In the second of our four part series of “Figure It Out” blogs focusing on Big Data Analytics in Retail, our Business Analytics team outlines some new ways that retail businesses can take advantage of new opportunities now available from big data.
The current retail environment is fickle and fiercely competitive. In order to gain the much coveted prize of customer loyalty, which is essential for future survival, businesses need to provide a more personal touch to make customers feel valued and engaged. Starbucks, for example, demonstrated the power of a personalised coffee experience in their campaign where baristas initiated first name introductions before serving, which generated over 25,000 tweets.
Marketing has moved on from blanket mails, which were seen as an irrelevant nuisance and a waste of paper, into a two-way relationship that customers actively seek in order to hear about products and offers they are interested in. O2 More is a good example of this, for which over 10 million people have voluntarily signed up to receive personalised marketing texts.
Intelligent customer data analysis has the potential to significantly improve marketing and customer value (as demonstrated in Figure 1, the percentage of companies that saw a difference after carrying out data analysis in a survey by TSYS. It found that building and maintaining strong customer relationships depends on how well you know your customers). For this, retailers have vast amounts of data at their disposal - not only information on the transactions and demographics of customers, but now, with social media, anyone who interacts with a company’s social media page provides an insight into the interests of people in their customer base. Retailers have the power now to truly understand their customers as individuals and so can focus on those who can bring the most value to the company. Play.com, for example, found that its Facebook followers are worth 24% more in sales than non-Facebook followers, and therefore can tailor their marketing efforts to reflect this.
Figure 1: TSYS survey results of benefits of customer data analytics
Retailers need to optimise their marketing spend by understanding their customers in order to target the right people with the right message – they just need to discover exactly who they are and entice them in with a personalised communication.
How does the Business Analytics team help companies know what to offer each individual?
Figure 2: Key steps in BA’s personalised marketing analytics
By performing a social media profile analysis, where we scan text to find key words linked to customers’ profiles, the BA team can gain insights and categorise customers based on whether they are likely to be interested in the campaign, product or service offered. Alongside this, we can perform transaction and demographics analyses to help companies understand the types of people likely to buy the product based on purchase history and personal preferences.
Combining this with insight from past campaign outcomes along with predictive analytics techniques, the team can better forecast whether a customer is likely to respond to a communication, offer or price and hence can send the right communications to promote this.
To maintain a competitive advantage, it is essential that retailers combine analysis of their big data sources along with their current data sets in order to better understand their customers, so they can communicate with a personalised marketing message, channel and tone to maximise response rates and customer loyalty. If you do not, your competitors will