New Inroads for Analytics in the Post Corona Era

 

OK, 2021 will not get rid of the virus immediately but the new consumer behaviour, induced by the pandemic will have lasting effects that need to be taken care of by brand owners, distribution channels and -consequently- by the analytics approach and infrastructure.

So, what is exactly this new consumer behaviour?

You already guessed: more online shopping and more pervasive switching to web shops from the local shops to compete with the incumbents. The local shop owners finally have understood the value of proximity combined with the convenience of online browsing and online ordering or preordering and collecting the order at the local shop.

But there’s more. Not only have the predominant shopping logistics changed; the product range has also undergone the influence of the various lockdown periods. Consumers have a tendency to shop for more luxury products in the food section as a means of self-indulgence and the dichotomy between convenience and fun shopping is getting clearer and larger. Some retail chains are already experimenting with automatic replenishment of convenience products using automated algorithms. But some supermarkets in the Benelux are combining convenience, fun and self-indulgence offering prepared meals that can be consumed in the shop. Plus, Albert Heyn and Jumbo are experimenting with the concept. This can have an impact on local restaurants who have survived on their take away service during the pandemic.

Due to Covid-19 this section where you can have a meal at a Plus supermarket is closed...

And how does this emerging consumer behaviour affect the analytics profession?

The larger distribution chains will continue to develop their centralised analytical systems. The data flows from the outlets’ cash registers to the central data warehouse and delivers customer and product insights as this has been the case since AC Nielsen built the first embryo of a retail data warehouse somewhere in the seventies.

New opportunities for innovation in analytics for large retailers lie in edge computing. Think of directed dialogues with the customer, analysing conversion rates from looking at products, holding them, inspecting them and finally putting the product in the shopping trolley and feeding it back to the pricing and communication in the isles.

Now, as local shops discover the value of customer data, syndicators will emerge to provide economies of scale and of scope to aggregate data of the local shops and provide benchmarks and high level customer insights as a first deliverable. It will take some serious investments in persuading the local shops to share their data but it will happen in the next three to five years. My experience with a data warehouse project for an association of independent retailers tells me it’s doable if you mimic the architecture of epidemiological analytics. These systems have the highest levels of information security combined with state of the art analytical capabilities. And so another product of this pandemic may contribute to new analytical solutions.

But the major shift in the analytics landscape is happening with the brand owners. Up to now, most brand owners were OK with the idea that customer behaviour data resided in the systems of large retailers. Some of the clever ones developed a data sharing approach with the retailers accepting the possibility of a biased view on their final customers.

Now the need for massive customer data for brand owners is unavoidable. New ways of collecting unfiltered customer data will emerge. Smartphones, fit bits and other devices will have new roles to play in this strategic movement.

 

 

 

 

Managing Choice, a BI and CRM Challenge

Introduction 

When I was visiting countries behind the iron curtain in the period before November 1989, it struck me how simple life was there. You had the choice between two cheese types in the supermarket (if they were available) one pickled gherkin flavour,… The car market showed a little bit more choice: two Trabant types, a few Wartburgs, Skodas, Ladas, Tatras, FSO, Dacia and other Yugos… They all shared the same features: low quality and no evolution in safety, design or luxury…

Back to 2013: hundreds of cheese types in the better supermarkets and car maker Volvo alone has the capability of building over 5,000 product configurations of its mid-market model. Today, managing choice has become a shared skill, shared between producer and  retailer on one hand and consumer on the other hand.

About Choice Stress

Choice stress is a common phenomenon in developed markets because the differentiation becomes so low in granularity that we get stressed because we want both: a bio low fat yoghurt with strawberry flavour in a reusable cup with the chance to win a trip to Disneyworld but also another bio low fat yoghurt with strawberry flavour in a recyclable plastic cup with a cash back promotion. And then you ask yourself: “But where’s the pineapple variety?”

More and more, Customer Relationship Management becomes the art of dialogue with your customers to help them make the right choice in a stressless environment.

