What are the best sources of customer insight and how do retailers evaluate and select them?
As consumers continue to feel the pinch, understanding every nuance of their purchasing habits has become increasingly crucial for retailers keen to keep people spending.
Shopper insight was thrust firmly on to the news agenda earlier this year when Tesco chief executive Philip Clarke declared he would bring Clubcard, run by data firm Dunnhumby, ‘back into the heart of the business’ in his £1bn ‘reset’ of the grocer. The fact that Clarke believes the data specialist is vital in reconnecting with disenfranchised customers in the UK’s largest retailer’s crucial domestic market signals the importance of collecting shopper data.
But it is how the grocer is deploying this data that is of interest to the wider market. Clarke’s promise to offer a more personalised, localised offer shows how customer data methods have changed from collecting shoppers into broad categories such as families or older shoppers to producing more targeted offers for each person.
Methods of collecting shopper data vary from one retailer to another and most use a number of different ways to gather information.
Retailers use data to evaluate product categories, conduct range reviews, identify opportunities for growth and understand how shoppers view their brand.
As competition has become tougher across the high street, retailers have had to study customers closely to understand their shopping DNA, win spend and reward them appropriately.
Purchasing panels, loyalty cards, direct mail and email, interviewing shoppers, brand image tracking and catchment area analysis are among the most commonly used tactics to gain insight.
But perhaps the most traditional methods of collecting data on customers are focus groups and mystery shops. Bringing together groups that either represent a particular social demographic or a wide range of shoppers allows retailers to understand everything from how an in-store initiative is performing to whether marketing efforts are improving brand image.
Gary Topiol, managing director of customer experience management group Empathica, believes retailers need to pick out trends. He adds that retailers should not end up relying too heavily on insights from a tiny sample size of their total customer demographic.
Topiol, who has worked with retailers including Boots, Debenhams, Iceland and Waitrose, believes quality data comes from both engaging with shoppers and creating depth of information. “The best customer insight programmes have a strong foundation on solid data gleaned from real customers. From our work with Iceland, for example, we’re able to capture in excess of 1,000 pieces of customer feedback per day, which we then analyse and report back to the brand, often at a location level,” he says. “Having customer data on this scale makes justifying operational changes at board level much easier, and adds weight when rolling schemes out to employees.”
In addition, loyalty cards remain a key source of shopper data and one which retailers often turn to. Alongside Clarke’s declaration, Jaeger, Waitrose and Holland & Barrett have all made efforts to improve their loyalty programmes in the last year. For shoppers, the schemes offer rewards after accruing points. For retailers, they offer significant insights.
A crucial decision
Selecting which source of data to use can depend on the end goal. Sainsbury’s, for instance, uses trends found in its Nectar data to inform the questions focus groups are asked, which in turn help to shape ranges. Sainsbury’s director of loyalty and insight Andrew Mann says: “We run panels where we can talk to Nectar customers. You can ask someone who buys biscuits what they think of biscuits rather than simply pulling in a selection of customers who don’t buy the product you are studying so their opinion is of less use.”
Sainsbury’s uses a number of methods to capture data alongside Nectar. These include eye tracking while shoppers look at shelves, accompanying consumers as they shop, and simply talking to staff in store. The retailer also has an internal communications system, Tell Justin, enabling staff to escalate feedback and suggestions to chief executive Justin King to inform strategy.
However, Mann warns that retailers must study all forms of data carefully and says it’s the analysis that matters. “Anybody can have data but how you turn that data into insight is what’s important to understand what customers want,” he says.
Danielle Pinnington, managing director of customer insight specialist Shoppercentric, says taking a varied approach to selecting customer research strategies is vital. “We use a whole suite of methodologies, as one thing we’ve learnt is that there are so many contextual influences on shopper research that no one approach can answer every client objective,” she says. “Most projects use at least two methodologies - whether quality and quantity, or in store and out of store.”
She adds it’s crucial to tailor each project specifically to a certain question. “It’s not just about knowing the objectives of the research but understanding the context and the rationale for the research in the first place,” she says.
Across the retail sector, technology has revolutionised ways of collecting customer data. From eye tracking and filming in store to social media, retailers have a wealth of information that can be dissected and shared with suppliers online to allow retailers to rapidly digest data and inform new product development.
Adrian Hado, head of insight and analytics at Avios, which has worked with retailers including John Lewis, Tesco and The White Company, says: “Social media is important both from a data gathering perspective and as a great resource. It’s essentially a free focus group and ultimately we would like it be a tool for users to advocate brands.”
Ultimately, strategic customer research is crucial to make business decisions and gathering salient customer information will be key as economic concerns continue. Selecting the right method to fully understand both snap judgments and careful decisions made by shoppers could be the decisive factor in retaining and growing market share and sales.
The importance of shopper insight
Customer loyalty consultancy Uber UK’s new white paper on customer insight warns
of the risks of not studying data.
- You could lose customers If your customers’ attitudes are not consistent with your brand’s core values, there’s a high risk that customer loyalty will slacken, leaving them more likely to defect to competitors.
- Don’t target the wrong people Ensure that loyalty programmes are relevant and the brands you link with are in the same catchment area as your customer base. Fantastic marketing in the Northeast of England isn’t much use if you operate in the South.
- Don’t give customers what they don’t want Ensure you don’t alienate your customers by offering loyalty deals on products or at times which do not suit them.
- Marketing on a whim Ensure a return on investment by studying key customer segments and attitudes carefully and making sure marketing material is well targeted.
Possible insight sources
- Online surveys The cheapest of the research methods, online surveys generate a top-level view of the thoughts and feelings of consumers. The use of multiple choice questions means they’re perfect for generating strong statistics and gauging customer trends.
- Focus groups Focus groups provide the opportunity for a face-to-face discussion with a representative sample of customers. This means that the more stat-led results of a survey can be coloured by lots of additional context.
- Interviews Individual interviews are a great method of market research to capture in-depth customer feedback on a particular issue. Telephone interviews tend to be more cost effective, but interviews can also be performed face to face.
Source: Uber UK