Customer-Centric Approach Focuses on the Data
With the holiday shopping season upon us, many multichannel retailers are scrambling to find a new marketing approach to salvage something positive out of this troublesome year. Enter customer-centric retailing, the enterprise-wide use of customer data to establish a comprehensive understanding of customer behavior as a foundation for maximizing the relevance of cross-functional retail strategies.
In a webinar from the Direct Marketing Association last week, Customer Centric Retailing — Making the Shift to a New Paradigm, presenters Miguel Pereira, director of consulting and analytical services at the customer retail strategies firm Precima, and Nicolle Scavuzzo, director of client services at Precima, outlined how customer-centric retailing can optimize the profitability of your business. Here’s a rundown of what they had to say.
To build customer centricity, follow this three-step process: analysis, strategy and execution. This represents a departure from most marketing plans, said Scavuzzo, because typically the strategy of a marketing campaign is discussed prior to analysis. But doing the analysis first can save time and money. “It’s a shortcut, and you can find hit and miss strategies by doing the analysis first,” Scavuzzo said.
Your analysis should consist of identifying segments based on current and potential value, categories/products, and profitability drivers. At the strategy level, prioritize your customer segments, develop functional customer plans/tactics and align the organization so that it’s presenting one consistent view across all channels. When it comes to execution, it’s about determining the right price points, promotions, assortment of products, among other factors.
A simple way to identify your best customers is by how much they spend, typically grouped into four categories: nonshopper, low, mid, high. But this doesn’t take account potential value. “You need to understand not only your customers current value, but also their potential value to quantify share of wallet,” said Pereira. This includes understanding customer dynamics to be able to predict where that customer will be in the future. A combination of transactional and demographic data provides the clearest picture of customers.