It’s easy to invest in technology that collects customer data. The difficulty lies in recruiting analytical experts who can generate relevant insights, and then channel that information through an organisation that is joined-up and able to meet customer needs – whether that's in-store, online or via an app. Of course, the real challenge is doing this in a way that’s profitable.
These were just some of the take-outs from Criticaleye’s recent Global Conference Call, Winning Back the Customer, held in association with professional services firm EY. On the call, there was general agreement that it’s crunch-time for retailers; either they find a solution to better understand what customers want, or suffer the consequences.
Julie Carlyle, Partner and Head of Retail at EY, comments: “For customers, value and fulfilment is front of mind. People want convenience, they want it now and they want that flexibility between channels.
"Customers want to be treated as real people, not just part of a demographic – they want to feel loved and that is quite hard to achieve.”
David Grounds, Relationship Manager at Criticaleye, says: “Customers want a hassle-free buying experience that fits with their lifestyle and delivers what they want at a fair price.
“Loyalty is fragile… When brands are engaging with customers as individuals, failure to deliver on the brand promise can feel like a personal affront. The consequence could be losing that customer forever.”
Snack retailer Graze launched in 2009 as an online proposition and has recently started selling its products in supermarkets. Its CEO, Anthony Fletcher, is a firm advocate of data and analytics, and has brought in data scientists to develop algorithms that measure and predict customer behaviour and preferences.
“Graze has… been able to pre-empt and ride some of the advantages and disadvantages technology has brought and exploit them,” he says. “We get 15,000 products ratings an hour, which form our product strategy… Retail is a tough game and Graze has had to develop a large product line and brand, which differentiates us from competitors.”
Another important element in the company’s growth has been its in-house supply chain. “We are very much in control of the process,” he explains. “We can release a product in 24-hours, the customer gets it, rates it, and if they don’t like it, we never send it to them again… It’s all about interacting with the customer and how quickly you can respond to their data.”
This approach extends to understanding profitability per customer. “Within 10 seconds of someone landing on our homepage, we can guess their lifetime value based on their device, browsing habits and so on,” he adds.
Connecting the dots
Traditional retailers with a bricks and mortar presence are having to adapt quickly. Andrew Hill, Group Supply Chain & Procurement Director of Value Retail, which builds and operates luxury shopping villages in Europe and China, explains how the company completed a successful data trial with a location analytics technology provider in one of its villages, and is now rolling out the technology across its other locations.
“The trial provided us with richer customer data and enhanced our business intelligence, [giving] us a deeper understanding of guest movements within our village, their time spent with us and the type of brands [they’re] attracted to,” he says. “Location analytics technology, and the data it provides, is enabling us to optimise village layouts and flow, to ultimately give our guests the best experience possible when they visit… We quickly recognised the broader value of the technology.”
It’s increasingly difficult to gain a single view of the customer when operating across multiple channels. “If I went and bought something from a clothing retailer on the high street, they would not have as much data about me compared to if I had bought it online,” says Julie. “Following one customer from what they do online to what they do in-store – not many retailers have the systems that give them that visibility.”
A lot of investment is going into the systems that look to solve this customer identity crisis. Gary Favell, CEO of Bathstore, which has both physical stores and a website, says: “We want complete encapsulation of the customer. We have a system that provides a life history of the customer at the press of a button; it allows staff to have more friendly conversations with them.
“Every customer wants to feel like you know them… That emotional connection to the brand is important.”
While using new systems is crucial to developing customer insight, the great barrier for retailers tends to lie within the organisation itself. “Teams need to be integrated,” says John Clarke, Partner for Technology Transactions at EY, and former SVP & Global CIO at Nokia and Global CTO at Tesco.
“Traditionally in big retailers, marketers would be on one floor; manufacturing would be in a factory somewhere and they wouldn’t talk to each other… You have to play with modes of working – organisational agility is as key as the technology itself.”
It’s no secret that the poor performance of some big retailers is as linked to culture and leadership as it is to legacy systems and slow, expensive supply chains. “While some big companies have invested a lot in data, they’ve been restricted by not having the right people who can do something with it,” says John. “They lack the capability of data scientists who can extract data or create algorithms… It’s not a lack of data, it’s a lack of information.”
Retailers aren’t the only ones grappling with this issue. Stephen Ingledew, Managing Director of Customer and Marketing at Standard Life, says that many companies in financial services are looking for different skills, processes and the right analysis and decision-making. “It challenges the way traditional businesses are organised,” he says. “We need to break down silos to be responsive to customers… That is the challenge for big organisations.”
It’s too simplistic to say that the answer lies in traditional corporates adopting the entrepreneurial mindset of digital start-ups. However, given the capricious nature of customers and their increasing expectations around choice and service, there is need for a swift response.
There’s nothing new about knowing your customer, but now the information must be available in an instant, regardless of the location or touch-point.
Anthony at Graze tells the story of how the company set about launching in the US. Ignoring most of the rules of international expansion, he opted instead to be “wrong, fast, agile and data-led”. In practice, this meant selling the UK range to Americans, which both he and his team understood would not be to their tastes.
“We knew that, but we also knew we’d get a lot of data quickly if we did it that way,” he says. “Once we had that information, we could then provide them with what they did want.”
It worked, and according to Anthony, the US operation is doing extremely well. With experimentation, innovation and no small amount of educated risk-taking, you can win back the customer.
But if they don’t feel understood, they’ll simply go elsewhere – taking their money with them.
By Dawn Murden, Features Editor - Advisory