Data: A pot of gold for retailers | 7wData
- Read original article here
Everyone agrees: data is the pot of gold at the base of the digital rainbow. But what’s less recognised is that all data is not equal. To yield significant insights, data needs to be highly granular, especially when it comes to data about customers and their shopping behaviour.
Retailers are the best source of highly-granular customer data because they understand − or have the potential to understand − not just what was purchased but by whom, where, how and when.
Retailers can also discover how that purchase process occurred: Did a store visit prompt an online purchase or vice versa? What else did the customer buy at the same time? What other products did s/he consider? Has this customer purchased this product or brand before? And so on.
By contrast, while a bank or credit card company has good information − who the purchaser is, the amount, merchant, date and time − they have no idea what the purchase consisted of, or the process of how the purchase happened.
Similarly, Google knows all the details of any online searches, but it has no view of what was actually purchased, or anything that might have happened offline − for example, whether online activity led to a store visit and purchase.
The crucial enabler for retailers is the loyalty programme, something they used typically to shun because of the costs. But a growing number of retailers are realising that loyalty programmes provide them with the vital ability to link a transaction to an individual, something that immediately increases the value of their data, enabling them to understand their customers and how they purchase much more deeply. More about this later.
As an aside, think of a retailer like Makro (Walmart) which, very unusually in South Africa at least, has always known who its customers are because purchases have to be linked to a registered Makro card. In theory, the company has decades of customer and purchase information that can be mined to generate potent insights. The question is, is it doing so?
Research conducted by Deloitte shows that only 25% of retailers have reached maturity in terms of data usage − those that have are, the report says, “unlocking value by understanding customer behaviour in ways that were never possible in a brick-and-mortar world”.
While retailers generally recognise the potential for data-driven insights to improve their businesses, 50% of them are struggling to make headway.
Key stumbling blocks include accessing the right talent and prioritising investment in data capabilities.
Let’s spend a little time understanding the retail data environment and its potential more deeply.
For retailers, data is clearly useful in helping to strengthen their core sales functions. Customer data can be used to examine historical purchase behaviour and assess loyalty. This information can in turn be used to improve the product mix and sharpen targeted marketing campaigns.
Retailers that can use their data effectively are able to drive higher conversion rates and increase average basket size and purchase frequency − all of which add to the bottom line, something that’s especially important during times of stagflation.
