What does it take to be a data-driven retailer?
by Sizwe Dlamini. If you want a data-driven retail strategy, you need to create a data-driven business culture.Wednesday, 10 Feb 2021
by Sizwe Dlamini. The infusion of a data-driven approach in the retail business has opened a world of opportunities that still needs to be explored and implemented, and it has the capability to change the face of your marketing strategy. A data-driven organisation uses insights gathered from data analysis to inform each and every business decision and strategy to maximise performance. In the retail industry specifically, companies can leverage data insights to make more strategic decisions related to customer interaction, product development, pricing, and even seemingly menial details like a product’s placement on a store shelf.
Digital transformation is at the core of retail and these are the most important factors to consider for a data-driven retailer:
- The customer is the true custodian of change. Data needs to be used the right way for your customers. The art is knowing how to identify the most profitable customers to invest in. Does the business have the right tech roadmap to make this happen?
- Integrated cross-channel decision-making. Making sure that you know what is happening in-store every day and that it is supported by data? The aim is to use that data in such a way that it becomes effective for the people running the store on a day-to-day basis.
- Every customer interaction should be data-driven. All actions and strategies should be supported by customer data – including pricing, promotion, and personalised communications.
- Consumer intelligence powered by customer data platforms. Retailers need to be actively leveraging data platforms that are considered fundamental in driving strategic initiatives around creating real-time personal experiences and driving marketing effectiveness.
- Adoption of AI-driven automation. Becoming data-driven requires tools that provide a complete view of your customers — and using real-time data to power in-the-moment responses to their activities. Only then can you give your customers the relevant and personalised experiences that make them come back for more.
- Personalisation to drive growth and engagement. Solving for challenges around predictive personalisation and instant gratification are pertinent. They are important elements for creating the meaningful experiences that brands are chasing and customers are craving.
- Embracing the culture of experimentation. It’s key to set-up and engage in a culture of experimentation and embrace a fail-fast philosophy. Fundamental change has to occur in the speed with which businesses make the shift to a data-driven culture. Today’s start-ups have created data-driven cultures from the beginning; hence, large established firms fear disruption from them.
Benefits of a data-driven retail strategy
Modern customers have everything at their fingertips, giving them more power than ever in the buyer-seller relationship— and they’ll only buy and continue to buy from brands who deliver rewarding experiences they can’t get elsewhere. Imagine if you could predict precisely who will buy a product, when they’ll buy it, and the method they’ll use to make the purchase? While customer data won’t give you superhuman psychic abilities, it’ll enable you to get as close to predicting the future as humanly possible.
By analysing trends, past behaviour, purchase history, and many more data points, brands can pinpoint every factor that contributes to a purchase decision. A data-driven business strategy does not happen overnight. It is a complex strategic shift, the success of which hinges on a number of equally important factors. Here are some specific considerations brands should keep in mind before embarking on their data-driven retail strategy:
- Identify primary data sources: Modern technology makes it easy to trace a customer’s digital footprint and gather large quantities of data— but how can brands gather data from people buying products in-person?
- Web analytics: The Internet is a massive source of data that offers important insights into your audience and how they interact with your brand.
- Build comprehensive buyer personas: No data-driven strategy is complete without in-depth, accurate buyer persona. Buyer personas help you understand your customers and their buying preferences.
- Purchase history: A person’s purchase history is a valuable piece of information as it can often help you predict their future purchases.
- Buying preferences: How do your customers make purchases? Do they prefer to buy products online, or in-store? Do they tend to buy in bulk or purchase one product at a time?
- Psychographic data: Why do your customers make purchases? Psychographic data refers to seemingly unquantifiable characteristics such as a person’s personality traits, interests, motivators, values and hobbies.
- Create a data-driven business culture: This is one of the most important, yet one of the most overlooked, elements of a successful data-driven retail strategy. It’s not enough to hire a single data analyst, or even a team of analysts, to collect, analyse and report on your customer data. You would have a data-driven program, but you wouldn’t be a data-driven company.
Data-driven retailers are the future of the retail industry
The retail industry is getting more competitive day by day. Retail owners are still facing huge challenges because they are unable to integrate data in the heart of their organisation. As a result, they are missing out on an ocean of opportunities offered by data analytics and are unable to change to maximise marketing performance.
Sizwe Dlamini is head of commercial at Idea Hive, brand storytellers. At Idea Hive we create and execute pioneering Brand Storytelling Solutions to illuminate your brand’s power. We apply a strategic framework which extracts and aligns all the key components of your brand’s story.
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