Adapting Business Intelligence
Adapting Business Intelligence(BI) and Advanced Analytics for the Retail Industry to boost customer loyalty.
Retail businesses can boost their customer loyalty by adapting bespoke marketing strategies that can be designed to create a personalized shopping experience for customers through insights from their data by leveraging Business Intelligence tools and Advanced Analytics.
Retailers have access to an oceanic amount of data. They capture transaction data everyday from every stock keeping unit (SKU) about every sale, every customer and every store. The companies with access to such vast data have been using very sophisticated market research and operational process techniques to find answers to a variety of questions such as: What Products? How much? Which location? What discounts on which products and where?
Smartmonk foresees a great potential for the retailers that adopt Business Intelligence tools and advanced analytics as a platform for growth. Under a brilliant team, a data and analytics initiative can yield amusing rewards for retailers. We believe a company that is in the process of building capabilities and strategies to become a more customer centric and an analytically driven enterprise has an edge in the retail industry in these times of economic uncertainty and decreasing margins.
In addition to this specific data and market research at their disposal these companies now have insights from social media and other similar data sets. The potential in this data can be leveraged by Business Intelligence (BI) and Advanced Analytics to turn this wealth of information into actual value and decision making insights. Data powered by advanced analytics allow companies to make better, faster decisions in their day-to-day business and deliver improved performance.
The fierce competition in the retail sector has brought to light the importance of customer loyalty for the retailers and this can be achieved by mining volumes of data and empowering it with analytics and Business Intelligence to gain valuable insights into customer behavior and trends. This will in-turn help making decisions and building strategies that are loyalty inducing by creating a personalized shopping experience that recognizes individual customers, offer customized discounts and treatment.
The challenging and uncertain economy has been forcing retailers to fish for new ways to acquire new customers as well as boost loyalty in existing customers. Many Big Ticket retailers have been investing billions of dollars on loyalty and reward programs over the years to attract a retain their most desired customers but many reward points still go unredeemed or expire without the customers knowledge. The program benefits also usually go unnoticed.
We have extensively researched customer loyalty, its significance for retailers and have utmost knowledge on the analytical solutions that need to be carefully adopted to drive customer loyalty.
As loyalty is specifically a very important goal for retailers, almost all the retail giants like Amazon, Target, Walmart and alike have made analytics and Business Intelligence(BI) a key ingredient in their marketing strategies.
According to research by several industry experts and research organizations:
- The cost of acquiring a new customer can cost an organization 7 times more than retaining an existing customer*
- A 5% increase in customer retention results in a 25% to 100% increase in profitability*
- 80% of your company's revenue will come from just 20% of your customers*
- Probability of selling to an existing customer is 60 - 70%. The probability of selling to a new prospect is 5 - 20%*
- Businesses only attribute 21% of customer churn to poor customer service while it actually is 70%. This is also one of the major contributors to a decline in customer loyalty stats on any retailers chart.*
- Companies that prioritize customer service, experience and other loyalty based initiatives generate 60% more revenue than their competition.*
- 91% of customers who move over to a fellow retailer for their needs usually do not move back to their previous retailer. It is very important to retain customers as the fierce competition in the retail sector are always on their toes to acquire a new customer.*
In a recent research by McKinsey and MIT: The trends show that companies that have adopted BI and Advanced analytical tools into their operations have outperformed their peers by 5 percent in overall productivity and 6 percent in revenue in the first quarter itself.
Smartmonk Innovations director Mr. Nagi Reddy, discusses how consumer-facing companies can use data and analytics to generate insights and turn them into effective frontline action.
Smartmonk's approach to Customer Loyalty Analysis integrates extensive research on the organizations revenue trends, data mining with bespoke analytic techniques to identify the factors that are driving customer interests, conversion and loyalty for each of your customer segments.
There is an enormous opportunity in the waiting to achieve customer loyalty through this approach. Retailers by integrating and adopting these tools into the organizations working can:
- develop bespoke pricing strategies that do not dent the profitability of the company as well as stay competitive.
- Understand prospective customers and deliver customized marketing strategies to acquire them.
- Identifying key growth areas and deliver targeted advertising, offers and building a strategy to motivate buyers.
The Loyalty Challenge
Building customer loyalty can be a challenging endeavor. Unfortunately, a majority of the loyalty programs fail and promotions do not reach their targeted goals due to limited or wrong insights sometimes driven by human calculations and experience. The effectiveness of the program is not thoroughly understood and an inability to understand member behavior caused by loyalty programs and promotions.
The key challenges in implementing analytics for making data driven decisions to boost customer loyalty are:
I. Managing the Data:
After the initial process of determining the specific business decisions they want to improve and the marketing strategies that need to be reworked, the retail companies must collect and manage the data needed to conduct insightful analysis.
This entails two deliberate actions:
- Creatively sourcing data
- Defining data-governance standards
II. Translating the collected data into insights
Managing the data is just the first step. For the companies to make sense of this vast amount of data, it requires sophisticated analytic models and the right people who understand your business.
loyalty from Data
Insights using Analytics
& Business Intelligence
Business Intelligence and Advanced Analytic tools can assist retailers to connect with customers at every stage of the whole eco-system by generating insights from the data patterns and in-turn make real time decisions and process them into effective frontline action.
Adopting Advanced analytic tools also allow enterprises to make better, faster day-to-day business decisions and show amusing results. A multinational company for instance, revolutionized its retailer-specific businesses and marketing plans: by applying advanced analytics to consumer data, the insights from the process determined better selling Stock Keeping Unit's from non selling ones and their retail formats. Also it provided insights and information on which Stock Keeping Unit to swap in and out to enhance customer experience. The multinational has now achieved 10 percent sales growth in a low-growth category. The impact was not just in sales but also in enhancing customer experience, retaining the customers and building their loyalty.
- Channeling marketing investments and budget allocations across specifically identified growth mediums.
- Customer segmentation and profiling to identify their profitable customers and promote tailor made offers to the identified target audience.
- Reward loyal customers by serving offers that are more in line with the customers need.
From our experience at Smartmonk we suggest:
- One of the business users or the business owners have to be involved in the initial model building process.
- The approach should aim to build the least complex model that will deliver the needed insights.
III. Turning insights into effective frontline action:
Gathering the right data and developing transparent models, however, won’t yield impact unless companies can also turn data-driven insights into effective action on the front line.
Implementing Analytics at your esteemed Organization?
We put to work our analytical and BI expertise to predict future tendencies of customers in order to develop retention programs.
- Identify and target the most valuable customers to ensure they become return customers.
- Use analytics not just for online channels but also within stores.
- Embrace mobile technology as the next big thing in marketing analytics and incorporate it into your strategy.
- Improve your social media connection with customers. Analytics can help retailers understand customers’ social behavior and provide valuable insights on what is important to them.
Across industries, companies are facing increased pressure to grow revenues while holding costs in check. Identifying and retaining your best customers has never been more important. Smartmonk's insights are a unique and comprehensive analytic solution that helps you identify your most profitable customers and gain a better understanding of what drives customer purchase behavior so that you can increase customer retention and control loyalty program
For more information on Smartmonk's retail analytics and customer retention solutions please visit smartmonk.co or write to us firstname.lastname@example.org.