Why Spotify is a master of using customer data whilst maintaining trustby
The music giant’s Wrapped campaign is one of many great examples it provides for fellow brands looking to use customer data more effectively, while fostering meaningful personalisation and maintaining trust.
In pre-COVID time, consumers might spend time wandering through aisles of freshly stocked merchandise on their collective lunch breaks at work, window-shopping with friends whilst imagining the possibilities of what could be worn and where.
But over the last few years, consumers have been stuck at home, spending time remote working, making do with online shopping, filling their time scrolling through Netflix and other streaming platforms while being bomarded with content to consume.
All this has led to an engagement crisis. From a shopping perspective, abandoned carts have increased by 10% (85.1% to 94.4%) during the pandemic, equating to billions of pounds lost in ecommerce revenue. In certain sectors, customer engagement levels have declined to unprecedented levels.
This is where personalisation comes in. And this is where Spotify can be declared a master of its craft and a brand we can all learn from.
The Spotify way
Personalisation has long been heralded as a marketing silver bullet but it's now as vital to any customer leader as it is to marketers. Far and away are the days where personalisation was a side order for the customer experience. In fact, as we move into 2022, personalisation will become a necessary requirement for brands that want to connect and truly engage with users.
With over 90 million people interacting with its Wrapped campaign at the end of 2021, Spotify has found a way to get consumers to engage. There is no secret to Spotify’s success, though. Just the right use of its customer data, and the right messaging.
In the run-up to Christmas 2021, Iterable surveyed 1,000 UK consumers and found that, when it comes to the tone of promotion and advertisement, transparency and trust is a winner, with 28.9% of consumers citing this approach as their favourite.
The research also revealed that consumers are tired of smoke and mirror marketing, with 24.7% naming straightforwardness as a major preference. Being transparent in their data collection and utilisation, Spotify enters into a literal (and figurative) social contract with consumers early on. Their messaging is honest and upfront, establishing a sense of camaraderie and trust.
Importantly, Spotify immediately puts consumer data to good use, delivering value by providing personalised recommendations and playlists for subscribers. Its Wrapped campaign takes risks but is firm in how it actions your data, and puts users in control of whether it's shared or not.
Another competitive differentiator for Spotify? Tapping into Maslow’s consumer need: connection. More than 76% of consumers want to shop with brands that they feel emotionally connected with. Fostering shared connection through community is a great way to start. Out of the gate, Spotify campaign feels celebratory, and encourages consumers to join communities and conversations around their annual music obsessions. The community-building aspect is bolstered by shareability on social media; music was never meant to exist in a silo, and neither should subscribers be forced to celebrate their end of year playlists in isolation.
Being in touch with consumer preferences is a competitive advantage. As privacy regulations increase, first and zero-party data will become an increasingly vital tool in any customer leader's arsenal. This kind of data sharing can only be built on trust and transparency. If brands can recognise this, then consumer relationships are strengthened and customer loyalty is extended. Likewise, more time spent in an uncertain and (sometimes) lonely environment will continue to push consumers to find outlets for connection and community.
While Spotify may have the spotlight right now, all brands—no matter the industry—can benefit from leveraging consumer insights in a similar way to create personalised experiences.
Building relationships that last
There are many reasons customer experience and marketing leaders may be looking at 2022 with trepidation. With anxieties over the pandemic, supply chain concerns, and changes to data privacy, it's understandable. It’s at times like these when personalisation and being transparent and truthful with your customers really comes to the fore. Spotify has excelled in combining trust with personalisation to create an experience that delights its customers, and builds community.
There are many opportunities to weave the tenets of Spotify’s personalisation efforts into the ongoing discussion with shoppers, too - whether online or in-store. In the current climate, honesty as to how COVID-19 or supply chain events may lead to disruption is a good place to start, and will help establish healthy rapport, and create a bond of trust that will ensure consumer relationships thrive throughout 2022 and beyond.