What if you were able to know, with near certainty, that your customer would prefer one specific product over another--and that her chances of purchasing it are 84 percent higher if it’s in black rather than any other color? Further, that she’d buy it at a 10 percent price premium--if you can get it to her tomorrow?
The fact is, this is happening today.
Smart retailers are leveraging the information surrounding their customers to profit in ways their competitors are just beginning to understand. The good news is, you can do this, too, and you can get way closer to your customers as a result. A couple of days ago, my wife and I were discussing the article I wrote last week on Amazon’s recent predictive delivery patent and the implications for any company (like the ability to drive greater loyalty, wallet share, and engagement with their customers).
Our discussion was about the retail experience, specifically focused on a clothing retailer she loves. The in-store service and product selection at this company is far better than its main competitor, yet she has purchased far more from the company whose experience she doesn’t like as much. From her perspective, the products are about the same, the brands equally strong. So what gives? Isn’t great experience the driver of loyalty? After all, that’s the mantra our firm is built on.
Leveraging Customer Data Can Trump A Great Experience
Enter big data. From sensors in our phones or embedded in products we use to loyalty cards, social media sites, and transactional records, we each leave behind an increasingly vast trail of user-generated digital breadcrumbs. These digital trails are the foundation upon which big data is built.
When it comes to this clothing retailer, it’s down to how well one firm gathers and leverages individual customer data to anticipate customer needs, providing my wife better information about the products most relevant to her. Even though the in-store experience--service, selection, and attitude--is far less appealing at the second company, the “lesser” company really gets how to leverage what they know about her, and does so quite successfully.
Put another way, when a company can proactively leverage customer data to anticipate the needs of its customers, it can trump other purchase drivers, such as a category-leading in-store experience. As a result, she buys more from the company she likes less.
The Race Is On: Customer Data Can Better Serve Customers
The race is on to make the vast and growing volume of data that surrounds your customers easily accessible and understandable, as well as actionable; in pure commercial terms, the potential to leverage customer data to drive profit is staggering. More importantly from your customers’ perspective, you can deliver massive benefits and convenience to them while you’re at it. Talk about a classic win-win.
When it comes to retail, my wife and I talked about dozens of ways the company she prefers could better leverage her data to enhance her experience while dramatically benefitting their business as well.
Here are five of them:
1. Save her time and money: Her favorite four-letter word? “Sale.” By providing her relevant access to special deals, she’d up her spending for sure. In fact, when she thought about it, she realized she’s never been sent an email or a catalog by her preferred brand, unlike the other guys.
2. Anticipate her needs: She knows they collect her data in the store. Surely they can use this info to be proactive in connecting her with services, products, and information she wants or needs. Which brings me to ...
3. Give her “better” products: My wife is 5’2” and a size 0. Yet most of these clothes seem to be made for 5’8” size 2s. What if they could point her to clothes she’d especially like? Better yet, make clothes “just for her.” After all, Nike can customize a pair of shoes. Why can’t any apparel company customize some of their products?
4. Provide her more relevant product information: I don’t know anything about the true competitive advantages of one of these retail brands over the other, but wouldn’t their customers want to know how design, materials, or fit make the products she’s most interested in better than the competition?
5. Connect her to things that may interest her: From community events to a way to connect with like-minded individuals, the opportunity to more deeply engage her across a series of physical and digital interactions--deepening her brand preference if not loyalty in the process--is a huge opportunity lost.
The ideas above are neither unique nor, in this day and age, groundbreaking. But the concept behind them is nothing short of radical: Use customer data to better understand and benefit your customers. Yet many companies still either don’t get it or don’t execute well.
Case in point: We’ve been talking about a company that absolutely nails the in-store shopping experience, but doesn’t seem to leverage that interaction to deepen the relationship across channels, much less to drive more sales.
The Downside: Losing Your Competitive Advantage
Today, your competitors can easily duplicate your products, supply chains, and distribution channels. (Think Microsoft setting up a store a few hundred feet from every Apple store.) They can match (or beat) your prices and your service levels.
But what they cannot do is truly understand what makes each of your customers different from--and similar to--your other customers. And they can’t see where and how to use that data to serve them better than anyone. Today, your knowledge of your customers is one of the greatest competitive advantages you can have.
That’s why those who wish to thrive will become masters at using data to make their customers’ lives easier and engage with them more deeply. By leveraging the information that surrounds your customers, you’ll improve their experiences, along with your top and bottom lines. At the end of the day, your customers want to be served, and they want to buy. They just don’t want to be sold to.
And they expect you to help them, in the ways they prefer.