Retailers Lack Needed Insight to Thrive in the Digital Economy
Digital transformation is happening across retail organizations. A large percentage of consumer interactions occur through digital channels, which means retailers have to be more vigilant about the customer experience. But how do you drive a personal touch through digital channels?
The answer is with data. Through data and insights, retailers can not only optimize efficiency, but also wow their customer with a more tailored experience. Customer experience is the No. 1 priority for retailers in the next year and with that, data also needs to become a key initiative. In fact, 65 percent of retailers believe that being data-driven can give them a competitive advantage by driving better relationships with customers.
Unfortunately, retailers don’t have a lot of trust in their data. Each year Experian Data Quality conducts a global data management benchmark report to look at trends around data management and usage. This year we found that, on average, retailers believe about a quarter of their data is inaccurate. We actually suspect that number is relatively low and that retailers are barely touching the data assets they have.
This high degree of inaccurate data has a direct correlation to how retailers interact with their customers. Sixty-five percent of retailers say that inaccurate data continues to undermine customer experience efforts.
Retail data management practices need an overhaul. When we look at the sophistication of data management practices, retailers are lagging. Most are reactive and not updated to facilitate the current uses or types of data needed to keep up with ever-evolving customer expectations. And while things like big data can be a positive change agent, organizations are seeing their current processes and technologies bend under the pressure of modern data demands.
Organizations need to focus on two major areas: creating a clear understanding around data ownership and management, as well as investing in modern technology that's more equipped to handle today’s data needs.
Unclear ownership and a lack of authority are compounding the data-related challenges many retailers face. Traditionally, IT owned the data, but more and more organizations are asserting that business users should own the data. They often have the context and the subject matter expertise to know when and how it should be analyzed. In fact, 79 percent of retailers think responsibility for data quality should ultimately lie within the business with occasional help from IT.
Retailers need to ask themselves where data ownership should reside within their businesses and create a clear understanding of who is responsible for the data, and therefore the processes around managing that information.
Ninety-eight percent of retailers have a data management project planned in the next 12 months. Comparing that with our findings from a year ago, it's encouraging to see that retailers are planning data management projects in much greater numbers. The highest percentage of projects are surrounding analytics, data migration and data cleansing.
However, it's important to remember that as the ownership of data changes, so too should the tools around data management. Today, the most important factor when choosing a data management technology is ease-of-use by business users. While features and functions are certainly very important, those features and functions don’t do any good if the user leveraging the tool can’t perform the tasks. Therefore, it's important that when investing in new technology, you make sure it can be leveraged by the right audience.
These new investments will help retailers better leverage their data in today’s digital economy, allowing them to better serve their customers.
Thomas Schutz is senior vice president, general manager at Experian Data Quality, a provider of data quality software and services.
Related story: Do Retailers Trust the Data That Drives Them?