Number crunchers have been harping on analytics for years – you’ve seen it take hold of sports (Moneyball and the rise of “sabermetrics”) while advanced infographics have become a staple of most publications. A new benchmark report from Retail Systems Research (by Paula Rosenblum and Brian Kilcourse) makes the claim that retailers who aren’t taking advantage of the many new resources for analyzing customer data are doing themselves a major disservice.
The report, titled “Retail Analytics Moves to the Frontline,” says that we’ve come a long way from the advent of digital data reporting when store scanners were introduced in the ‘80s: “The explosion of new data available today that reflects consumers’ shopping habits and preferences, particularly as they use digital technologies to make their purchase decisions both away and while in the store, dwarfs the volumes of data from those earlier times.”
Report co-author Paula Rosenblum says the report has special applications for MI retailers.
“First of all, we would never remotely suggest that analytics or any other math program will replace a musician’s eyes and ears on deciding what to buy,” she says. “No math program is going to recognize the mellow sound of a particular Martin guitar. What analytics can help you do is figure out how many to buy, when the best time to buy them might be, and the segments of your known (and not-yet-known) customer base that would likely be interested in owning one. That’s the forward-looking piece – figuring out how to make the best use of working capital.”
Though there are many methods of gathering data, Rosenblum says that it all comes down to simply asking for it any time you can. This means when you’re finishing a sale, when folks visit your website, and when administering loyalty programs. The key is that it comes in exchange for a perceived reward. “Loyalty programs can be effective, but only if the rewards are clear and real,” she says. Social media tools like Facebook and Pinterest can be effective, though finding personal data can be tough there. “I think it still has to happen as part of some kind of offer – ‘Join our mailing list to receive info on [insert their interest here].’”
Once you’ve gathered enough meaningful data, the way you analyze it can be of utmost importance in building a list of likely buyers for different instruments. A retailer can use these lists to call customers, suggest add-on items (anything from amps to cases and straps), and more.
“Rolling forward, a pattern might emerge from the data that helps you determine when it’s time to send additional offers,” Rosenblum says. “If I take the guitar analogy further, you could send automatic emails or create ‘tickler’ lists to contact buyers when it might be time to change strings. You could recognize the difference between Brian, who changes his strings all the time because he plays a lot, and me, who hardly ever plays or changes my strings. You could remind me to change them a bit more often (I really should!).”
Rosenblum notes that analytics can also be used to keep tabs on employee selling habits. Who are they selling to? Is anyone giving away sweetheart deals for lower than you’ve authorized?
While the idea of analytics may bring to mind extra time spent with dull spreadsheets, Rosenblum argues that they actually accomplish the opposite. “The core question an owner has to ask himself is, ‘While this is a labor of love, am I laboring so much that I’m losing the love?’ Analytics and computing power in general help take the sweat out of being a business owner, and frees up time for more selling or relaxation time.”
“The bottom line is: there will always be a big place for the human touch. The value of analytics is to give you the time to provide that human touch, and let the math take care of the scut work.”
Retail Systems Research (“RSR”), founded in 2007, is the only research company run by retailers for the retail industry. RSR provides insight into business and technology challenges facing the retail industry ecosystem, and thought leadership and advice on navigating these challenges for specific companies and the industry at large. “Retail Analytics Moves to the Front Line” can be found for free online at: goo.gl/ddyXhj.
