By Mark Dunleavy, Informatica.
Times haven't ever been tougher for the retail industry. According to the British Retail Consortium, British retail sales plunged unexpectedly in April this year, falling 2.2 per cent on a like-for-like measure compared to 2012. So why are times so tough? Retailers today are faced with the challenge of looking for ways to offset increasing competition, pricing pressure and operating costs, as well as dealing with growing trends such as showrooming and "ROBO" (research offline, buy online) shoppers. This all boils down to the fact that it's never before been more important for retailers to concentrate on the customer in order to attract and retain business.
According to the 2012 National Retail Federation and KPMG's Retail Horizons report, nearly 67 per cent of retailers surveyed ranked customer satisfaction as their top strategic initiative for 2012, while 82 per cent claimed customer service strategies would be their top priority for the year, up from 75 per cent the year before.
When retailers can deepen their knowledge of the customer across all of today's proliferating retail channels, they can strengthen customer loyalty, increase share of wallet, minimise operational costs and maximise profits. It sounds so simple – so why is it so hard?
The answer is that it is hard because customer data is often difficult – difficult to access, difficult to make consistent and complete and difficult to trust. It is just plain hard to make sense of. Customer data is scattered and duplicated across multiple systems, which means there are multiple versions of the truth. That makes it difficult for sales, marketing, customer service and operations to gain a complete and authoritative view of this business-critical information. It is not uncommon for a retailer to have a set of systems for retail point-of-sale, another for e-commerce and yet another for the call centre, with information entered and stored differently and in different formats in each case. Given this fragmentation, it is no surprise that it is challenging to coordinate marketing, sales and customer service across Web, brick-and-mortar and call centre operations.
Below are some top tips on how retailers can focus on mastering their customer information:
- Leverage a single "golden version" of customer data and other data by automatically recognising and resolving data duplicates and conflicts across multiple systems.
- Create a holistic view of the customer by relating customer data to other information, such as products they own, retail channels they prefer and household relationships that can drive further sales.
- Harness the flood of new interaction data from social media by combining it with traditional transactional information (e.g., orders, invoices, etc.) and analytic information (e.g., purchase history) to round out a complete and authoritative view of the customer.
None of this is outside the realm of possibility. It is within the very real and present realm of master data management (MDM) technology. MDM is all about creating complete and authoritative business views, including customer views. If you need to fully understand the value of each customer, MDM enables this by tracking key attributes and resolving data conflicts across data sources. If you want to ensure a consistent customer experience or engage in customer segmentation, MDM enables this as well by helping improve the quality of data and by synchronising data across all its sources to eliminate inconsistencies.
Here are some specific ways that MDM can help retailers maintain a focus on the customer in today's multi-channel, retail environment and the benefits that result.
Correlate data across channels for more effective engagement and cross-sell/up-sell
We have discussed how MDM enables retailers to resolve data conflicts and correlate information from different data sources, including point of sale, web and call-centre systems, resulting in an authoritative view of customer data across all retail channels. This ability translates directly into more effective cross-sell and up-sell capabilities. A classic example is being able to match a specific in-store or catalogue transaction, such as the purchase of high-end pots and pans, to the customer's online profile in order to offer complementary products, such as professional-style kitchen knives, either via email or when the customer next visits the website. Leveraging this complete view, retailers are also better able to identify their most profitable and promising customers and households and better understand buying behaviours in order to best align multi-channel marketing efforts.
Tap into social sentiment to drive customer loyalty and sales
Consumers are not shy about sharing their product preferences and sentiments on Facebook, via Twitter and through other social media channels. MDM can help retailers listen and learn from social dialog, as well as move quickly to engage with customers and profit from individual sentiments and broader social trends. An example is engaging in sentiment analysis across the social media universe to understand how their brand is perceived globally and regionally. It also includes using MDM to reconcile individual social profiles with individual customer profiles in their Customer Relationship Management system. Retailers can then build out a more complete customer profile using information about customers' interests and activities gleaned from a person's Facebook profile, for example. Retailers are also able to leverage MDM to identify an individual's social friends and gauge an individual's level of influence across their social network to help them promote their brand.
Further, with customer opt-in, the opportunities for closer customer engagement via social media are phenomenal. For example, if retailers have visibility into an individual's Facebook wish list and something on it is on sale at your site, they can let them know. Similarly, as friends' birthdays approach, retailers can deliver wish lists to their customers and make it easy for them to buy appropriate presents from the online store.
Operate more efficiently and economically
The above examples relate to increasing the value of data through MDM. MDM can also help decrease the costs associated with retail data. Increased competition, a difficult economy, consumer empowerment via online product research and shopping – all these factors are driving lower prices and smaller margins. MDM lowers the costs of handling and managing data across applications by centralising an organisation's data governance efforts and technical capabilities, such as data quality and identifying relationships between data to reduce duplication. Doing this on an application-by-application basis would be cost prohibitive.
Meanwhile, complete and authoritative master data is available to sales, marketing and service organisations in days instead of months to more quickly power customer-facing initiatives and free up personnel for other tasks.
Master the data and master the market
MDM is essential to bridging the information silos that characterise multi-channel retail operations - and to overcoming fragmented and inconsistent data to create a complete and single version of the truth about each customer. Retailers are then better equipped to market more intelligently, sell more effectively, operate more efficiently and create closer and more profitable customer relationships. The retail world continues to become more and more complex. There will always be new channels and new data to master. Retailers embracing MDM now will have a long-lasting market advantage, regardless of coming trends.