Retailers know that consumers’ main sources of stress are store related (like staff, queues, parking, products sold out, messy presentation, regular changes in the aisles,…) and choice related (mainly brand clutter and information clutter). But what are they doing about it and how does this relate to shopper marketing in the store and online?

One side of the coin: Business Intelligence in the virtual and the real world converges

From needs, occasions and solutions, how do you make the transition to the most profitable brand on your shelves?

And how do you make sure both showroomers and webroomers end up on the right web page or in the right aisle?

Business Intelligence solutions for retailers need to converge both web clicks and store visits per customer to come up with answers to these questions.

Let’s examine the enablers for these advanced analytics.

First there is an organisational aspect: make sure there are no splits in your hierarchy between online and store marketing management. Phew, that’s going to be a hard one for some organisations. You may be enthusiastic about the internal turf wars but your customer doesn’t make the distinction between your click and mortar presence, so why should you?

Second: the balance of power is shifting, so how do you adapt? In the pre Internet era when information was in the hands of producers and retailers the consumer was subjected to  their agenda. Now it is the other way around. Consumers create their own information about products and brands and managing this flow of dispersed blips on the radar is quite different from the traditional broadcast, one-way marketing communication. The consumer’s knowledge on product ranges of his choice is sometimes better than the shop assistant’s. Social media may not be a good vehicle to promote any brand but they sure are effective vehicles to break down reputations… fast and irreversible. That is not to say that there aren’t brands and retailers effectively using social media to manage sentiments and content about their products and brands. But they are still a minority, which is the only positive message I have for the laggards: there is still time to catch up. But don’t wait too long. Initiatives like Amazon Birthday Gifts using Facebook to have friends chip in for a birthday gift card are just the beginning of a set of ploys coming along to digitise classical real world interactions and channel them to the retailer who has the creativity and excellence of execution to take the first mover advantage. Big behavioural data[i] will become more and more a topic on the retailer’s agenda but this is only one side of the coin. The other side is a new form of customer relationship management (CRM) where the social aspect is altering the classical CRM processes.

The other side of the coin: social CRM

Paul Greenberg, a recognised CRM expert for decades, cornered the term in a handsome and useful definition:

"CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It's the company's response to the customer's ownership of the conversation."

I’ll add my two cents to that definition: it is an extension of the existing CRM process support in that sense that it interacts sooner with the customer in the sales funnel, trying to convert information seekers and information producers into consumers.

Technology vendors like Salesforce.com and Sugar CRM have been working hard to produce support for social CRM and others are following their lead. Social CRM is about a meaningful dialogue as researchers of Penn State, Duke and Tilburg University found out.

Establish a meaningful dialogue with your customers

In their article “SOURCES OF CONSUMERS’ STRESS AND THEIR COPING STRATEGIES” (European Advances in Consumer Research Volume 4, 1999, Pages 182-187, by Mita Sujan, Harish Sujan, James R. Bettman and Theo M.M. Verhallen) talk about facilitating choice both online and in store, only five years after the Internet became available for commercial purposes:

Marketer Interventions for Consumers Stress and Coping.

As suggested earlier, marketers can help consumers cope with their stresses by enabling them to use more effective strategies for coping. For example, retail stores can provide more in-store personnel that stressed consumers can approach for help. Additionally, marketers can facilitate the development of consumer self-efficacy through the environments they create. One way to achieve this may be through consumer educational programs (at the point of purchase, over the web) that teach consumers skills by which to make better buying choices, use products more appropriately and to dispose them more responsibly

 

Conclusion: retailers become information brokers, in collaboration with producers.

Managing information online and in store and presenting this information in a timely and accurate manner will help the shopper cope with choice stress. Convenience shoppers will greatly appreciate this approach and are ready to pay a premium price for this service. Our self-service economy has become so time consuming that consumers with spending power have become more than ever aware of the time = money equation.

Combining data from producers about product perception and experience with shared information between producers and retailers about product preferences and what I call “the shopping logistics of product choice”.

If you want to know how this is done, don’t hesitate to contact us at contact@linguafrancaconsulting.eu    

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[i] I refer to my definition of the term in the article “What is Really “Big” about Big Data” which you can find here.