Growing consumer adoption and use of technology tools has significantly changed shopping habits. Consumers no longer need to visit a brick-and-mortar store to make a purchase; they can now use a variety of technology tools to buy products/services via a website or mobile application. A recent Aberdeen report looks at the challenges retailers face in harnessing data and analytics to better meet consumer expectations across all interaction channels.
Data-Driven Retail: The Path to Maximize the Shopper Experience
What Keeps Retailers Up at Night?
Table 2 shows that the top objective keeping retail executives up at night is growing annual company revenue.
Given that it is ultimately the customers who determine an organisation’s ability to obtain this objective, the retailers are also focused on meeting shoppers’ needs by providing a personalised and consistent experience across all channels.
Consumers today have the ability to connect with a wide variety of other customers through social media and the web to educate themselves on numerous products/services when making purchase and loyalty decisions.
It’s imperative that retailers regularly monitor and address changes in customer needs and wants to attract, retain and ultimately grow consumer spend.
Figure 1 shows that the pace and scale of how customers incorporate digital channels within their shopping activities is the top challenge impacting retailers’ efforts to maximise the shopping experience.
Retailers must make better use of customer data when interacting with shoppers via digital channels or in-store.
The Role of Data in Managing the Shopper Experience
Having a fragmented view of customer data means that employees in different parts of your business are not able to see the same account information across different channels. If you haven’t integrated customer data captured across all relevant systems you run the risk of having no visibility into cross-channel purchases (such as click and collect) and won’t be able to provide the customer with the service expected.
Figure 2 shows the top reasons why companies struggle with making effective use of data.
The ability to balance quantity and quality of data is a key attribute of data-driven retailers. These are organizations that not only capture data across all channels of interaction, but also excel at converting it into insights to drive their business activities.
Figure 3 shows the pay-off enjoyed by data-driven retailers.
The delta between data-driven retailers and their peers when it comes to the improvements in average order delivery time is comparably small when considering the other metrics.
Steps to Success in Data-Driven Retail
When observing the characteristics of data-driven retailers, Aberdeen found several areas where they are more likely to focus than all other firms.
- Use the Right Technologies to Convert Data into Insights
It was noted that 94% of organizations are not satisfied with their ability to use customer data as part of their business activities.
Table 3 shows that data-driven retailers use a rich set of technology tools to overcome these challenges.
Database management tools help firm’s clean, scrub and integrate customer data across multiple systems.
Data-driven retailers use a wide set of analytical tools to reveal hidden trends and correlations; these include business intelligence (BI), web analytics and predictive analytics. The use of BI tools also helps firms analyse how interactions at the consumer level impact aggregate trends in pricing, inventory, availability and sales.
2.Manage the Shopper Experience with Omni-Channel
Retailers’ top challenge is being able to keep up with the pace and scale of how digital channels impact Omni-channel activities. Figure 4 shows several activities that data-driven retailers use to address this challenge.
Segmentation is a key activity that helps firms understand the unique needs and behaviours of different consumer groups. Companies segment buyers by numerous criteria, such as demographics, interaction type, as well as previous purchases.
A common mistake made by many data-driven organizations is having tunnel-vision when using data. Solely analysing data to fine-tune shopper interactions is not enough to address the evolving needs of today’s empowered buyer.
With the constantly growing use of digital channels in shopper interactions, retailers using mystery shopping must include both digital and in-store interactions as a part of their efforts to measure the quality of service delivered.
3.Integrate Customer Data With Back-End Systems to Optimize your Supply Chain & Merchandising Activities
Retailers must have visibility into all inventory and fulfilment flows, must deploy price, product and have inventory strategies and back-end processes in place. True Omni-channel retail requires tight synchronization across sales, stores, merchandising and supply chain activities to support each customer’s sales-to-fulfilment channel in timely fashion.
Top performing retailers incorporate a full lifecycle pricing strategy to ensure pricing consistency and competitiveness across channels and segments.
Top-notch, data-driven, supply chain management and merchandising strategies are critical to complement the customer-centric activities we’ve discussed thus far.
Shoppers are more selective about the products/services they buy, and their loyalty can’t be taken for granted. For savvy retailers, this spells opportunity.
By developing a keen understanding of shoppers’ needs and wants, retailers now have the ability to connect with buyers across more channels.
- Integrate your enterprise systems.
Aberdeen’s State of the CEM Market 2014 study found that 99% of businesses are using at least two channels to interact with buyers.
- Establish better data governance.
Data security and quality are equally important to achieve better business outcomes as well as boost consumer confidence.
- Convert data into actionable insights.
Once you build a unified view of the customer data throughout your business, it’s also crucial that you utilize it.
- Don’t ignore the back-office; make sure you meet consumer demand.
If you don’t match your inventory, warehousing and shipping activities to meet customer demand, you won’t achieve the performance results enjoyed by data-driven retailers. Ensure that your pricing, promotions and customer communications strategies are designed to sell the right amount of relevant products to your target buyers via their preferred fulfilment channel.
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