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The growing importance of data and insight
Data is the key to understanding customers
Sharelines
DATA AND INSIGHT is proving more vital than ever to retail today and future growth largely depends on the learnings gained from it. This is driven by a number of factors – from new technology capabilities and new skills to simply a greater requirement than ever to be able to predict and define customer behaviour, driven by the evolution of omnichannel and the need for a consistent customer experience across channels.
Why data matters
“Data and insight is important because it allows you to make informed decisions – otherwise you are just making decisions based on gut instinct,” says Dave Elston, digital/ecommerce consultant and former digital director of Clarks.Steve Gaughan, head of customer insights at AO.com, agrees.“Data is the beating heart of the business. To understand how and ultimately why, a customer behaves a certain way, data is the cornerstone of insight led decision making,” he says.
Without making use of the many rich sources of learning available retailers are missing out on easy wins that will help them better understand what their customers want and when, as well as making key operational efficiencies within their business that will allow survival against competitors.
At Ocado the company says data is vital to its need for continual innovation. “We operate in a highly competitive market, maybe the most competitive of all: grocery retail,” says Dan Nelson, head of Ocado Smart Platform Services, part of Ocado Technology, the division of Ocado developing the software and systems that power Ocado.com and the Ocado Smart Platform.
“This means you need to inspire your customers, excel in satisfying their needs but at the same time minimise operational costs as margins can be low,” he says.
“If you can’t successfully do all of this simultaneously then either your customers will go to a competitor (who maybe can) or your company will go out of business trying. You also need to innovate to stay ahead of the competition, and so data-led decisions can help you navigate the field of emerging technologies and choose the right ones. In our model, this is especially true as we operate in a symbiotic environment, where our retail division feeds insight into our technology division who then develops the solutions that help retail attract and retain customers,” says Nelson.
Put simply, knowledge is power
“This has never been truer than in the information driven age we now live in,” says Natalie Bruins, marketing specialist at K3 Retail. Certainly, retailers are realising the value of not just collecting data but getting useful insight from it. In our survey our respondents almost unanimously (99%) said that data and insight was important for them in terms of how they develop and learn as a business, with 69% of respondents citing it as very important and a further 30% saying it was important.“Quite simply the companies that can gather, normalise, analyse and develop insight have a massive competitive advantage,” says Simon O’Mahony, director of digital retail and customer service at Nisbets.
Our respondents cited a number of commercial advantages of using data within their businesses – from delivering superior shopping experiences to better targeted marketing. Others cited the agility it allows – moving retailers from being responsive to predictive.
Overall it allows better decisions to be made and enables retailers to know where to focus their activities. “Fact-based decision making always wins,” said one respondent in our survey.
This isn’t surprising given its power. “By analysing vast quantities of data that were previously inaccessible, you transform your business culture into one that shapes the future with predictive analytics, rather than hindsight,” says Bruins.
Board-level strategies
Retailers, as they realise its increasingly vital role, are putting data and data management at the heart of their businesses too. Our survey showed that 90% have it as part of their business plan.But whilst putting it in the business plan is sensible enough real success requires that it is driven from the top as a board level priority. This gives a business a better chance of getting the investment needed in data and insight teams and capability within the business.
Our survey showed that data and insight was a board level concern for 7 in 10 (70%) of respondents. Partly this is being driven by an expectation that data is being used to learn more and partly simply a need for data to fit into the wider, overall digital strategy of a retail business. “CEOs are now frequently asked what their ‘big data strategies’ are and CMOs are being pressured to turn the volumes of information their companies collect into business insights and cunning marketing strategies,” says Bruins.
How exactly boards are driving the importance of data varied. “The board demands evidence to make decisions,” said one retailer, a view unsurprisingly repeated in our responses. “They use it for future product development and resourcing,” said another.
Where data is embraced fully it is also integrated into basic business strategy. “The strategy for the year, which comes from the board, is related to getting, preserving and using the data,” said one respondent. “The board insists that the data is collected and presented in a way that can be used to inform decision making and hence maximise sales,” said another.
Although driven from the top, real success comes from embracing it wholly with successful data-driven organisations sharing the ownership of data across the whole of the business and realising the benefits it brings to all parts, rather than isolating it in IT, marketing or sales.
But new roles are also being created – and new talent brought in – that is putting a greater focus than ever on the important role of data. The CIO, once stuck in the backroom, now has a boardroom focus and new roles – once unheard of - have now emerged such as data scientists, chief digital officer and the customer experience director. “These changes have been driven in retail to win the hearts and minds of the customer through fantastic retail experiences,” says Bruins. And at the heart of this is data.
This feature first appeared in an InternetRetailing white paper, How to act on data rather than drown in it, published in association with K3 Retail. To explore the white paper further, including a primer on getting compliant with GDPR, click here.
Image: Fotolia
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