Forget big data for a minute. Pause on sending daily emails to your entire customer file, where everyone gets the same thing. Halt from launching a loyalty program that is not connected to your email club or your CRM efforts. Stop your app development that does not capture customer information.
Perhaps it’s not necessary. Maybe we don’t need to do better than this. Does sending me emails for women’s jeans 70% of the time lead me to be less interested in the email for men’s jeans when it appears? Have I been trained to put up with it? How about offers for products you know I have already have purchased?
I believe in something smarter, and I have for years. It’s this: when you take the time to integrate data from all channels (marketing channels, purchase channels), you are able to build strategies and tactics that provide market-beating financial returns for your organization. Over and over again. Knowing how browsing behavior impacts in-store. Seeing that email opens by category can lead to specific product recommendations that are of interest to the customer.
I think it’s even bigger though. Those are tactics. If X then Y kind of stuff. What about your strategy? Which of these trends are big enough to actually change your merchandise assortment? Are you spending a lot of time on the 40% of customers who only bring 10% of revenue (a typical retailer metric)? Do you know who your best customers are? The 10% of customers that provide 40% of your revenue?
Of course, this begs the question: What does it mean to Know Who Your Customer Is? Name? Address? Sure. Demographics? That helps. What they purchase? How important they are to your bottom line? That they are influencers? Yes. Are they engaged? Are they loyal? We need to know.
When you have hundreds of thousands, millions, or tens of millions of customers, there needs to be a way to make sense of this data to understand the major types of customer relationships you have, and build out strategies based on that insight. This means analysis, statistics, and third party data appends. It may mean primary research. All to reveal what your customers think, what they buy, and how much they relate to what you are as a brand.
Forget the primary research approach to segmentation, where you survey 1,000 or 2,000 consumers and cluster them based on things you can’t find in your database. Forget the attempts to model these segments onto a database (hint: it doesn’t work). It’s interesting to know that the “Barb and Clive” segment spends 30% more than the average and likes organic food, but unless you can find them on your database, it’s relatively meaningless.
So, what do you need for you to be able to “know your customer”? Let’s start with integrating many sources of internal data, as well as the ability to append external data available from third parties. Also, there’s the need for experienced data scientists- individuals who know data, marketing, statistics, and consumer science. This is not a website widget, or a technology solution. These are consultants doing the hard-core work of understanding consumer behavior, translated into customer data analysis.
The results, when done well, are impactful. If only 7% of your customers shop across 3 or more departments, you are not doing a great job of cross-selling (is this a brand problem? Opportunity to bundle?). Over 50% wait for your catalog to purchase because they have been trained to get the 30% discount. Older shoppers spend more of their disposable income with you than younger. Each of these findings gives you a concrete problem or opportunity to solve, with quantifiable goals (increase cross shopping from 7% to 10% in year 1).
However, the big benefits come from the combination of all of this information, developing Segments. The “Fanatics”? They will consider buying anything you want to sell them. Don’t drop a catalog. Instead, test email to a digital catalog. They will probably bite, and save you marketing expense. Survey them to see what other products they may like. Give them pre-order access. Hold onto them! The “Lagging”? Build reactivation models to identify which you should focus on to bring into the fold. Your single-category buyers? Build depth in the category, then build breadth across.
But more importantly, can you then communicate across all channels with this information? If she only buys dresses and our goal is to get her to add accessories and casual wear (because we know she’s buying elsewhere), can your emails, DM, and app notifications all be consistent? When she comes to your site, can you automatically have a landing page with accessories? The technology exists. It’s the strategy that is often lacking.
If you don’t know who your customer is, you are missing the biggest opportunity for organic growth in your business. It’s time. Your company needs it. The systems in place to send coordinated messages and trigger campaigns are waiting for you to get the smarts together to go after it, strategically and tactically.
It’s 2016, and there’s no excuse for not knowing who your customer is.