Despite big data analytics’ overexposure in the media, retail analytics isn’t about being trendy. It’s about tying real business value and returns to investments. But analytics are only as valuable as the opportunities it makes possible for retailers. And yet, the data itself is never the only factor to determine those outcomes. So just how do you move from insight to value?
- Uncover Hidden Insights And Act On Them
- Strengthen Customer Relationships And Increase Customer Value
- Increase Efficiency In Inventory Management
- Improve Financial Operations Processes
- Achieve Measurable Results From Marketing
Analytics allows retailers to spot trends and patterns that aren’t obvious – and then act on them. Stores don’t need a supercomputer to detect seasonal spikes in winter coats come winter or shorts come summer. However, with analytics, they can uncover hidden trends and, when they take action using that evidence, they can bolster their sales. One retailer analyzed customer behavior and found that the same customers who purchased men’s suits were also buying women’s dresses. While this may seem like an odd coincidence, analytics revealed that wives were buying those suits for their husbands. With well-timed and well-planned deals targeted to those female shoppers, the retailer was able to capitalize on this hidden trend.
Truly knowing a customer base is impossible without the insight provided by analytics. Consider the unknown customer that refuses to divulge personal information, leaving retailers unable to create a customer profile. Without analytics, many retailers are forced to write those customers off completely. With analytics, retailers are able to connect the dots that unknown customers leave behind. These elusive customers may not offer up their preferences, but analytics helps retailers track spending patterns, purchases and behaviors, allowing them to paint a profile of formerly unknown shoppers.
It is also difficult to show the benefits to known customers and increase their customer value without analytics insight. Retailers cannot target email or direct mail campaigns if they don’t know specifics about their customer base. They cannot offer personalized recommendations or tailored coupons (e.g. for a customer’s birthday). Data opens the door to a relationship. As retailers show value to a customer, that customer will share more information, providing even more insight that will further strengthen the relationship. With big data, retailers can reduce churn, increase retention, and increase overall customer value.
Analytics insight can increase efficiencies and help reduce costs. Historically, inventory management has been a reactive process. A product may sell like hotcakes in Philadelphia, while in Washington, DC, it collects dust on a shelf. Using historic data combined with predictive analytics, retailers can better manage their inventory from the beginning, sending the right amount of merchandise to the right stores at precisely the right times: less wasted time, backlog, and reduced shipping expenses.
Finance teams can use analytics to increase speed and accuracy when it comes to planning, forecasting and budgeting. They are also better positioned to allocate resources in a way that maximizes profitability. In the past, department heads have come to the finance team asking for money for initiatives that may or may not provide real returns. Analytics shows which initiatives work and which fall flat, and helps department heads and finance teams make a business case for their respective requests and decisions.
For decades, marketing has been a guessing game. Coupons long reigned as the only real, traceable method of measuring marketing effectiveness. With analytics, customers are now able to receive completely personalized offers. Retailers can track their browsing and shopping behavior online, and know if their emails and personalized online recommendations are working.
Retailers can also glean important insights on marketing effectiveness and customer behavior from the analytics tracking rewards cards and in-store, location-based mobile apps.
Big data analytics isn’t a trend – it’s a method to achieve real business value by taking strategic action based on data. The more a retailer invests in analytics, the bigger the return. And those returns can be found across the organization, from increased customer retention to a reduction in fraud.