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Over the course of a typical year, I attend a number of retail and digital marketing conferences.

Without fail, everybody attending learns a huge amount. But almost everybody I speak to also comments that in heading back to the office they have a whole load more stuff they need to think about.

The ‘to do’ list keeps growing and growing.

This highlights one of the major challenges faced by retailers (and non-retailers for that matter): the myriad of customer experience initiatives, channels and marketing tactics available to them.

Having so many different ways they could invest their budget is exciting but also pretty daunting.

So how do retailers decide how best to spend their money to drive awareness, acquisition, retention and loyalty?

Unfortunately, in my experience, decisions are too often based on guesswork; following the latest ‘fad’, copying the competition or buying a ‘solution’ they don’t really need.

Inevitably, this results in wasted budget, resource and time. But perhaps more importantly, it can mean customer expectations not being met.

With 80% of UK consumers being less likely to buy again after one bad experience (Mckinsey/Nielsen), meeting the expectations of today’s savvy, technology-driven consumer has never been more important.  

So what’s the answer?

There is a simple solution in my view: customer insight. 

Putting the customer at the heart of your retail organisation has never been so important. Every decision taken should begin and end with the customer in mind. 

To achieve this, you need to build a detailed picture of your customers. Whilst profiling techniques, such as ACORN, undoubtedly have a role to play, they don’t necessarily reveal the specific values, behaviours, habits, needs and expectations of your customers.

You can only build this understanding by gathering insight, both solicited (surveys, for example) and unsolicited (via social media, for example).

To highlight my point, here are five very simple insights gathered from surveys we have created and run for our clients.

Before I go on, a disclaimer. In reading some of these examples, you may well think…'What? How did they not know that!'

The point is, these retailers wouldn't have known without asking their customers, meaning key decisions were previously based on guesswork rather than shaped by what their customers actually wanted.

Offer free delivery: your investment will pay off

Insight for a health and beauty retailer revealed that a major barrier to conversion was a relatively high delivery charge on a low average order value.

By offering free delivery, they increased online revenue by 20% within eight weeks. They hadn’t considered offering free delivery until their customers provided the feedback.

In this case (as with most others), the cost of offering free delivery more than paid for itself due to the increase in conversion rate, orders and revenue.

Don't do Facebook 'for the sake of it'

Insight for a garden retailer found that their more 'mature' audience preferred email communication to social media.

By re-allocating budget and resource accordingly, they saw a 224% increase in revenue via email within three months.

The key lesson here. Social media isn't right for every audience. You don’t have a bottomless pit of money - spend it on the marketing activities that are most aligned to the behaviours of your customers.

Get to know the 'sale only' shopper

Insight for a fashion brand found that a high proportion of 'sale only' customers live in the US. Why? Because import duty meant US customers were waiting until sale time to order.

Understanding the behaviour of this smaller, seemingly less valuable segment, significantly changed how they engaged with them.

The client learnt not to discard the 'sale only' shopper. Instead, they developed specific strategies to target them.

You've got to dig deeper than transactional data

For a high end fashion brand, we found credit card purchases from a younger, female demographic were registered to males who had owned a home for more than 15 years. Eh? 

Only by overlaying transactional data with qualitative insight was the client able to understand why - they found that in many cases, the father’s credit card was being used by the daughter (knowingly, we assumed!) The end customer wasn’t who they appeared on the surface.

The lesson? You need to look beyond ACORN or MOSAIC profiling, it's not always a reliable indicator of who your ACTUAL customers are.

Are the incentives you're offering the right incentives?

Insight for another fashion brand revealed that customers would be incentivised to spend more with the offer of next day delivery, sale previews and unique offers rather than the heavy discounting they were pushing.

In fact, the latter was felt to devalue the brand.

Reworking their loyalty program resulted in a 24% increase in repeat sales over 12 months.

They key is not to make assumptions when it comes to incentives. At the top end of the market, price is rarely the decision trigger.

Other incentives, aligned to customer needs and values, are often more important so discover what really matters.

So, what can we conclude from these examples? 

A few things…

  • ACORN profiling has a role to play in segmenting your database (or prospective customers) according to a broad set of social factors, habits and behaviours. But it has its limitations.
  • Solicited feedback, in the form of a survey for example, can be designed in such a way as to dig a lot deeper when it comes to uncovering the needs, motivations and expectations of your customers, which in turn can be used to shape key strategic decisions.
  • Transactional analysis (using RFM modelling, for example) is essential to segmenting your database according to their spending habits. However, I have found overlaying transactional analysis with attitudinal insight hugely powerful to informing customer experience initiatives and digital marketing strategies on a segment by segment basis.
  • Don’t follow the crowd. Shape your strategy based on what your customers actually want, therefore taking the guesswork out of decision making. 

Next time, I’ll be following up by looking at 20 or so things a retailer really ought to know about their customers.

Until then, please feel free to comment below. How does your organisation use customer data and insight to shape key decisions?

Ben Potter

Published 16 May, 2014 by Ben Potter

Ben Potter is Commercial Director at Leapfrogg Digital Marketing and a contributor to Econsultancy. You can follow Ben on Twitter and Google+.

17 more posts from this author

Comments (2)

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Matt Lovell, Group Head of Customer Insight & Analytics at Thomas Cook AirlinesEnterprise

Really nice article.

One thing we've discovered is half the time we have the data (there are about 15 different ways that customers can provide feedback back to us from contact us forms to live chat and various social presences) but that this wasn't being collated together to provide an overview of the main pain points for customers.

As a result, it's something for advertisers to bear in mind as a lot of the time, it's just a minor change or two that could result in them getting a far better understanding of why some users just aren't converting...

about 2 years ago

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Ben Potter

Hi Matt,

Thank you for your comments. I think you highlight one of the key problems there - the sheer amount of data available. As you say, collating it all and focusing on the stuff that really matters is key.

Thanks

Ben

about 2 years ago

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