference for digital tactics, test digital offers against paper coupons; you can also test the frequency of digital communications to see how many (or if) digital tactics can replace print or direct mail, enabling your brand to optimize for both results and production costs.

3

TAKE ACTION:Target. Tailor. Test.

Innovation insight:Leading brands are mastering data attribution. They are matching anonymized data from online interactions with their own consumer data to understand consumers more deeply and tailor offerings.


35% of Digital First consumers use mobile apps to connect with brands, and 17% say it is their top way to stay connected with a brand.

Connect app users to the information they need as quickly and easily as possible:

Deliver a simple, personalized experience

• 9 in 10 Digital First consumers want the app to be easy to navigate and expect to quickly and easily find what they need

• 60% are OK to neutral on turning on location monitoring to receive more relevant content and results

Provide tools that make shopping easier

• Digital First consumers are 89% more likely to use chat services, compared to the average consumer

• Digital First consumers are 54% more likely to use mobile payments, compared to the average consumer

72%of Digital First consumers say playing games within a retailer’s mobile app is unimportant.

The mobile app is a hub for brand experiences


Mobile has become the integrator of the retail experience. It pulls into one view the ability to shop, track orders, access customer service, see loyalty status, view communications, and interact with the brand.

Promote the download of the mobile app through both paid and owned communication channels.1

Elevate the interconnectivity between your app, site, email, store, social, and other channels; ensure interactivity is also designed to take place within the store environment (ex: enabling store associates to call up a customer’s information and see which items they have favorited on the app).

2

Promote adoption of mobile payments and chat services, if available. These offerings empower consumers to engage on their terms and provide streamlined experiences.

3

Plan for regular app updates, including seasonal icon changes, fresh content, and other triggers that encourage users to engage.

4

TAKE ACTION:Create an engaging app experience

Innovation insight:Cutting-edge brands are tailoring their experiences using location data, loyalty status, shopping history, and engagement data to serve up ultra-personalized brand experiences across all channels and providing robust tools that remove friction.


DIGITAL FIRST CONSUMERS’ EVOLVING VIEW OF STORES


Digital First consumers are just as likely to shop in store as the average consumer. And they know they have plenty of choices at their fingertips. If they make the trip to the store, they have expectations of what should be there.

The retailer must make the trip worth their while

Digital First consumers:

Expect the products featured in communications are available in the local store

Want clearer communication in store and across all channels, with nearly 50% saying brands need to improve in making it easy to tell if they qualify for a sale or promotion

86%

Say “customer service” is a key reason they shop their favorite retailer

31% 8 in 10


Digital First consumers have higher expectations. The store should be organized and easy to navigate. Convenience and ease are more important to them than other consumers.

Create ease and convenience in store

Want a retail store that is easy to navigate and well organized

88% of all consumers share this expectation

96%

Say “Easy to shop” is a reason they shop their favorite retailer most often

64%

Expect their favorite retailer to deliver convenience

49% of all consumers share this expectation

54%

55% of consumers say “easy to shop” is why they shop


Technology offerings aren’t solely adopted by Digital First consumers—they have appeal to all consumer groups. When designing new offerings, keep in mind they are just as likely to be used by the masses as those who are tech savvy.

Tech in store has appeal beyond Digital First

Everybody likes buy online, pick up in store equally

31% of both all consumers and Digital First consumers have used the service, with more than 50% saying it exceeded or greatly exceeded their expectations

Have checked local in-store inventory on a website or mobile app


26% of Digital First consumers

Have used Scan and Go / Cashier-less technology



Have scanned products to check price, find information or discounts



All consumers Digital First


Ensure wayfinding is exceptionally clear. Easy-to-navigate stores will help you win with all consumers, especially Digital First.

1

Strive for simplicity and clarity with promotions. Be consistent with what is offered online and in store. Fine print here causes friction.

2

Digital First consumers can easily get frustrated if they are more knowledgeable than the brand’s associates; ensure all staff, including temporary holiday staff, are in the know on the brand’s products, promotions, and activations.

3

Digital First consumers often come to the store with a specific purpose in mind. The one thing they don’t want in store: a hassle.

TAKE ACTION:Deliver a great store experience

Innovation insight:Brands with a significant brick-and-mortar presence are looking for ways to bring Digital First shoppers in store. Whether it’s accepting the brand’s returns for purchases made on Amazon (or other shopping platforms), or providing special parking for buy online, pick up in store, a major key to winning these consumers is convenience and ease.


Websites must offer simple, easy experiencesBrands must deliver the quickest, simplest web experience — in design and infrastructure. With endless options, consumers are gravitating to brands that make their shopping experiences easier.

Email should deliver relevant personalizationDigital First consumers expect data-driven personalization. Develop strategies that target the right consumers, tailor messaging, and test new ideas.

The mobile app is the now the brand hubDigital First consumers expect a consistent experience online, in store, and within your app. Ensure the app cleanly pulls together everything your brand has to offer.

The store has to be as easy to shop as the site or app

Delivering ease and convenience will help the brand win with all consumers—and especially Digital First.

The Digital First segment will continue to grow in size and influence as the younger generations age into shopping for themselves. Brands need to understand and respond to their unique needs and expectations—or risk losing these consumers forever.

Deepening Digital First loyalty

of millennial and Gen Z consumers will stop shopping a brand because of a poor experience, and 1 in 3 said nothing could be done to win them back once the brand lost them as a consumer.*43%*The Rules of NextGen Loyalty, Alliance Data, 2018

Documents

WHAT IT MEANS TO BE DIGITAL FIRSTknowmoresellmore.com/sites/default/files/Digital First_AllianceData.pdfto the average consumer • Digital First consumers are 54% more likely to use