Slipping sales and quickly changing shopper behaviour has made consumer information priceless. Joanna Perry finds out how retailers can gather this data and use it to improve trade.

Canny customers can get great deals right now if they are prepared to sign up to receive retailers’ e-mails, use loyalty cards and have friends who forward them the many printable discount vouchers that are doing the rounds.

But what do retailers get back from these offers? In some cases they are happy just to get stock shifted a little earlier in the peak trading season. But retailers that are just as canny as their customers will be collecting as much information on their shoppers as they can. Armed with this data, retailers can decide what will get customers to open their wallets right now.

Marketers have always been the biggest users of such insights, but now that customers can’t be counted on to splash the cash in the same way as they were during the boom years, other areas of retail businesses also need to understand consumers’ movements and behaviour to make decisions on fundamentals such as products, pricing and stock levels.

LMG Insight & Communication was set up off the back of the data collected through the Nectar loyalty card. Its commercial director Dave Buckingham says that the downturn has created a greater appetite for information from Sainsbury’s and its suppliers. Within Sainsbury’s there are now 300 members of staff trained to use LMG’s Self Serve data analytics tool, which allows them to gain insight from the combination of detailed Sainsbury’s transaction data and Nectar data that LMG holds.

Buckingham adds that what is new is not the insight that can be drawn from data, but the speed at which it can be analysed – now a matter of minutes. Self Serve can be accessed across the grocer’s different departments – not just marketing – and it is also supported by a team of LMG analysts who are based within Sainsbury’s.

He explains: “Sainsbury’s has done a complete review of how it goes about ranging and its assortment processes. It was using pure sales information, but now it is putting the customer right at the heart of ranging.”

Buckingham says, for example, that the grocer is laying out its wine fixtures differently as a result of realising that customers chose red wine by country of origin, but white wine based on the type of grape.

He adds: “Sainsbury’s is much more closely aligned to how customers make decisions so it can make the shopping experience more relevant and encourage them to spend more.”

Buckingham maintains that promotions analysis is also crucial. “Promotions analysis was always difficult to crack. Now you can look at customer behaviour to see if the promotion meets its objectives, if customers are trading up or switching from competing brands,” he says.
He gives the example of one FMCG firm that has worked out that three-for-two offers encouraged very few shoppers to pick up three of its items. However, straight price cuts encouraged twice as many shoppers to choose its products.

Custom built

Marketing is the area where customer relationship management (CRM) data has been used most to date. Spirit Marketing Group chief executive Enda McShane provides marketing services to a host of shopping centres in the UK and Ireland. He explains: “We build a customer database and then stream offers and promotions to the people who have signed up to the shopper clubs.” For instance, a competition the company ran for the Liffey Valley shopping centre in Dublin generated 80,000 entries with 85 per cent opting in to receive more information.

McShane says that retailers can use their shopping centre’s platform to push out quick promotions and targeted messages. This kind of marketing is working well for shopping centres in Northern Ireland, which are pulling in shoppers from the Republic of Ireland in greater numbers because of the price advantages due to both the exchange rate and VAT differences.

McShane says that centres such as Victoria Square in Belfast are benefiting from shoppers coming across the border for what amounts to as much as a 35 per cent discount. He adds that e-mail marketing is a very cheap way to attract these shoppers – who are extremely profitable because their spend is nearly four times that of a local consumer.

SAS UK retail solutions manager Alan Smalley says that customer segmentation is more crucial than ever, not just so retailers can market to them, but also to make more fundamental decisions on what they should supply to customers.

Smalley says that 12 months ago it was enough to look at customer segmentation biannually, but now behaviour is changing much more rapidly. He believes segmentation should be simple, but more importantly the changes in the segments should be tracked.

Software provider SmartFocus chief executive Chris Underhill says that the retailers it works with – including Asos and Next – have fresh customer data available every day. He says that they are all trying to move away from broadcast marketing to one-to-one marketing. He adds: “Next, M and M Direct and Asos are all moving into that cycle, consolidating customer data into one single database and then feeding it to other disciplines.”

Underhill says that Next is moving from having tens of customer segments to hundreds – the goal being to identify groups of people who look the same and act the same. However, he also points out that even if your segments are up to date, you must also review how individual customers move between these segments, maybe even on a daily basis. “If a retailer treats you inappropriately for three months, you will soon get fed up,” he says.

The one type of retailer who can get away with not doing this is the heavy discounter. Volker Beckefeld, co-founder of retail-focused SAP consultancy Greenlight, says: “If your customer demographic is changing, it is important to understand what your customer demographic is and why other customers are leaving you. Aldi and Lidl know who their customers are. They are people who buy for one reason only – price.”

He says that for small- and medium-sized retailers whose customer segments aren’t so easy to identify then a pre-configured CRM system can allow them to start collecting and analysing data quickly. Greenlight claims it can get a retailer up and running with its SAP-based CRM system in four to six weeks, but that they should expect it to take a year to see a return.

Buckingham believes that falls in GDP will focus ad spend further on below-the-line campaigns and targeted promotions. Offers can be targeted by customer behaviour and he says the logical conclusion to this is trigger marketing, where e-mails are sent automatically to consumers who display certain behaviour.

Nectar also has its My Bonus Points offering, which lets Nectar cardholders opt-in for promotions and offers that interest them. It can then tell when cardholders redeem these offers and incentivise them further to continue their behaviour.

Experian director of marketing consulting Marie Myles agrees that its retail customers are certainly interested in targeted marketing and are using additional consumer information to help achieve this. As such, Experian can provide data on individual consumers’ marketing channel preferences, which can then be added to CRM systems.

The one area where she says retailers have been slower to demand more information is around credit. Other sectors are demanding more consumer credit data and she thinks that it is only a matter of time before retailers start to consider credit worthiness and affordability among their customer bases.

Even data on customer service can be analysed and acted upon. Rob Keve, chief executive of consumer feedback service provider Fizzback, says that the company is seeing increasing demand from clients to integrate the Fizzback service into their CRM systems. Fizzback collects customer feedback and analyses the content of messages to automatically determine their meaning.

Keve says that the intelligence collected can initiate processes in CRM systems, for example acting upon potential cross-selling opportunities, or even potential churn.

He says: “All feedback that we gather should be integrated into the single customer view, which usually resides in the CRM system. In a number of clients, such as Phones 4U, we automatically poll clients after they’ve called the customer service centre, helping service organisations drive improvements based on voice-of-customer, rather than traditional, inward-facing call centre metrics.”

Phones 4U director of customer services Nicholas Fisher adds: “To stay ahead of the game the questions we need constant answers to are what is the reality of the customer experience we’re delivering and how can we make it better?

“Phones 4U has partnered with Fizzback over the last year polling customers that have purchased in-store and, more recently, customers that have purchased over the phone or internet. We have integrated Fizzback into our customer service process, automatically polling customers on their satisfaction with the interaction. The mandate is the same: to learn, improve and ultimately exceed their expectations. We are now receiving large volumes of feedback from customers that have contacted the customer service centre. This data is constantly being analysed and acted upon and will significantly contribute to our ongoing improvement programme.”

The message is clear: as long as consumers are incentivised in some way for sharing information on themselves then they are happy to do so.

Trading conditions next year will be the most hostile that many retailers will have ever seen. For the majority, the insight gained from customer data will be essential if they are to stop competitors eating into their market share.