Retailers Must Rethink Their Data and Analytics Strategies in 2018
How many times has this happened to you: You visit your favorite department store and loyally purchase the same brands and products you’ve loved for years. A few days later, you receive a generic email promotion from the same department store for products and brands you have no interest in purchasing. This pattern continues for weeks, months or even years. Eventually, you stop opening these emails altogether and they collect virtual dust in your inbox or trash folder.
Contrast this to an online shopping experience with Amazon.com. After purchasing this year’s hottest toy brand, it’s only a matter of time before you receive a specific follow-up message from Amazon offering that same toy brand’s newest product and at a compelling price. Just a few clicks later and you’ve completed a purchase. Amazon has offered you the right product, at the right time, at the right price based on your shopping habits and the data it has on you based on your previous purchase history. This personalized offer led to a purchase that, otherwise, might not have occurred.
So, why, despite having so much data and insight on us, do many traditional retailers continue to engage their customers with poorly targeted email promotions or offers? In short, they still don’t understand how to leverage data to their best advantage. Those that are doing it successfully are leveraging the following techniques.
Develop a Holistic Business Strategy
Overall, retailers need to think about how to engage customers, and develop a strategy down to the intersection of customer segments and offerings to grow share of wallet. Are you trying to drive the further purchase of items customers already buy? Are you trying to expand the categories that they buy? Or do you want to increase the frequency at which they buy? Identifying what you want to do and coming up with a plan to do it is essential to driving organic revenue growth.
Collect and Analyze the Right Data
To gain insight and better understand customers, retailers need to take a deep dive into their own data. That’s not enough, however. To gain a rounded understanding of your customers and overall marketplace, retailers must also leverage competitor data. What does the customer purchase, when do they make that purchase, and what are they willing to pay? What are your competitors offering, and how, where and when should you compete? This approach will keep the focus on your customers while systematically collecting and preparing the data needed to inform your targeted offers.
Harness the Power of Your Data With Modeling and Analytics Tools
Retailers have been collecting data on customers for decades. However, this data is useless if retailers fail to understand and manage it effectively. Leveraging analytics to uncover the right product, channel, message, timing and price is easier said than done. You must leverage the right advanced modeling and analytics capabilities with an expert lens to accurately segment customers, predict their likely response to a given offer, and then target them with appropriate campaigns. This must be done at scale, continuously and across a retailer's entire customer base, product assortment and channels.
By applying the right science to business and data, retailers can measure the impact of promotions and determine which strategies provide the most effective return on investment. Couple that with the right people to analyze all that data and you’ll see your investment pay huge dividends.
Rethink Data and Analytics Strategies
Leveraging customer data to create personalized shopping experiences is no longer just an option; it’s something customers have come to anticipate. By leveraging the power of customer data to create fresh and meaningful experiences for shoppers, retailers can capitalize on growing sales and continue to deliver the experiences customers expect.
Jared Wiesel is a partner and resident retail expert at Revenue Analytics, a revenue management and price optimization consulting firm.
Related story: The Secret to MGM Resorts’ Pricing Strategy