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Pacsun Turns to First-Party Data as Third-Party Cookies Crumble

With consumer concerns over privacy mounting—in a survey of U.S. adults this spring, multinational advisory firm KPMG found 86 percent feel a growing concern about data privacy—support for third-party cookies is crumbling.

The rollout of iOS 14.5 drove this home in April, with the single update giving all iPhone users the option to opt in or out of cross-app activity tracking. According to December data from Verizon-owned analytics firm Flurry, just 19 percent of U.S. mobile active app users that receive the prompt are choosing to allow tracking.

SoundCommerce’s latest product launch offers retailers an alternative to embattled third-party cookies. Released Thursday, SoundCommerce Customer360 uses first-party data to provide sellers with insight on shopper profitability and lifetime value. The retail data platform provider described it as “a single source of truth for all customer transaction, interaction and event data.” Basically, it brings all a retailer’s shopping data in one place, SoundCommerce CEO Eric Best said.

Though the technology behind Customer360 has been in the works for three years—essentially since the firm’s founding—Best said iOS 14.5 is part of the reason it is launching now. “As the industry gets more serious about preserving consumer privacy and security, the way that information is collected inevitably has to change,” he said.

Pacsun began piloting SoundCommerce's Customer360 platform about a year ago

Unlike other customer data platforms, Best noted, Customer360 goes beyond shopper profile information. Instead, the tool connects with product assortment, merchandise discounting and supply chain decisions to expand the scope “beyond the traditional marketing function where this type of optimization typically occurs,” he said.

“It’s a bigger vision for how brands and retailers use customer awareness and customer insights,” Best continued. “The idea is to instrument every part of the business to use this shopper behavioral and profile awareness to make better decisions.”

Mike Relich, co-CEO at Pacsun, which has been piloting Customer360 for about a year, said the changes around third-party data are “definitely” causing problems for the youth retailer. “Now SoundCommerce, by basically taking all the first-party data, along with all the clickstream data, allows me to measure a lot of [what] I relied on third-party cookies to do,” Relich said.

One specific way Pacsun is using Customer360 is to connect in-store and e-commerce shopping data going back five years such that the retailer can see the lifetime value of its brick-and-mortar, cross-channel and online customers. With that information in hand, it can then pull in marketing spend and determine the cost of acquisition for different customers. If certain shoppers have dropped off, Pacsun can identify them and then market appropriately, Relich said.

“Pacsun has the ability to isolate segments of customers based on their purchase propensity, like are they a womenswear shopper or a menswear shopper, are they a shoe shopper or are they an outerwear shopper?” Best said. “In the case of PacSun, because they source from such a broad set of suppliers, you can now with SoundCommerce, identify the value of, say, Fear of God fashion drop shoppers relative to non-FOG shoppers and you can understand the value and behavioral characteristics of those FOG customers versus everyone else.”

Of course, Pacsun and those using Customer360 can drive down on variety of other engagement signals, including first purchase SKU, first purchase location and the categories of subsequent purchases. “We bring all of that together in a way that allows the marketer at PacSun to understand what’s happening, and then design merchandising promotions and marketing campaigns to better target those customers,” Best said.

Though Pacsun is largely sharing its Customer360 insights with its marketing and financial teams, Relich said the retailer has also brought the data to its call center in the Philipines.

“We’re not doing it yet, but one of the desires is, let’s go and instead of treating every customer the same, let’s look at the history and the profitability of the customer and then the ones that that we failed and are highly profitable, let’s make a lot of concessions,” Relich said. “If someone’s gaming the system and we can see it, well we’ll treat them accordingly.”

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