By Venkat Viswanathan, LatentView Analytics
Today’s retailers are faced with numerous challenges. The rise of omnichannel retailing and the proliferation of mobile devices are some of the recent elements that have contributed to the industry’s increased complexity, forcing retailers to adapt their practices to cater to and form relationships with the new 21st century shopper.
Whichever channel, at the end of the day it’s all about the customer, and understanding the customer’s wants and needs is key to achieving success.The companies that succeed in reaching and establishing relationships with their customers, versus meeting an explicit one-time need, are those that can ultimately build brand loyalty and boost sales. The question is, how is this executed?
The Three A’s
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As we look at the retail business, it’s important to consider “the three A’s:” acquisition, actuation and activity.
- Acquisition: As the name implies, the acquisition phase relates to obtaining new customers, which means reaching potential buyers in the broader market. This includes promotions and demand generation activities to attract potential customers to try your product.
- Activation: Following that, the next step is activation — getting customers to execute a desired action. This could mean attaining a certain average number of shopping trips per household, completing a specific type of transaction, or increasing awareness in different product types. Whatever the criteria is, the goal of activation is getting customers to interact with the brand so that retailers can begin to engage them and build relationships.
- Activity: The final stage is the activity stage, which is where loyalty programs and benefits come into play. Amazon Prime is a good example of this; by offering free shipping the company is providing a key value-add and an incentive for consumers to shop with them. This allows the retailer to build stronger relationships with consumers and increase activity levels.
Supporting the “three A’s” is another “A” that makes this all possible: analytics. Analytics is at the core of all measurements and is incredibly valuable for retailers wanting to gauge number of visits, channel of acquisition, number of items purchased, etc. The digital world naturally contains more data to access and utilize, but analytics is important for both online and traditional retailers. In fact, it even bridges the gap at times. For example, offline services are often reviewed online, via sites like Yelp and others. Retailers can use analytics to relate how much business stems from these digital reviews and gauge the overall sentiment of their customers.
The Power Of Social
Social media is one of the trends driving retail’s data deluge. This has become an increasingly important channel for retailers working to identify customer needs and predict product demand. Often, Twitter and other sites are where consumers are most honest about their actions, making this data a valuable resource for retailers seeking to understand consumer sentiment and response. This is majorly because the feedback on social media is un-solicited and peer reviewed, unlike feedback forms.
A great example of the power of social media comes from the grocery business and the rise of certain foods, like the Korean dish Kimchi and the hot sauce, Sriracha. Both items gained initial popularity in restaurants. When it became evident that they were liked and being talked about over social channels, retailers were able to glean that insight and focus on building activity around the products. This showed consumers that they were available on shelves and encouraged them to come in and purchase these newly stocked items. In situations like this, retailers can capitalize on analytics to help tap into trends, monitor user feedback and predict product popularity.
Traditional Tie-Ins
Analytics also helps retailers better reach their customers through special offers, promotions and ad placements. Retailers who use circulars extensively, for example, have a limited amount of real estate available, so they must make the decision of what items to highlight as well as understand the relationship between the ads in these circulars and actual retail sales in nearby locations.
The measurement behind this is critical – it’s important to know if ads are resonating and then be able to use that knowledge to adjust placements as needed. The same concept holds true for radio and TV promotions. Analytics allows retailers to measure the impact of these efforts, thus equipping them with the insights they need, to optimize their ad dollars to better reach and engage their audience.
Just the Beginning
The above only scratches the surface of how analytics can be used in the retail space. Analytics offers the ability to unlock customer behavior and delivers the insights and value needed to help retailers better understand their existing customers, reach new prospects, build relationships and ultimately boost brand loyalty and revenue.
The implications and usage of analytics in the retail industry are enormous, particularly across social media channels. Retailers who are capitalizing on this valuable tool now will notice improved awareness of trends, enhanced customer understanding and stronger customer relationships, all of which contribute to greater success in the long run.
Venkat Viswanathan is Founder and Chairman of LatentView Analytics.
