Analytics for product promotion empowers retailers to build better customer ties
Effective product promotion has been a challenge as long as there have been products to promote. Big data analytics presents an opportunity for retailers to address this challenge. While analytics can help retailers capture trends to determine what promotions to pursue, implementing the systems requires the right tools, people and processes. In retail, the challenge is understanding which product customers want, when they want it and what they are willing to pay for it. Both parties need to benefit.
Effective product promotion is like the catalyst in a chemical reaction. Product promotions alert shoppers to opportunities to get what they need, at a price they are comfortable with, from a brand they trust. The terms of the offer boost retailers' sales and profitability.
Big data analytics has the potential to improve retailers' ability to make the situation work better for both parties. Retailers have had the mathematical techniques necessary to discern customer tastes for years, says Dean Abbott, a veteran data scientist and founder of SmarterHQ who has written about what he calls retail customer intelligence. Instead, it is the means for collecting and analyzing data that have advanced, a trend that corresponds to the rising number of channels through which customers express their preferences and interact with a brand.
Forward motion on promotions
In the past, retailers captured trends from shoppers' responses to paper mailings, and then built models to anticipate who would respond. Then, Abbott says, retailers focused on customer actions: purchasing, placing items into an online shopping cart, opting into a loyalty program or signing up for an email list. Retailers collected data on these actions to feed models designed to capture trends and develop product promotions. These activities are still ongoing, but now customers are demanding relevant, personalized experiences from their retailers. Effective promotions require "constantly evaluating data inputs and adjusting insights as behaviors change," Abbott says.
Retail industry experts note customer data and analytics tools are best used as a complement to other industry-specific skills and knowledge to create an effective promotion strategy. Here are a few requirements:
- Retail industry expertise: Effective analytics requires business experts who can determine what metrics the company should be tracking. Without such guidance, data analytics can provide answers to the wrong questions. Retail experts need to frame the problem so that data analysis provides value, Abbott notes.
- Organizational alignment and coordination: The development of product promotions can be hindered when a company'sdata is collected and prepared for analysis in separate silos. As experts at FTI Consulting point out, it doesn't help the enterprise when there's one team for consumer research, another which handles customer relationship management and additional groups for e-commerce, digital marketing, social media, merchandising and product development. All of them must collect, manage and communicate data and insights in a unified way.
- Brand coherence: The product promotion needs to make sense to customers when presented, according to Loyalty360. Consider the context of the product promotion. What do customers see? What else is happening in the retail niche? What about the region or location? The specific product being promoted? Past promotions? Customers will perceive signals for each of these questions and more. Make sure your brand is broadcasting a message that resonates with them and is true to your values.
Campaign testing on Twitter
As with other analytics projects, it pays to experiment with a product promotion. Party Galaxy, an Oklahoma-based party supplies retailer with nine stores, has been testing a social media monitoring system that identifies shoppers seeking the goods they sell. By identifying phrases of note, the system can scan Twitter to see who's in the market. Once identified, the retailer sends a link to the user to opt into a program that provides them with coupons and other promotions. The retailer saw a big increase in social media-driven sales leads from the exercise, Stores Magazine reported.
Analytics enables retailers to better determine which products to highlight to whom and when. With customers expecting a quality experience from every interaction with a, retailers should look to organize their teams and develop promotions to boost their customer relationships and their business.
Fuel sales by understanding how big data can impact all sectors of your business. Learn more about IBM Retail Industry Solutions.