As economic conditions change, retail brands’ reliance on ever-growing customer demand puts these companies at financial and even existential risk. Top-line revenue and active customer growth do not equal profitable growth.
Despite multi-billion dollar valuations for some brands, especially those operating the direct-to-consumer model, the rising costs of meeting shoppers’ high expectations (i.e. free shipping, free returns) along with the escalating cost of goods, fulfillment operations, and delivery costs, create pressure for brands to turn a profit. The ONLY way brands drive profitable growth is by managing variable costs in real-time. This in turn mandates adopting modern data cloud infrastructure including Google Cloud services such as BigQuery.
To unlock the value of data, Google Cloud has partnered with SoundCommerce, a retail data and analytics platform that offers a unique way of connecting marketing, merchandising, and operations data and modeling it within a retail context – all so brands can optimize profitability across the business.
Profitability can be measured per order through short-term metrics like contribution profit or long-term metrics like Customer Lifetime Value (CLV). Often, retailers calculate CLV as a measure of revenue with no consideration for the variable costs of serving that customer, for instance: the costs of marketing, discounting, delivering orders to the doorstep, or post-conversion operational exceptions (e.g. cancellations, returns).
What may first appear to be a high lifetime value customer through revenue-based CLV models, may not be profitable at all. By connecting marketing, merchandising, and operations data together, brands can understand their most profitable programs, channels, and products through the lens of actual customer value – and optimize accordingly.
The journey for brands starts with the awareness and data enablement of a more complex data set containing all variable revenue, cost, and margin inputs. What does a retailer need to do to achieve this?
All data together in one place
Matched and deduplicated disparate data
Data is organized into entities and concepts that business decision makers can understand
A common definition of key business metrics (this is especially important yet challenging for retailers because systems are siloed by the department and common KPIs like contribution profit per order may be defined differently across a company)
Branched outputs for actionability: BI dashboards vs. data activation to improve marginal profit.
Once brands understand these requirements, up next is execution. This responsibility may fall within a ‘build’ strategy on the shoulders of technical IT/data leadership and their team(s) within a brand. This offers maximum control but at maximum cost and time-to-value. Retail data sources are complicated and change often. Technical teams within brands can spend too much time building and maintaining the tactical data ingestion process, which means they are spending less time deriving business value from the data.
But it doesn’t have to be this hard. There are other options in the market that brands can consider, such as a tool like SoundCommerce which provides a library of data connectors, pre-built and customizable date mappings, and outbound data orchestrations all tailor-made and ready-to-go for retail brands.
SoundCommerce empowers retail technology leaders to:
Maintain data ownership to allow users to send modeled data to external data warehouses or layer-on business analytics tools for greater flexibility
Provide universal access to data across the organization so every employee can have access to and participate in a low-code or no-code experience
Expand and democratize data exploration and activation among both technical and non-technical users
For retail business and marketing decision-makers, SoundCommerce makes it easy to:
Calculate individual customer lifetime value through the lens of profitability – not just revenue.
Evaluate and predict lifetime shopper performance – identify which programs drive the highest CLV impact
Set CAC and retention cost thresholds – determine optimal Customer Acquisition Costs (CAC) and retention costs that ensure marketing efforts are profitable through the lens of total lifetime transactions
Below is a sample data flow that illustrates how SoundCommerce connects to all the tools a Retailer is using and ingests the first-party data, agnostic of the platform. SoundCommerce then models and transforms the data within the retail context for brands to take immediate action on the insights they gain from the modeled data.