While leveraging big data by using software, apps and point-of-sale (POS) technology can help retailers handle everything from holiday hiring to inventory management in the days leading up to and following Black Friday and Cyber Monday, one of the most useful applications for big data technology this holiday season is in countering showrooming, a phenomenon that's been on every brick-and-mortar retailer's mind as they make preparations for their busiest season of the year.
As the popularity of omnichannel shopping has increased in recent years, retailers are able to capture data about billions of customer interactions and transactions from multiple touchpoints. Using this information and external data available from third parties like Datalogix, Compete, Nielsen, Acxiom, etc., retailers can zero in on what their customers want and quickly respond to their needs to increase sales and customer satisfaction. Real-time pricing, personalization and using loyalty data are all effective strategies that harness the power of big data to encourage consumers to complete their purchase in-store rather than buying from a competitor via a smartphone or going home to buy online.
Comparing prices is one of the top ways that cost-sensitive consumers are using their smartphones in-store. Computer algorithms are now available that can monitor competitors’ pricing and react by making adjustments to campaigns, promotions and pricing in near real time. Flexible pricing strategies can mean the difference between making a sale and losing one.
While competitive pricing is an effective means of combatting showrooming, not every brick-and-mortar store owner can afford to match e-commerce price models. According to research published in the Harvard Business Review blog, personalization can deliver five times to eight times the return on investment and create a sales lift of 10 percent or higher, and it's a great alternative to price matching. Retailers can create a personalized experience by using geo-location data and mobile technology to push special offers to shoppers near a particular store or by offering an exclusive discount (e.g., a military discount). Tailored messaging that offers discounts based on purchase history, shopping preferences and other existing customer data can also be very effective.
Creative marketers can take this strategy to the next level by going above and beyond merely offering a discount and incentivizing their best customers with a memorable experience or special treatment. For example, an apparel retailer catering to the 18- to 24-year-old demographic might host elaborate after-hours events at stores located near college campuses the day after mid-terms or finals week to help students get a head start on their holiday shopping. The brand could choose to only grant access to verified college students. Connecting with consumers on a personal level builds customer loyalty and is one of the most effective ways to counteract showrooming.
A well-executed loyalty program is another way to form a personal connection with key customers. Many existing loyalty programs were developed in part as a method of collecting transactional data from customers. Now with more sophisticated technology available to aggregate and analyze the information, retailers can identify their most engaged customers and offer them real value.
Marketing tools are available from companies like Pursway that can not only help identify frequent shoppers, but also influencers and brand ambassadors by viewing data in a social context. Maintaining relationships with core customers is especially important during the holiday season, when new customer growth may spike as family members and friends buy gifts, but retailers may not actually be growing their primary customer base. Customers who have strong brand loyalty are less likely to turn to their smartphones to find reviews or compare prices when the time comes to purchase.
By using technology and big data to level the pricing playing field, connect on a personal level with consumers and sustain their existing core customer base, retailers can go into the holiday season with a significant competitive advantage. Retailers who embrace the role that big data plays in the new omnichannel marketplace will enjoy a very merry holiday season.
Jake Weatherly is the CEO of SheerID, a POS verification provider for retailers.